Utilizing only 2 or 3 of these techniques will save you thousands of dollars each year. Keep in mind, a few thousand dollars can cover several months of living expenses in many countries around the world.
So, how did I do it?
15) Sell Your Car
I sold my car over a year ago and have saved roughly $5,700 this year in car payments and insurance alone (This does not take into consideration the fuel savings which fluctuate and can add hundreds more in savings each year). Not everyone will be able to justify selling their car and for many readers, selling their car is not an option. However, there are many readers who can likely survive without a car.
The hardest part of selling my car was the idea of giving up my “independence.” I have owned a car since I was 16 years old, about 1/2 of my entire human existence. I could have sold my car 4 years ago and would have survived perfectly fine, but it took a real incentive for me to actually take the plunge. The trip around the world was just the motivation I needed to finally overcome the fear of losing my “independence” and do it.
There are a few things to consider when deciding whether or not to sell your car:
Does your spouse, partner or roommate have a car? If so, can you consolidate into using just 1 car? (Obviously, you must discuss this with them first) Will your roommate let you get groceries and run errands with them? If you paid them each time or helped them with their car payments, you could still save thousands each year.
If you do not have access to another car, are you old enough to rent a car? If you are at least 21 years old, some car rental agencies will rent to you with an added surcharge. If you are 25 or older, you can rent from any rental agency without the surcharge. If you rent a car once or twice a month to run major errands, to stock up on household items, or to take that day trip to the beach, you can still save thousands of dollars each year.
Do you need your car for work or is there an alternate way for you to get to work? Is your work within walking or biking distance? Are you willing and able to move closer to your place of employment? Does your city have fast and convenient public transportation?
Bottom line, if you do not need your car to drive back and forth to work or have reliable public transportation, have a spouse or housemate with a vehicle, or can get by with renting a car once or twice a month, then you can likely survive after selling your car. Is traveling around the world worth giving up your “independence” for 1 year? For me, it was a no-brainer.
14) Brown Bag It
(Save over $2,000 per year)
This is a time-tested savings technique you will find in nearly every “how to save” guide. It is one of the easiest money-savers to implement, but was one of the hardest for me to stick with. I used to eat lunch at a restaurant with my co-workers nearly everyday. This adds up fast when you are spending $7 to $12 dollars each day. I was spending approximately $2,500 each year on lunch. Now, I have reduced that cost to about $2 dollars per workday and will save approximately $2,000 this year. Not to mention, my food choices are now much healthier.
Not only can it be healthier to “Brown Bag It,” but it is an easy way to set aside a couple thousand dollars for your trip.
13) Buy Produce – Reduce Grocery Costs
Fresh produce is cheaper than the prepared/boxed/frozen alternatives, at least in California. It may take more time to prepare, but is healthier in the long run. I know Rammit Sethi will likely disagree with many of my savings techniques, but when I spend 20 dollars a week at the supermarket versus 100 and have good, healthy food, it is worth it for me. So, stop buying processed food for better health and end up saving money at the same time.
12) Skip Starbucks & Buy a French Press
Nearly every guide to saving money will recommend that you stop buying your daily cup of coffee at Starbucks or similar establishment and make it at home instead. But does coffee brewed at home ever taste as good as your favorite coffee shop? No!
If you are a coffee addict, a french press can end your enslavement to your local coffee shop. Seriously! As a coffee lover, I know nothing compares to a fresh cup of Starbucks, Java City, or Dunkin Donuts (pick your poison). Even when you buy a bag of whole coffee beans from one of those places and grind them fresh each day, it never tastes quite the same. I love the strong, fresh flavor of Starbucks coffee and was never able to replicate it at home in my own coffee brewer.
One day, a friend suggested I buy a french press and promised I would not be disappointed. I spent $12 on a french press at Ikea and was amazed at how much better my coffee tastes. With a french press, the coffee tastes stronger and fresher than in any coffee brewing system I have used. I am currently addicted to “Black Silk” by Folgers and I think it tastes better than Starbucks when I make it in the french press.
If you spend $2-5 dollars on a cup of coffee every work day, you could save $500 to 1,300 per year with a french press. And, in my opinion, it is comparable to, if not better than, a cup of Starbucks.
11) Use your Public Library
(My total savings for #8 through #11 is over $1,300 this year)
It’s free and can nearly eliminate your home entertainment costs. In addition, it will help you achieve additional savings with 9 and 10 below.
If you have a strong public library system, take advantage of it! Our public library system offers current DVD’s, current music CD’s and of course a huge selection of books. Our library allows up to 30 requests in our “que” at a time and we can check out up to 30 books/CD’s and up to 5 DVD’s. With such a huge selection of movies and 3 week checkout periods, we rarely rent DVD’s anymore and never pay late fees. However, if we decide we cannot wait for that new release, we use the $1 per rental Redbox or DVDPlay kiosks and avoid paying exorbitant prices at the theater.
Since I am a huge movie fan, I estimate my yearly savings on DVD rentals at $200-300 each year.
10) Cancel your Cable Service and other Subscriptions
If you have high-speed internet service and are able to get current DVD releases at your local library (see above), you wont be missing much in the world of entertainment if you cancel your cable service. We are able to view our local television channels with an antenna, watch movies and television legally online on websites such as Hulu.com and check out current releases on DVD free at the local library. The basic cable package at Comcast is around $70 dollars each month (not considering the introductory rates). If you cancel your cable package, you will save a minimum of $840 dollars in one year.
Cancel your magazine subscriptions and other memberships that you will likely not use before your trip. You will likely be so immersed in travel research and planning that the subscription to Maxim or Vogue will likely sit around unread anyway. If you really need some bathroom reading materials, convert your lifestyle magazine selections to travel magazines which may help you plan your trip and provide some decent budget travel ideas. If you have a gym membership, cancel it. Utilize the great outdoors to exercise, use the community pool, buy a cheap bike, just don’t waste $50-100 per month on something you can easily do at a fraction of the cost.
9) Don’t Buy Travel Guidebooks
I love travel guidebooks, but I only own 1 of them. If I were to buy a guidebook for each of the countries we will be visiting, it would cost me anywhere from $200 to $300. That may not sound like a lot, but that same amount of money can pay for a month of lodging for two people in several of the countries we will be staying. Not to mention, it would be impossible for me to carry 10 guidebooks in my backpack.
Instead, while planning your trip, check out guidebooks from your local library. Our library carries the most common guidebooks such as Lonely Planet, Footprint, Eyewitness Travel, Rough Guides, Frommer’s, Fodor’s and Let’s Go. I personally prefer Lonely Planet guidebooks as a budget traveller, but check out several different types for the country you are researching and see which style of guidebook you prefer.
I use guidebooks as a tool to loosely outline the places I would like to see and to get an idea of lodging, food, and activity costs. Since I do not rely upon them to create a complete itinerary, it is not as important to have them with me as I travel. I generally jot down the main cities we feel we “have” to visit, a few hotels in those cities within our budget range that we can fall back on if needed, and any other side trips that sound fun. Once we arrive at our destination, free tourist maps and internet cafes are everywhere and fellow travelers/locals can help fill in any information gaps.
If you feel you must have a guidebook for each country you visit, try buying one at your destination from a fellow traveler who is leaving the country, from a used bookstore, or buy a new one at each destination and then sell it to another traveler before you leave to help recoup some of your costs.
8) Fulfill Your Entertainment Needs with a Netflix Subscription
I realize this may contradict what I wrote above about canceling your subscriptions, but for less than $10 dollars a month you can stream movies, documentaries and TV shows on your TV if you have a gaming system such as the PlayStation 3. I like to call this “the Cable Killer.” If you find yourself unable to kick the cable habit, Netflix is a great way to fulfill your addiction in conjunction with the suggestions above.
7) Entertain at Home/Avoid Eating Out
Going out with friends always seems to be more fun than entertaining at home. However, if you have your mind set on traveling around the world, you can successfully entertain at home much cheaper and save money over the course of a year for your trip. If you are always the host, the costs can meet or exceed the costs of food at a restaurant or drinks at the bar, so mix it up and ask your friends for support. If you have a group of friends, rotate hosts or host yourself with potluck style dinners and BYOB (bring your own beverages).
I have been out for drinks/dinner approximately 5 times in the past year. I estimate my savings based upon my social level at over 500 dollars this year (minimum 40 dollars per night out and approximately 2x per month is nearly $1,000 per year). How much can you save each year by kicking it at home with your friends?
6) Adjust Your Tax Withholdings
(Savings less than 500)
(Disclaimer: I am not a tax professional. Always discuss tax decisions with a tax professional first)
I refuse to give the government an interest-free loan each year. So, I adjust my tax withholdings accordingly to avoid just that. This enables me to bring home more money each paycheck. This technique may not technically “save” you a lot of money each year, but it can enable you to have the money when you need it or to earn interest in an investment vehicle of your choice compared to earning no interest and essentially giving the government an interest-free loan.
Here is what I have done for the past several years. I adjust my tax withholdings on my W-4 with the intent of breaking even on my taxes at the end of the year. If I rely upon the standard withholdings of 0 or 1 (being that I am single without children), I will get a decent-sized refund at the end of the year. However, I would rather have the money now than later. This past year, I owed a few hundred dollars, but next year I plan to essentially break even.
This is beneficial for several reasons. I can invest the money now and earn interest until I travel. I can pay off some of my debt now and avoid paying interest on that debt. I wont have to file my taxes before I leave and hope that the refund is deposited timely. In other words, I wont be sitting in South America waiting for that deposit to be able to eat. I can file for an extension and not pay penalties when I return from my trip (more about tax extensions/filing while traveling to come).
If you are planning to travel shortly after tax season, getting a decent-sized refund may be an easy interest-free way to “save” for your trip. But “easy” is not always the smartest or best choice. I adjusted my tax withholdings for the first few months this year which also assisted me in paying off 2 credit cards which, in turn, helped me to set aside more savings.
5) Pay Off Debt
Although it may not be possible to pay off all of your debt prior to traveling the world, it is the responsible/ideal way to travel. However, if you are like me and are going to travel with debt, pay off as much as you can now and you will free up money in the form of interest savings and smaller/no monthly payments while you are gone. Although I will not be able to pay off all of my student loans or credit cards before I leave, I have already saved a few hundred dollars this year by paying off 2 credit cards which will continue to save me money before I leave and while I am away.
Ideally, you should overestimate your travel budget and then add more for unexpected expenditures/emergencies. Then, overestimate the monthly bills you will have to pay while you are away. After setting aside money for travel and monthly bills, the rest should be put towards your debt.
4) Stop Buying Bottled Water
Buy a water filter system that you can attach to your faucet and save a few bucks this year. In addition, you will be helping the environment. I have the “Pur” filtration system which cost about $20 bucks and each filter costs about $9. For me, each filter lasts a couple of months. Instead of buying a liter of water at the convenience store everyday or buying a 24-pack at the supermarket each week, fill up a Nalgene bottle and take it to work.
3) Bank Online or Use a Local Credit Union
(earn 1-2% more in interest this year)
Although most online savings accounts no longer offer the 3-4 percent interest they did a couple of years ago, they still beat the brick-and-mortar banks by close to .5-1 percent. For me, this is not enough incentive to switch to online banking, but for some readers with larger savings accounts, it may still be worth it for you.
For me, the local credit union won me over. Currently, the Sacramento Credit union is offering 1.76 percent in rewards checking. There are specific conditions that must be met each month to qualify, but my banking habits already meet those conditions. There are no annual fees and there are other incentives such as ATM fees waivers, etc.
Search online for “high-yield rewards checking” and “online savings” and see if making a switch from the brick-and-mortar bank will help you.
2) Enjoy Free & Local Entertainment
Fortunately, the Sacramento area offers some decent free events to keep us entertained. Every 2nd Saturday is the locally famous “2nd Saturday Art Walk” which has become a huge monthly event in the Sacramento area. The event used to consist of primarily art gallery showings throughout the Midtown area, but has grown into a semi-street festival with a good balance of art, music and food. Most venues are free and some even serve free wine and beer. Although I don’t attend as much as I used to, it is free and fun to check out the scene every now and then.
Since we are so close to San Francisco, we also try to take advantage of the free events held there. They offer numerous free festivals throughout the summer. We attended the King Tut exhibit in February for free and all museums in San Francisco are free on the 2nd Tuesday of each month.
Check out the entertainment section of your local Newspaper or search online to take advantage of the free events in your Community.
1) Use What You Have/Sell What You don’t Need
If you have an AAA membership, log onto their website where you can have free maps mailed to you for the places you plan to visit, but don’t forget to cancel your membership before you go, unless you plan to stay in lodging that offers a AAA discount.
If you are a best buy rewards member and have racked up points prepping for your trip, redeem them for more travel related gear. If you have a cash back rewards credit card, use the cash back reward for travel related items. If you have old gift cards from holidays/birthdays, use them for travel items. Even if you have a target gift card, you can probably find something that you were going to buy for the trip anyway.
Sell the big ticket items you wont need while you are gone. I plan to sell my PS3 system and games before I leave for a decent chunk of cash. Consider selling those things that quickly depreciate in value that you can probably get for the same price or cheaper when you return (LCD flat screen TV, desktop computer, etc). Both, Never Ending Voyage and Where is Jenny have some great tips about selling everything you own before embarking on your RTW.
Bonus: This is probably a no-brainer for those seriously planning to travel the world, but bank your vacation-time/comp-time earned (CTO). Don’t use it for the entire year. Although policies vary on CTO, vacation time must be paid out if you resign. If you are requesting a leave-of-absence, most companies will require that you exhaust your vacation-time or CTO time before you are officially on your unpaid leave.
I originally planned to request a leave of absence and it would have been nice to see a few direct deposits roll into my account while I was abroad. However, due to unforeseen and unpreventable circumstances, I must resign. Regardless, I will be paid out all of my CTO and Vacation on my last paycheck. This will be a nice chuck of change considering I will have banked around 120 hours of Vacation & CTO. If you are resigning, don’t forget to adjust your tax deductions on your last check (play it safe and adjust them for your last two) so that you aren’t hit with more taxes than normal since your paycheck will be much larger.
Depending on your lifestyle, there are potentially many other ways to save money in preparation for your trip, like buying off-brand products or buying cheaper wine/beer (i.e. Trader Joe’s 2-buck chuck). But, never forget, one of the easiest ways to save money is to stop buying things unless they are absolutely necessary for your trip.
This is how I saved enough money for my upcoming trip around the world. How do you plan to save for your trip? If you have a unique saving technique, let us know in the comments below.