Financial Planning for Long-Term Travel
I’ve been thinking about doing this post for a long time, but I wasn’t sure how to go about it. The truth is: the best way is to be as transparent and open as possible. Kody and I really want to be able to inspire other people to take the trips they’ve been dreaming of and go out and see the world in a feasible, affordable way. In an effort to do that, I’m not going to hold anything back in this post – I’ll tell you exactly how much money we needed for this trip and where it has been going. The numbers you come up with for your own trip might be different, but I hope this is an informative resource for you.
It’s important to note that we aren’t the kind of long-term travelers who sold everything we owed in order to finance our trip. We own a house in Oklahoma and are maintaining our life there so that we can return to it. That’s why the financial part of our journey took so much work and planning.
The formula for the Money part of our trip goes like this: SAVINGS + CREDIT CARD REWARDS + ONLINE REBATES + CHEAP TRAVEL OPTIONS + PASSIVE INCOME.
I’ll break all of these down in (possibly excruciating) detail below, but here’s a general overview:
1. We determined the length of our trip and how much money we would like to have to spend each day. This is important for other choices we made down the road – we think about the amount of money we can spend each day, not overall for the entirety of our trip. We did the simple math there (daily spend x length of trip) and set our savings goal.
2. We signed up for different credit cards in order to take advantage of their sign-up bonuses in the form of hotel points or cash back.
3. We researched the cheapest ways to travel overseas and how to get free accommodations once we arrived.
4. We built up passive income in order to have our at-home expenses covered as we travel.
Feel free to skip around this post, read the whole thing, or just glance at the “take-away” at the bottom of each section and the resources listed at the end of the post! This is just the way we planned for our trip and might not be a formula that works for you, so, if nothing else, I hope it can help you figure out how to creatively plan the finances for your own trip.
It seems a bit obvious to say that we had to save money for the trip, but we put a lot of thought into determining exactly how much we would need/want.
Once we had our cruise fares booked for our travel to and from Europe we knew that the total length of our trip would be 219 days. After reading a few other blogs of long-term travelers, we landed on a spending budget of $100 per day for the two of us (or, $50 per person per day). That $100 was intended to include everything we would want or need on the trip: accommodations, food, transportation, and fun. We focused there for a while and set our savings goal at $21,900. Unfortunately, even cheap accommodations in Europe run between $30 and $50 a night and we had decided to lease a car, so we had to up our daily spending amount to $140 in order to have some wiggle room. Our new savings goal was $30,660.
I know that number can seem staggering when it’s just staring back at you from a screen. Kody and I saved for this trip for years, before we even knew what trip it was we were saving for. We figured out early on in our relationship that we both wanted to travel and we had been saving on the side (separate from our “emergency” savings) for a long time – we finally gave that money a purpose when we earmarked it for this trip. Unless you’re fortunate enough to have an awesome remote position where you can travel and bring in a full income, traveling long-term is going to take a lot of planning and a lot of saving. At least, it did for us. So, we didn’t save the entire $30,000 in one year, but we saved more intentionally and more rigorously once we had the exact number in mind. Additionally, we were saving to travel as a married couple in our 30’s, so we knew we wouldn’t want to stay in hostels, which are a much cheaper option for accommodations than looking for private AirBnBs with kitchens, parking, and WiFi.
For us, saving means budgeting. Anyone who knows us knows that Kody is the King of Budgeting. We create and reevaluate our monthly budget constantly. On it, we list all of our income and all of our expenses. Once we’ve determined how much we have left over, if any, we look back at the different components and assess again. Do we really need $XX for personal spending each week? Can we take $XX from our grocery budget and move it into savings? We account for every expenditure and put it in a monthly spreadsheet. Each of us gets a certain amount of “fun money” each month that we can use for whatever we want. When we set our savings goal for our trip and really focused on saving, we went through our budget diligently and cut out as much spending as we could in order to have it for this trip.
It wasn’t easy and it definitely wasn’t always fun, but knowing that the money was going towards 6-months in Europe made it hurt a lot less. We maintained a “barebones” budget for about a year before we embarked on our journey.
The next thing to decide was where to put all the money we were saving. It’s difficult to choose a bank to house your savings in and my default was just to use the bank I was already using. Kody did some research and we started using a Charles Schwab Investor Checking Account as our “savings” account. This benefitted us in multiple ways: the Investor account earns interest; Charles Schwab has no foreign transaction fees; and they reimburse 100% of ATM fees. Putting thought into which bank to use helped us while we were saving and we have continued to reap the benefits while we’ve been traveling. ATM fees abroad can be quite expensive and they try to get you to use their conversion rates in order to charge you a commission fee, so be wary!
Honestly, you will need to have all of the money for your trip upfront. It makes planning so much easier and allows you to take advantage of the best deals. Before we left for our trip we had booked our cruise fares to and from Europe, about 75% of our accommodations, and we had leased a car for the duration of our trip. These were the big ticket items and it was painful to spend a big chunk of the money we had saved so quickly, but once those costs were out of the way, the rest of the money was for having fun!
We don’t budget on this trip the way we do at home. We’ve sort of developed a sense for how much we can spend each day and we go under-budget much more often than we go over-budget. It’s easy to check where we stand for our “daily spend” because we can just divide the balance of our account by the number of days remaining on our trip. If we splurge one day, we go easy the next day by hanging out on the beach or relaxing at home. The most expensive days are usually travel days where we’re moving one location to another. Those days we have to account for gas, tolls, car tags in some places, the occasional ferry, and road snacks. Some of the tolls in Europe are devastating and car ferry tickets can cost upwards of $100.
If $140 a day doesn’t seem reasonable or exciting to you – and it didn’t to me, either, before we left – then consider making adjustments to your trip. Maybe going somewhere for less time and having more money to spend is your style! Or maybe your trip isn’t six months long. It’s all about imagining what your best trip looks like and trying to get as close to that as possible. Kody and I are lucky because we’re the same type of traveler – we like to feast our eyes and feast our bellies and that can be rather inexpensive if you know where to look.
You may have noticed that our savings goal was directed only at our trip expenses and not at normal, every day expenses that still exist while you’re on vacation – like your mortgage, phone bill, and things like that. Read the section below on Passive Income to find out how we’re managing those expenses while we’re abroad.
The take-away from this section: Determine the length of your trip and how much money you would like to have each day for accommodations, food, transportation, and fun. Create a budget and see how much you can save each month, this will help you figure out how long you need to save up the money required for your adventure. Keep your travel fund separate from your emergency fund – emergencies can happen when you’re away, too. Find a bank account with travel benefits to keep your money in and take care of the most expensive costs before you leave, if possible. Remember that getting from one place to the next will likely be the most expensive part of your trip!
CREDIT CARD REWARDS
This post, really, is an homage to Kody’s financial thinking and research. He’s responsible for planning the financial portion of our journey and I’m responsible for planning the logistics – we make a great team.
One of his greatest finds is how to use credit cards to our benefit. The underlying idea is simple: we take out credit cards in order to take advantage of their sign-up bonuses in the form of travel points and/or cash back. The reality of this can be more difficult because your ability to be approved for credit cards is dependent on your credit score. We were fortunate enough to use eight credit cards between the two of us to earn over 300,000 in hotel points and $1,000 in cash back. I’ll list the exact cards we used below along with referral links, if you’re interested in using them as well.
In order to get certain sign-up bonuses from credit card companies, you have to spend a specified amount of money on the card. This number is different for each card and each sign-up deal, but they all require the same thing: discipline. We didn’t go on spending sprees in order to meet the goals we were required to. We simply put all of our normal monthly spending on whichever credit card we were trying to maximize and paid the entire balance off each month. At times, we enlisted friends who had large purchases coming up to let us put it on our credit card and have them pay us back in cash. We were also able to meet some of the spending goals by booking things for our trip, but we only booked them when we had the cash ready in our savings account to pay it off immediately. There’s no sense trying to get credit card rewards if you end up paying a ton of interest.
For the most part, we got each card twice – once under Kody’s name and once under mine – but we only used one card at a time in order to make sure that we reached the goal and didn’t overextend ourselves. Kody would write on the back of each card what the specific sign-up bonus was that we were aiming for so that we kept track and stopped using the card once we had met the requirements.
The credit cards we used were the Amex Hilton Honors card (we each got this card and we each upgraded it one time); the American Express EveryDay; the Capital One Quiksilver card; the Chase IHG Rewards card; the WellsFargo Visa Signature card; and the Susan G. Komen Bank of America card.
- American Express for the Hilton Honors:
- 85,000 Hilton Points after spending $1,000 within 3 months
- No annual fee
- This card allowed us to score over 170,000 points by double-dipping (meaning Kody applied for the card and earned the sign-up bonus, and then I did it). American Express has a user-friendly App that we really like. Eventually, you can upgrade to a Hilton Aspire or Hilton Ascend to receive even more points.
- American Express EveryDay:
- 20,000 Membership Points after spending $2,000 within 3 months.
- No annual fee.
- The 20,000 points break down to about $200 in credit once applied to your card balance.
- A good card to use to purchase a cruise, or large expense.
- Capital One Quicksilver:
- $150 cash back after spending $500 within 3 months.
- No annual fee.
- The Quicksilver is an easy card to take advantage of because the spend requirement is low.
- Chase IHG Rewards:
- 80,000 bonus points after spending $2,000 within 3 months.
- Annual fee of $89 (waived for the first year).
- The sign-up bonus can earn you a week’s worth of hotel nights.
- WellsFargo Visa Signature:
- $150 cash back after spending $500 within 3 months.
- No annual fee.
- This card has a low spending requirement, making it easier to meet.
- Susan G. Komen card from Bank of America:
- $200 cash back after spending $1,000 within 3 months.
- No annual fee.
- This card has a low spending requirement, making it easier to meet.
The idea of sifting through hundreds of credit card deals looking for the best one can be daunting. Fortunately, a lot of people already do that and we can enjoy the products of their labor and research. Our favorite resource for finding credit card deals is Doctor of Credit.
This is something we do even when we’re not preparing for long-term travel. Getting cash back from a credit card is like putting money you’ve spent right back into your bank account. You can use the same resources I’ve mentioned for finding cards that have benefits that suit you.
The take-away from this section: It is possible to use credit card sign-up bonuses and rewards to ease the cost of your trip or to provide free hotel lodging. Look for websites like Doctor of Credit to find the deal that best suits your needs. Don’t just use this for travel planning though! It’s a great way to save or make money regularly as long as you are disciplined and organized when you do it.
I know online rebates and cash back portals don’t sound sexy. They sound like something your grandpa might use, but they’re super easy and you’ll reap the benefits almost immediately.
Online rebate sites essentially operate as portals. You create an account with the rebate or cash back site and go there first when you’re looking for purchases online. Once you’re on the portal site, you search for the website that you want to shop on and click on their link to get there. Your shopping experience doesn’t change at all after that point and you don’t have to do any additional work. The cash back portal automatically records any purchase you make on the shopping site once you’ve been redirected there. The money you save using the portal site typically shows up on your account within a few weeks and then you can transfer it to your bank.
Kody and I used TopCashback when we booked our two transatlantic cruises. We simply logged into our account and clicked through the site onto Priceline and booked our fares there. Not every shopping site will have a deal on each portal and the cash back amount will differ. Using Priceline through Top Cash Back we were able to get 10% off of our cruise fares.
Once again, this isn’t something you have to limit to travel purchases. Any time we’re shopping online, we check to see if TopCashback has a deal for the site we’re looking at. It only adds a few seconds and you save money doing it.
The take-away from this section: Using rebate and cash back portals to get discounts for online purchases is as easy as making an account and shopping online. This is a great way to save on big ticket travel items and everyday purchases. Our preferred site is TopCashback, but there are many available.
CHEAPER TRAVEL OPTIONS
The two main things you will spend money on while traveling long-term are transportation and accommodations. You’ve got to get to your destination and once you’re there, you’ll likely want a decent place to sleep after a day of exploring.
The transportation portion can be broken down further into two parts: transportation to/from Europe from where you live and transportation around Europe once you arrive there. We solved this part of our travel planning by booking transatlantic repositioning cruises and taking out a short-term car lease.
Deciding to take a cruise from the United States to Europe was a pretty easy decision for us. I hate flying. In fact, whenever we visit my family in Washington state, we make the 29-hour drive rather than take the 4-hour flight. When Kody learned about repositioning cruises, it was a no-brainer that they would be our method of travel from continent to continent.
A few times a year, the cruise ship companies move, or “reposition,” their ships for the season. For instance, they will move from the Caribbean to the Mediterranean for the summer season and then head back down south in the winter. These cruises are usually around 2 weeks long and are cheaper than a standard cruise.
We sailed from Galveston, Texas to Barcelona, Spain onboard The Vision of the Seas, a ship owned by Royal Caribbean. The journey was 17 days long and included a 5-day ocean crossing and 6 ports of call. The total cost of the cruise (fare + forced daily gratuity of $14.50 per person) was $2,216.99, but that wasn’t what we ended up paying. By going through the Top Cash Back portal and buying our tickets on Priceline, we saved 10% of the fare upfront, or $173. Additionally, we used a new credit card with a sign-up bonus of $200 cash back after spending $2,000. The total we paid for our cruise to Barcelona was $1,843.99.
This is still a large amount to pay upfront and may not seem cheaper than airfare unless you look at your travel spending the way we do – on a daily basis rather than as a total amount for our whole trip. The cruise was 17 days long and included food (not alcoholic beverages), accommodations, and entertainment. After paying for our fares and forced gratuities, we didn’t have to spend anymore money for those 17 days! Think of it as hanging out on a moving all-inclusive resort. The total breaks down to $108 per day, which was within our daily spending budget.
The cruises would be even cheaper without the forced gratuities, but you will find this with every cruise line. The amount is not included in your fare. You pay for your gratuities at the end of your cruise. I’ve included it here to give a more accurate accounting of the cost of taking a repositioning cruise.
Once we arrived in Europe, we needed a way to get around. Again, flying was out for us, even though it is a relatively cheap method of travel from one country to another. We looked at different train travel deals and, because there are 2 of us and we moved around so quickly, the fares were adding up quite quickly. We found a solution that was both affordable and allowed us to have more independence as we moved from place to place: taking out a short-term car lease.
I found out about short-term leases while I was looking into renting a car for portions of our trip. The rental fees were very expensive because we would be picking the car up in one place and dropping it off in another. Also, there are restrictions on how long you can rent a car, who can drive it, and where you can drive.
I used a website called IdeaMerge to get a quote for a 175-day lease, which is the maximum allowable through the Citroen EuroPass Program. I arranged the actual lease through EuroPass. You choose the dates, the pick-up and drop-off locations, and the type of car you would like. We paid extra to have our French car delivered to us in Spain, but we saved money by choosing a manual transmission over an automatic (manuals are far more common in Europe than they are in the US).
The total cost of our 175-day lease was $3,706.70, which we paid in full upfront. This was a little terrifying because we didn’t really know if there would be a car waiting for us when we got there. The price per day comes out to $21.18. This price includes full coverage insurance, which came in handy when our car was broken into in Athens.
We adjusted our daily spending amount to reflect our car lease, so we had $119 for accommodations, food, and other incidentals. Any driving expenses that came up, like tolls or gas, we paid for from our daily spending amount.
In order to cover our cruises to and from Europe and our car lease, we paid $7,250.69 before we even left the United States! This left us $23,409.31 in our budget or $106 per day. We had an incentive to keep our accommodation costs low so that we could have more money to spend on fun things.
As I said above, we came to Europe with about 300,000 hotel points between the two of us and we were able to turn that into 27 free nights. We put a lot of thought into how to best use our points. When we looked at accommodations, one of us would check AirBnB and the other would search our credit card reward sites. We chose where to stay in hotels by picking the places with the best location for the lowest number of points. Since a night in a decent AirBnB in Europe costs approximately $35-40 for two people, we saved between $945 and $1,080 doing this.
There are even more fun ways to save money on accommodations, though, and our favorite is WWOOFing. The organization is called World Wide Opportunities on Organic Farms and they facilitate pairing travelers and hosts together to exchange labor for accommodations. We have a complete post on how to WWOOF, but the benefits are worth repeating.
The sign-up cost is $30 for a couple or $20 for a single traveler. We matched with two WWOOF host families in the United Kingdom. The work was pretty light – only about 4-5 hours a day – and we received three square meals a day and a roof over our heads. We WWOOFed for 11 days, saving at least $440 in accommodations (since AirBnbs in the UK were some of the most expensive we saw during our trip) and about $1,000 more because we didn’t spend much money otherwise.
Not only do you get shelter and food, but you also have the opportunity to meet locals and interact with the place you’re traveling in in a more authentic way. Unless you are absolutely opposed to doing light manual labor, there’s no reason not to save some money on your trip by WWOOFing for a little while!
The take-away from this section: Repositioning cruises are an inexpensive and fun alternative to flying from one continent to another. Don’t just think of it as transportation; think of it as part of your trip! Slower travel is key to maintaining a budget. Instead of renting a car or traveling solely by train around Europe, consider taking out a short-term car lease. These can be anywhere from 1-175 days and are a great way to have independence while taking the scenic route from city to city. For cheap accommodations, look into utilizing credit card hotel reward points. You can also exchange light manual labor for accommodations and food through organizations like WWOOF.
I mentioned that our travel budget does not include any of our “at home” expenses, such as our car note, home mortgage, cell phone bills, or student loan payments. We cover those costs through the use of passive income that we have built up over the last 8-plus years. “Passive income” is earnings that you make that don’t require your active involvement. When we were researching our trip, we didn’t come across many people who were traveling long-term this way. Most travelers either sell a lot of their belongings in order to finance their trip or are lucky enough to have a remote job that earns them a salary while they see the world.
Our goal has always been to enhance our life with travel, not exchange our life at home for it, so selling all of our belongings was not an option. We wanted a house to come home to.
We create passive income through real estate. We own rental properties in Oklahoma and have even been renting out our personal home since we’ve been gone. Kody began buying real estate in his early 20’s before we met and we have continued to do it together. At this time, we own 9 rental units which generate enough income to cover our non-travel expenses at home.
I believe that we would be able to travel long-term even without our passive income, but our budget would definitely reflect that. That being said, there are many ways to create passive income and it gives you the wonderful benefit of traveling abroad while maintaining a home to return to.
The take-away from this section: Consider building up passive income in order to cover at-home expenses that still exist while you’re traveling. This can be done by purchasing houses to rent or lease.
I know this is a lot of information to take in, but it’s also why it took us a few years to save up for our trip and a year to plan it. Our formula is SAVINGS + CREDIT CARD REWARDS + ONLINE REBATES + CHEAP TRAVEL OPTIONS + PASSIVE INCOME, but yours might be different. The point is to plan the trip and then TAKE IT! Below are resources, including links to outside websites that we utilized and to previous blog posts where we’ve written about a subject more in-depth.
We hoped this helped and we can’t wait to hear about your travels!
- Click here for our post on WWOOFing
- Click here to visit Doctor of Credit to search for credit card reward deals
- Click here to set up a TopCashback account for online rebates
- Click here to visit IdeaMerge to get a quote on a short-term car lease in Europe
- Click here to set up a WWOOF UK account
- Click here to learn more about a Charles Schwab Investor Checking Account
- Click here to set up an AirBnB account to find lodging abroad