Budgeting 101: Know where you start
- November 7th 2007
- Saving for your trip
If you want to travel, you will have to figure out where to get the money from. For those of us who don’t have a rich uncle, this means finding places in our budget where we can take the belt in a bit and save some extra cash for our vacations. When you’re planning any budget, the first thing you need to do is understand where you currently stand and what you’re currently spending your money on. That said, I’m not in the least an expert in this subject. Tracking my spending is the most difficult part of budgeting for me. There are ways that I’ve gotten around that, but those will come in a latter post.
Step One: Balance your accounts
You probably balance your checkbook occasionally, but you need to sit down and balance all your accounts. How much do you owe on your credit cards? How much do you owe on student loans? How much do you have in your bank account? How much do you have in savings? How much do you have in your retirement account? Who do you have personal loans or other such things from that you need to pay back? Do you have any unpaid parking tickets?
Tally them all up… this is your starting point.
Step Two: Set a BIG goal
I’m a fan of setting big goals and going from there. If you want to spend a week at a Wikoloa Hotel for your 20th wedding anniversary your BIG goal will be different from if you want to spend two years backpacking around the world. What is important to remember is that you can spend the same amount of money for both trips! The difference is here:
Going for a week: In addition to the estimated cost of $5,000 for a ‘nice’ romantic vacation for two, you’ll have to pay your motgage, your babysitter, the pet hotel, your car payment and take time off of work. You’ll also be paying credit card bills, etc.
Going for two years: Before you go you’ll have to pay off your debits (how else will you manage monthly payments from Tibet?), sell the house, sell the car, take the kids with you, get a mobile job to make money on the road and foster the pets onto your sister’s perpetual care.
The details work out differently, and the planning takes different levels, but both are possible. Your Big Goal should be the economic status you want to be in when you return to ‘normal’ life after your trip.
Step Three: Make a plan
Once you’ve got your goal in site, you need to make your plan. If your trip will cost you $5,000 in order to be a a $0 difference before and after you go in your overall economic outlook then you need to figure out where to get that $5,000. Consider such things as using coupons ( TheGroceryGame.com is a great way to cut your grocery bill in half), buying clothes on Ebay or at the used clothing store (I regularly find Levi’s with the tags still on them at the Salvation Army for $3), or cutting back on non-essentials (do you need the new plasma TV more than you need a vacation?).
Then the only thing left to do is to work your plan. What is the hardest part about financing travel for you?
Uh…If you maintain a travelogue and take a lot of pictures and record videos, there’s lots of ways you can have this cake and eat it too. Travel websites pay a lot nowadays for exclusive travel diaries. You can not only finance your traveling costs, but also end up with more money than when you started.
Excelent recomendation! I’m thinking of doing an article series about this exact thing in comming months. If you would be interested, I’d love to have you guest write some articles…
-Kango Suz