Once again, I remind you that anything here are my own opinions and experiences, not professional financial advice.  That said, I want to say a few words about the importance of saving money even when you’re in debit.  Every financial website, book, talk show, planner and smart person will tell you to pay off your debit then start saving money.  Most of them are smart people who have good money sense and were never in debit themselves.  Even if you’re in debit, I think that you should save some money every month.    
    I recommend this because of the psychological impact that saving money has upon someone who has accrued debit in the past.  As anyone who reads ReallyBigGoals knows, I’m pretty far in debit myself from past school loans and in general living above my means.  It wasn’t until I started saving a little bit of money every month that I was able to learn the skills that have taught me to finally live below my means. 
    Saving a little bit of money, even when you owe large sums of money, teaches you three things.  First of all, it teaches you how to live on a budget that is below your income level, not at it.  By putting away even $5 a month (although I always try for $100) you force yourself to downsize your budget which teaches you how to live not just within but below your means.  This is the key to ceasing increasing your debit and the key to getting out of it.
    Secondly, it creates a small fund of money that provides a sense of security.  If you’re always living in debit and never having any emergency money, when something happens unexpectedly (like our move across country) you can end up in more debit and more depression/frustration which can then trigger unreasonable spending.  Call it ’shopping therapy’ or whatever you want, but a Santa Barbara shopping trip because you’re anxious or stressed or depressed because of your debit will only make it worse.  If you have a tiny bit of savings this isn’t so strong of an impulse.  To my great surprise and pleasure!
    Finally, by saving for things and rewards that you want you appreciate them more and learn to postpone your gratification until you can truly afford it.  How much more fun will your trip be if you come back and haven’t racked up any credit card debit?  How much easier will paying off your debit be if you know that you’re still going to get to go on a trip, even if it might take you a tad longer to save for it? 
    The down side- it’s not the best way to get the most from your money.  You’ll be paying a higher interest rate (in most situations) than you will be getting in interest from your savings.  If your debit can easily be paid down in a few months, do that first.  If, however, you’re working with a larger amount that will take years to pay down consider saving some money as well for that trip and/or rainy day so that you can continue to live while you pay off your debit.  You can always dip into that savings later and pay off chunks of your debit if you want to.

Ok… now your turn to sound off.  Don’t worry if you disagree with me, share your reasoning here!

• Comments (2)

It’s easy to be told to save your money instead of use your credit card for things and vacations you want, but when it comes down to actual practice it usually easier for most people to put it on a credit card and pay it off.  Why is it so hard to save money for things, like vacations, that we know we want?  Why can’t we just say no to the cup of $4.50 coffee and put that five bucks into a savings account each and every time?  Is it because we’re not good at delayed gratification or are we just horrible at self control?
    I sometimes think to myself, as I stand in line at the coffee shop, “I have an espresso machine, I can make this at home for next to free” but I never turn around and leave.  The desire to save that money just isn’t large enough.  It was during my interview with Theresa a couple of weeks ago that I realized that I’m not applying the same goal-setting practices to saving for a trip that I apply to the rest of my life.  In my other life I write the blog ReallyBigGoals.com about how to achieve truly huge goals in your every-day life.  I felt so silly for not even thinking about applying the very same practice that I promote there to my travel savings goals. 
    Here is the way my thinking about saving for and planning a trip goes:
    “Self, hello?, I want to get out of the country/town/hemisphere”
    “That’s nice self, but we don’t have any money”
    “But I’m sick of being here.”
    “Well, let’s save some money up and then we’ll think about planning a trip.”
    “Ok, I’ll save some money for a vacation and when I have $2,000 I’ll plan a trip.”
    I asked Theresa if it was easy for her and her hubby to save the massive amount of money that they are going to need to travel the world for a year or so and also to re-integrate and find jobs when they get back.  She said that it got easier to save the more planning they did because they quickly realized that the $25 that they would normally spend on take-out when they were to lazy to cook suddenly equated to two nights in a South East Asia hotel.
    To set any goal, whether it is a Really Big Goal or a simple New Year’s Resolution, you need to define your goal in a quantifiable way and then break it down into bite-sized pieces.  Even if you’re not planning on taking a year long wander around the world, denying yourself cable becomes much easier when you realize that a year of cable will buy your family a week in a nice San Francisco Family Hotel.  Without a clear goal, you can know that you should save the approximately $1,200 that cable will cost you a year, but it just won’t seem worth it unless you know what you’ll get in exchange.
    What is the most helpful goal-setting tool you use in saving for your vacations?

• Comments (1)

    I love the ING Direct commercials.  The little dollar bills that are laying around on the couch eating junk food that are whipped into shape and start jazzerscizing when they get with ING is just such a perfect illustration of my frustration with most savings accounts.  Thank goodness I say for the advent of the Internet!!!  Now, to compete with ING’s Internet-based checking almost all banks have high-yield Internet savings accounts that will give you 4-5% interest.  That’s a far cry from the passbook saving account I had with a credit union for years that gave me .01% and told me I was lucky.
    If you’re working hard to save money for your vacation, you should make sure that your money is working just as hard for you.  If you’ve got more than $1 saved for your trip you need to find yourself a high-yield savings account, and don’t settle for less than 4.5%.  You can get at least that from simply transferring your money into your PayPal account, which pays Money Market dividends.  I always suggest checking with your local bank first though because the online banking is all in one place then if they will give you a competitive rate.
    This isn’t professional financial advice, rather simple common sense.  You should make sure your account doesn’t charge any fees and that you will be able to access your money quickly if you’re going with a savings account.  If you’ve got more than $1000 in savings you should look into Money Markets and Certificates of Deposits (CD accounts) that can give you higher interest rates, although they have restrictions on when you can withdraw your funds.  Many these days will let you add more money at any time so you can get the same rate, so long as you wait till it matures to withdraw it.  Remember, the interest rate you get from these should be significantly better than the interest you get from your savings account, at least a percentage point.  Also, if you’ve got even more money don’t ever overlook the possibility of negotiating a higher rate.
    Check out Bankrate.com for sample rates from banks in your area.  Also, check out Credit Unions around you as they frequently can offer higher interest rates since they are nonprofit organizations.

** Check out Los Angeles Family Hotels from around the web**

• Comments (7)

You know me, I’m always trying to figure out how to travel for next to nothing.  When I find things that not only save you money but promote cultural understanding and world peace all at the same time, well, its like candy!  Enter Couchsurfing.com.Anyone who has been or knows a 20-something vagabond knows what couchsufing it.  Its the old, “Hey dude, can I crash at your place on Friday night?” way of finding a place to lay your head.   Ok, most of us have done this at some point, including me.  When I travel in the US, I always plan my trips around places I know I can find a free place to stay for a night (aka- people I know).  When we moved to Chicago, we stayed with everyone from my husband’s highschool friend in Utah to friends of friends in Ames, Iowa.  That’s couchsurfing.Couchsurfing.com takes this common practice and makes it an international movement/art form.  After registering with their site and getting verified by them (that you’re a real person) you become a member of their couchsurfing community.  Then, say, someone is coming to your home town.  They post a note saying that they’re looking to couchsurf with someone in your area.  If you’ve got a free couch, you reply to their post.  Together you work out logistics, etc, and then when they fly in (or however they’re getting there) you pick them up, hang out, let them crash at your place, share some of your life with them, and BINGO- new international friend.  Then, when you’re traveling to Boro Boro you do the same thing and meet another new friend.  Yay!  Lots of new friends.  Lots of cultural sharing!  Lots of free places to stay for the night!Way cool.  Check it out.  Register.  Host people.  Do it now, you know you want to… 

• Comments (0)

Ok, so here’s the thing about driving in a foreign country. It’s freeking scary! I don’t much like driving at home (we only have one car for this reason and I bike to work when I need to go in) so driving abroad is something I’m naturally biased about. However, after my trip to Ireland I was doing some post-trip math and figured out that it would have been much cheaper for our group to rent a car than to buy train tickets. I started doing the math out by person and realized the following:

• Traveling alone, don’t rent a car. It’s a pain, tiring and isolating. Also, it’s more expensive.

• Traveling with two, rent a car if you want to see things off the train or bus lines and if you can find a good price.

• Traveling with three or more, it frequently comes out less expensive to rent a car than to buy three tickets everywhere. Also, with three people you’re not going to meet new people on buses and trains but rather at your lodging locations and sightseeing locations.

• If you’re not renting a car, consider finding out if the people that you meet might be able to give you a lift to some of those out-of-the-way places for a spit of the gas money, it can save everyone some dough and you can make some great friends!

Of course, there are some times when it just makes more sense to travel by car than by plane or train.  If, for instance, you’re going from Los Angeles to San Francisco, you should drive Highway 1 because of the great things to see along the way, such as Hearse Castle.  There are just some great trips out there if you want to drive.  Watch for tips on planning a car trip.

• Comments (3)