How I Save Money on Vacation (and How I Don’t!)

I’ve been vacationing a lot lately. Call it what you will — a quarter life crisis, extreme debt fatigue, insanity — but I managed to spend 4 out of 6 weeks traveling from the end of June to the beginning of August. Basically, I decided to uproot my life and move across the country. Before I actually left on my road trip, I spent a week each in North Carolina and Toronto. And now, I am writing this in the middle of my two week vacation/move across the country. Let’s go with insanity…

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Anyways, I’m learning more about my travel tendencies including where I save and where I splurge when it comes to travel. Check out my cheap travel hacks as well as the things I refuse to skimp on.

How I Save

1) Lodging. Hotels are ridiculously expensive. Even the crap hotels can break the bank. I’ve found a couple of ways to combat this.

Some people scour the web for great deals and plan way ahead of time. While I admire these people, I’m not one of them. To be honest, I don’t even know where I’m staying tomorrow night.

My two favorite ways to keep lodging cheap (or free!) are couchsurfing and travel rewards from credit cards. Couchsurfing.org connects travelers all over the world and allows members to request to sleep on the couch (or extra bed or sleeping bag) of other members. Sounds creepy, but we’ve had great luck with it (as I write this from a Couchsurfing host’s extra house — yeah, they gave us a whole house for two days). People in general are decent, remember that.

Travel credit cards are amazing too. We spent 6 nights in Canada for FREE using reward points. I know a lot of you have credit card debt, have you cashed in your rewards yet?

2) Souvenirs. This one is pretty simple, I just don’t buy them. Your loved ones don’t need cheap t-shirts with a tacky screen print of a place you visited recently. They just don’t. They also don’t need key chains with their names on them or half a coffee cup because _________ was so expensive. Just…no.

Actually, I don’t really shop for anything that isn’t consumable on vacations. So pretty much just alcohol. I really like getting local alcohol.

3) Tours. I don’t go on bus/ferry/boat/whatever tours. Why? Well besides the fact that they are filled with your grandmother’s friends and screaming children, they are ridiculously overpriced. Chances are, you are healthy enough to walk. Educate yourself on the sites you are seeing online and burn some calories.

How I Don’t

1) Food. Okay, I do save a little on food. When I travel, I focus on independent, low to medium range priced restaurants. I don’t go to crazy expensive places but I enjoy the local places. I’ll shell out the extra few bucks to avoid chains and I don’t pack my meals. #SorryNotSorry

2) Beer. I will occasionally order wine or cocktails, but I usually order beer on vacation. Once again, this is all about experiencing the local market. This is how I order beer on vacation, “What do you have that’s local and light*?” Server rattles off three or four options. “Okay, I’ll take the best one.” Super easy and I try some great beers this way. *Yes, I am a light beer drinker. I am not ashamed.

How do you save money on vacation? What is your favorite splurge? What’s the dumbest souvenir you’ve ever given or received?

The Problem with Keeping up with the Joneses

The personal finance world heavily advises against purchasing in order to keep up with “the Joneses” — that proverbial family that always seems to have two new cars in the driveway, 2.5 kids in an expensive private school, and the latest designer duds. There are several reasons for this: it’s materialistic, it limits your savings and often increases your debt load, things won’t bring you happiness, blah blah blah. While it is not ideal, many people spend with the intention of impressing others. Not all of us, but some of us are never going to be those people that purchase only what is necessary and forgo the luxuries. For those people, I have a better reason why jonesing for what the Joneses have is derailing your finances.

You don’t stop at the Joneses.

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Let’s turn the Joneses into a family, okay? Your next door neighbors are now the Joneses. Provided they aren’t ridiculously frivolous spenders, “keeping up” with them probably won’t land you in the poor house. The problem is, the “Joneses” aren’t one family. People who spend partly to impress others aren’t just emulating the spending habits of one family. You are trying to keep with the Joneses, the Smiths, and (let’s face it) the Kardashians.

You (one family/person/couple) are trying to purchase the same — or better — things as multiple other families.

This isn’t an uncommon practice. Millions of Americans (and I’m assuming Canadians) try to “keep up” with multiple families who are all in turn keeping up with multiple families. It’s a complete and utter fiasco. Before you know it, you are sitting there with three brand new leased vehicles, a house four times as big as you could ever need, and a “collection” of vintage designer purses, wondering how you got to that point. It’s the spending hangover from hell.

But of course, you can’t show anyone that it phases you. No one talks about money after all, it’s impolite. You might start digging yourself out of the hole, only to be derailed again by well-intentioned-but-totally-misguided friends and family that want you to spend, spend, spend. After all, you work hard. You deserve it. And god forbid Mrs. Smith start spreading a rumor that your topsoil isn’t organic or Mr. Jones tell someone about your refusal to split the bill equally after you ordered salad and a water instead of filet mignon. I mean, what would people think?

The problem with keeping up with the Joneses is that everyone is a Jones. It is not realistic to keep up with every spendy person you know. It doesn’t end well. It can land you with a heap of buyer’s remorse in an even bigger heap of debt. That’s not something you want to show off, is it?

The Joneses are everywhere and it can be tempting to spend like them. In the end, it’s not about the stuff. You see people who seem happier than you who happen to have these flashy gizmos. You are comparing your real life to what other people put on display. Don’t compare your behind the scenes to someone else’s highlight reel. You owe it to yourself to ignore the Joneses — numerous as they may be — and spend to enrich your own life. You may find that happiness doesn’t come at that high a cost…

How To Spend Your Money After Graduation

This was another google search term that led to my site. It’s an even better question than the first one, What should your net worth be at 30? And I have a better answer!

After graduation you should spend your money on…

Your immediate needs. This means food & shelter. Make sure you have a roof over your head and more than left-over pizza in your fridge. Don’t go out every weekend to eat at restaurants and call it a “need” because it’s food — that’s entertainment. I suggest lots of fresh veggies & fruits, but you can live on mac & cheese if it’s your thing.

A small emergency fund. Work on building up a buffer of about $1,000 to see you through any immediate catastrophes, like reduced pay due to taking a sick day or an unexpected dental bill. If you own a car, I would suggest a slightly larger emergency fund of $2,000 or even $3,000.

Interview clothes. When I graduated, I found that I owned practically nothing that could pass for business dress. This was a mistake. Go ahead and make the investment in a few quality pieces to see you through multiple interviews and one week of work at a new job. Once you land said higher-paying, new job you can get wardrobe to see you through more than a week of work.

Resume help. I went to the career centre at my university to get help with my resume. It was only $20, but the return was tens of thousands in increased income when my resume got me the job I wanted. I know burgers & beer sounds like a better way to spend $20, but I swear you’ll be able to buy way more burgers & beer if you spend $20 on your resume first.

A library card. As a student you probably had access to a library for free, but now that you’re a graduate you’re going to have the shell out the whopping $12 or whatever to take out books. I think this is a really important place to spend your money because like the two points I listed above, it’s an investment in yourself. After graduation, I visited my local library to take out books like What Color Is Your Parachute? and Life After College to help me get the job I wanted. I also hung around to read the latest copy of MoneySense and Elle (hey, can’t be serious all the time). Your library is way better than spending money buying books new or subscribing to magazines.

Your student loan debt. To quote my favourite financial hero Lesley Scorgie: “Congratulations, you’ve graduated and here is your bill”. If you don’t need to take advantage of the grace period, don’t. Start making payments on your student loans as soon as you can, and make those payments as big as you can. The faster you become debt free, the sooner you can get on with the awesome adult life ahead of you!

Your retirement. You have an income, start saving it. If you’re in your 20’s, you only need to set aside about 6% of your income for retirement. If your income is small, a TFSA is a better vehicle than an RRSP, but I would suggest researching all your options before making any decisions, since what’s best depends a lot on your income and student debt situation!

Your long and short term goals. Think retirement sounds boring and far away? Me too. That’s why it shouldn’t be the only thing you save for. Want a car? Set up a car fund. Want to put a down-payment on a home? Set up a house fund. Want to travel Europe? Set up a travel fund. Put money aside to pursue a graduate degree. Start contributing a little bit of every paycheque towards your long and short term goals in a high-interest savings account.

Spending money in these places ensures you are self-sufficient, financially secure, prepared, and have a plan. You’re also supporting your local library!

Tracking my spending… so far so good

As some loyal readers may remember, I used to be fairly good at tracking my spending. Eventually my tracking became more erratic, and eventually I gave up entirely. Recently I resolved to track every cent in 2012. Why? Well, I’ll be honest, my first reason is not to “know where the money is going” so I can “make changes next year” (though that is a secondary benefit for sure). No, if you want to know the real answer, it’s this: I like charts.

I like when other PF bloggers do their year-end summary and they can tell you EXACTLY how much they spent on EVERYTHING. I’m really a huge fan of those posts with piecharts where the author says, “and here you can see I spent 27.34% of my net income on clothing…”

I love it. My OCD heart just sings when I can see those figures. And if there’s bar and line graphs, well, I swoon. I can hardly breathe my heart beats so fast with awe and longing.

That said, I have no idea how much of my net income I spent on clothing in 2011. Actually, I have no idea what my net income was in 2011, and won’t know for sure until I file my taxes. While I could probably accurately determine how much I saved, contributed to my RRSP, etc. it would take hours to go through 12 months of bank statements to find that information. And as for everything else? Good luck. Sometimes I look at my statements and I see a shop name and I’m like, “is that coffee shop? A boutique? Where was that? Did I really buy something at this place? Has my identity been stolen?!” and it makes for an all-around very stressful day.

So I’m avoiding a lot of that hassle now by tracking my spending. We’re just over one week into 2012, and I already have learned very interesting things about my spending:

– the first week of the month is ludicrously expensive. Why does rent have to come out all on one day? Can’t they split that up?

– I eat too much.

– I’m terribly dull. My money is spent it completely predictable places like the grocery store and the tailor.

Not that I was really expecting any different. I am noticing that I’m particularly careful about spending because I have to keep track of it. I’m once again romancing the idea of no-spend days (I had three last week, they were delightful) and nearly every transaction has taken on an air of importance because it so often is the one that determines a spend day from a no-spend day. Never have I taken a coffee at Java Jive so seriously before. Now I’m like, “do I really want to break a beautiful, unmarred no-spend day for a $2 coffee?”. My debit card has become a holy object, it determines fates.

So.. only 51 more weeks to go until I can make that year-end chart of my own!

Confession: I don’t really budget

Maybe some people will find this to be a surprise, since I shared my 2011 Spending Plan last month, but I actually don’t budget my income in any semblance of a detailed fashion.

I pay my rent, my cellphone bill, my automated savings, whatever is on the credit card, and that’s it. If there’s money left over, I make a decision to spend it or to save it, but without any real loyalty to either. I usually hover somewhere in the middle — which I why almost every spending recap shows equal spending & saving.

I do not set limits on food, clothes, or entertainment. Nearly everything on that Spending Plan was a total stab in the dark. I merely took guesses for what “felt” right and put that in, but I don’t actually know if my income is enough or too much for that plan because I never did the math. I have no idea what I’ll earn this year, and I never subtracted those totals I made from so much as an intelligent guess of my annual income. In short, I was just making shit up that sounded good to me, but I have no idea if it will actually work.

Does that make me a bad PF blogger?

Sometimes I read people’s blogs and they do zero-based budgeting where they account for every single penny — they have a plan for how every dollar they earn is going to be spent, even before their paycheque is deposited in their bank account. While I think this is a good practice, I have no interest in doing it for myself. Why? To tell you the truth, planning that way makes my spending feel really restricted.

Yeah, I said it: budgeting makes me feel deprived.

When I start itemizing everything and attaching costs, I start to think that I don’t earn enough. A concrete figure looks small and inadequate, absolutely impossible to work with — whereas seeing a few hundred dollars sitting in my chequing account after all my bills are cleared makes me feel free to buy whatever I want. To be honest, I wouldn’t even know where all my cash was going if I didn’t feel semi-obligated to make those pie charts for my monthly spending recap. Even those are merely an account of where the money was spent, they are never a plan or the rule (which might be why they’re all so different).

I don’t think you need to plan or account for every single cent to be financially healthy.

I think tracking your spending, setting financial goals, and committing to being debt free are important, but I can’t plan every penny I’m going to spend in advance — I just do too much on a whim! So while I think everyone needs to live within their means, I remain sympathetic to those that hate to budget.

Budgeting kind of sucks!