Managing Your Money: Before You Leave

02.November 2010

Budget, Managing Our Money, Pre-Trip

CanPaperMoney_2 I know it’s dry, and terribly boring, but if you don’t pay attention to your money before you leave you may end up worrying about it more than you need to while you’re away.

Save…Save…Save!

I know this sounds like a no-brainer…and it is…the more money you can put away the better off you will be on the road. No-one likes to worry about how much they have, or how much they are burning through so the more you can save the better.

First off…stop digging the hole! Stop accumulating whatever debt you are accumulating. No more ‘pay-as-you-go’, no more ‘don’t-pay-until-next-year’, no more ‘just-put-it-on-the-credit-card’. Just. Stop.

Then, work towards filling the hole. Pay off debts aggressively. Debt is costing you money and giving no reward. Once the debt is gone, all that money spent paying it off is now building the pile ‘o money that will be yours!

We made plenty of sacrifices so that we would have enough for our trip. We tracked all our spending so we would know where every dollar was going (a habit we keep to this day) and we increased our consciousness about spending money, asking ourselves whether we really needed an item or just really wanted it. Every purchase was compared to ‘how many days in Thailand’ it cost. It really worked and constantly reminded us of the bigger goal that we had.

We ate out at restaurants way less often (one of our fave things to do), we didn’t go on any mountain biking trips that year, didn’t buy any new clothes and moved into a cheap rental once we had sold our condo.

Any money that didn’t need to be spent, wasn’t. Eye on the prize baby!

Find A Good Bank That Will Help You

I know, sounds impossible, but some are better than others and, if you do your homework you might find one that is better. It’s worth the time to look.

Banking fees were a significant portion of our budget…about 2%…so it was important to make sure we were getting what we needed and spending the least amount to get it.

Our primary concerns were:

  • Account Security. We had a pool of money that would gradually diminish as the year went on but we didn’t want it all to be accessible at once for security reasons. What if someone got hold of our cards and could gain access to the whole pile? So we set up a system of bank accounts to which our cards only had access to one. We were able to electronically transfer money to keep this one account filled up as we needed. Alternately you could schedule payments from one account to another.
  • Banking Fees. We wanted an account the would give us the greatest interest rate but the lowest banking fees…no point spending money to store your money! Many accounts waive fees if you have a certain amount in them all the time. Seeing as we had enough money to cover this minimum we managed to reduce our fees significantly.
  • ATM Fees. Our plan was to use ATMs almost exclusively to access cash so we needed a plan that would minimize these costs. Some banks charge up to $5 per transaction at a foreign ATM machine…and that’s on top of the local fee that the ATM machine may charge! Many ATMs have a daily limit that you can withdraw and so we would have to make multiple withdrawals to have enough cash…and would be charged for every withdrawal. Ouch! We managed to find a bank that charged zero ATM fees, foreign or otherwise. Score!!
  • Credit Cards. You need a big name card. Visa or Mastercard are where it’s at in the rest of the world. Actually, ca$h is king, but if you’re going to carry a credit card (and you should) then it should be one of these two. Find one with the lowest interest rate possible and beware of exchange rate premiums that may apply. Read the fine print…out of country rules may be different than in country rules.A credit card with a reward or travel points system may actually help pay for your travels! Look into the possibilities.

Don’t be afraid to change banking providers if you find that your current bank can’t (or won’t) help you. Our long term bank was absolutely inflexible with regard to fees etc. We had evidence of another bank that would be able to help us, but they still could not bring enough to the table to make us stay.

Don’t negate on-line banks. Our end case scenario involved a ‘brick and mortar’ bank that had an on-line affiliated bank. The combination of the two met all our above needs and worked like a dream.

Remember it’s your money!!

Power Of Attorney

Ugh! It just gets drier and boring-er, doesn’t it? But this piece is what gave us the most piece of mind.

Sure, we thought we had accounted for every financial scenario, had dotted all our i’s and crossed all our t’s…but what if we forgot something? How were we going to manage it while we were on the other side of the world? We asked someone to be our Power Of Attorney.

Some considerations:

  • Choose someone you absolutely trust. Remember, they will have access to your money. Whether it’s a family member or a friend, it has to be someone that absolutely has your best interests at heart.
  • Check with your bank as to how this is done. It may be as simple as you writing a letter or, as in our case, you may need to all head to the bank to have paperwork signed.
  • Learn the conditions of the PoA. Ours allowed our friend to deposit money, withdraw money and write cheques on one account but did not allow access to all the accounts or the investments. This protects everyone involved.

We ended up using our Power of Attorney more than we thought we would. A couple of unexpected bills showed up that he could take care of for us and, while arranging to come home, he took care of the rental deposit etc so we could have a place to live. Thanks Ron!!

It’s about more than saving money…it’s about managing your money.

Are there any other things you have done to financially prepare for a big trip?

Related Posts Plugin for WordPress, Blogger...
Click
to join the OneGiantStep Facebook conversation!

15 Responses to “Managing Your Money: Before You Leave”

  1. Keith Says:

    I agree with the advice on finding a bank that will not charge ATM fees internationally. PNC here in the States offers even one better, they refund any changes you get from the bank those ATM it is. Some months this was nearly $100. Not chump change for sure.

    We did a whole post on it here: http://www.greenaroundtheglobe.com/2010/02/18/69-in-bank-fees-%E2%80%93-refunded/

  2. Andrea Says:

    We got one of those travel money cards so we can load several currencies and not pay the high credit card conversion fees for purchases in another currency. Great tips!

  3. Zablon Mukuba Says:

    great advice and tips, on managing money, you could add carrying travelers cheques always come in handy and you can withdraw cash using them any where you are

    • Gillian Says:

      @Zablon: We didn’t use travelers cheques…and didn’t meet anyone else using them either. I wonder how much they are used nowadays? Not that they’re not still a valuable method but we used ATM’s the whole way and never had any trouble.

  4. Dawn Says:

    We took travellers checks with us, and used them-when we got home to buy groceries. I think they gave us an added feel of security, and I also think we would have appreciated them in a worst case scenario, but they were something else to worry about.

  5. life with kaishon Says:

    What great advice. Practical and helpful.

  6. Kyle Says:

    Err…I think we need to get on that power of attorney thing. It seems scary to think about it, but it’s definitely a good idea.

    I totally agree with having a bank that will refund ATM fees. Fees in some countries are pretty outrageous, but it’s nice not to worry about it any time we need to get some money from the bank. It’s also nice not to feel like we have to take out a large sum to justify the charges.

    Great tips!

  7. joshywashington Says:

    it is my first time on your site and I am stoked to be here.

    One money issue that derailed me in Vietnam was the fact that my bank did not allow credit/debit card transactions from Vietnam and a few certain other countries.

    This left me and my wife scrambling to understand the problem as ATM after ATM refused us cash.

    We had checked in with our bank to give them an itinerary before we left, twice. On neither occasion did the clerk mention a blacklisted country and when I called them from Vietnam no one in the branch knew anything about it.
    They didn’t know what other countries were on the list, they didn’t know who could over ride…they didn’t know the list existed!!

    How can you prepare for such a contingency…?

    • Gillian Says:

      That’s a tough one! I’m writing a follow up about managing your money on the road and, in it, I explain that we had cards from two separate banks and how it helped us in the end (one of our banks stopped doing business while we were away!). If the bank doesn’t know which countries will be blacklisted though…that’s tough. What did you do? Cheers!

  8. Mike Lenzen Says:

    Great article. My wife and I are saving up for our travels in ‘T’ minus 6 months. We were humming and hawing over granting Power of Attorney.

    Did you have your power of attorney file taxes for you while you were away? of did you file electronically?
    Mike Lenzen recently posted..Travel Funds

    • Gillian Says:

      Hi Mike,
      If you have someone to trust, I recommend the Power of Attorney. Hopefully you won’t need it but it just gave us peace of mind. He did not file taxes for us – in Canada, if you don’t owe money at tax time you can delay filing with no penalty. We knew we wouldn’t owe so just waited until we got back. Cheers!

Trackbacks/Pingbacks

  1. Tweets that mention One Giant Step » Managing Your Money: Before You Leave -- Topsy.com - November 3, 2010

    [...] This post was mentioned on Twitter by OneGiantStep, OneGiantStep. OneGiantStep said: ***New Post***Managing Your Money: Before You Leave http://tinyurl.com/2cropfc [...]

My favorite places to stay? In apartments! How to Find the Perfect Vacation Rental Better than a hotel. Every. Single. Time.