Managing Your Money: Before You Leave
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.
- 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?