The Elephant in the (Travel) Room

The Elephant in the Room: Budgeting

Let’s just get one thing straight from the start: you’ll never be able to travel if you don’t know how to budget. If you don’t commit to budgeting and then see it through it’ll forever feel like something you’ll “get around to.” Budgeting is difficult because it forces us to face truths we don’t particularly like because no one likes being told what to do with their money, even when they’re telling themselves what to do. These truths may be something as minor as how often you hit up the McDonald’s Dollar Menu or highlighting how much you’re over-spending on clothing or what-have-you.

So, I’m going to break down what budgeting looks like for me in detail. Whenever you read these posts online, people never get into the nitty gritty of what their finances actually look like and, frankly, that’s just not very helpful.

I don’t make a lot of money—but I do make a living wage.

Full disclosure of my living situation: I pay 1/3 of the monthly bills (rent, electric, water, internet, phone, car insurance, trash) while my mother pays the remaining 2/3. (Note: these aren’t my only bills—see below.) The way we break this down is that out of every paycheck I give her $250. I’m well aware that “normal” life isn’t set up so cleanly, but I also believe that with a proper bit of budgeting and organizing, you could make it that clean. I’ll show you, if you ever want to talk about it.

For all intents and purposes, I make $1,100 every two weeks after taxes and healthcare. Instantly, I transfer $250 to my mother and $110 to my tithe account. As you can see, suddenly I’m at $740 remaining. How I go from here is regimented and cascading.

My bank allows me to set up individual savings accounts for free to the tune of nine savings accounts per one checking account. I make liberal use of this—it’s a more modern method of Dave Ramsey’s envelope method, one that feels a tad more secure than envelopes of cash all over the house. Here’s what my bank looks like:

Checking: Spending Account

With every paycheck, I bump this back to $500. I’ve been a bit in the hole on this for the last few years, but I’m slowly catching back up. This account takes care of my weekly grocery and gas needs, my Audible and Regal Unlimited subscriptions, my massage subscription, my gym membership, one-off fees like annual memberships to Costco, and oil changes. This is also the account I draw from if I have to get new clothes or shoes or want to get a beer with friends.

I am well aware of who I am and what I need to be able to “live life” between the trips. I’m not exactly the type of person who could cut all extraneous costs to save faster for travel, unless it’s a shortened period of time. I know I need to give myself room to have some weeks where I spend more money to get things done as opposed to others where I could go without spending more than a tank of gas.

In a two week period, I rarely spend more than $200 out of this $500, so we’ll call that the benchmark number.

Remaining Balance: $540

Savings Account

• Tithe
  1. This is where the aforementioned $110 gets deposited. Tithing is a big factor of my faith and honestly one of the few things that brings me most joy. Throughout the years I’ve used my tithe in many different ways “as the Spirit leads” including buying school supplies for families that couldn’t afford them, sponsoring missionaries, donating to organizations stopping sex-trafficking, and the like.
• Car Payment
  1. $125 from every paycheck comes here for the automatic withdrawal of my monthly payment. [Remaining Balance: $415]
• Deductibles: $50 [Remaining Balance: $365]
• Next Trip #1: $100* [Remaining Balance: $265]
• Fun: $50 [Remaining Balance: $215]
  1. This is the fund I buy concert tickets out of, book hotel rooms for weekend trips, etc. If it’s not quite a Big Trip, but still requires some savings, it comes from here.
• Next Trip #2: $50* [Remaining Balance: $165]
• Next Trip #3: $5*

*once a trip has reached the budget amount I’ve set for it, I move the amounts down to the next two trips.

Remaining Balance: $160.

Friends, let me tell you, having a remaining balance rarely happens for me. Why? Because life happens. Suddenly you need two new pairs of shoes, work pants, and a car battery. We’ve all been there. That’s why it’s a cascade system.

I’ve had paychecks where my sorting stops at Car Payment. Such is life. Bills always come first.

However, if I did reach a point where I had $160 remaining, I would split it evenly between my car payment and my next trip. I’d like to pay off my car before the five year loan repayment is up, but I’m not quite at the place (as I’m still catching up on some things) where I can start throwing extra money at it every paycheck quite yet.

Other insights into how I make decisions:

I try to rarely, rarely, rarely dip into these savings accounts, but if I do, I “steal” from Ins. Deductibles first.

1. Insurance is defense against the unknown and accidental, but on trend (and my continued prayer) I rarely, rarely, rarely, rarely have to use my medical or car insurance. Setting aside a combined $6,000 for a “what if?” just doesn’t fit into my current paycheck, as much as I would LOVE to be in that safe of a space (and to have medical insurance that was cost effective and didn’t have a $5,000 deductible).
2. I am blessed to be an only child of two very financially sound people and if a true insurance disaster occurs, I wouldn’t go into a debt crisis by not having these deductibles saved. I reiterate: I am blessed and I don’t take this for granted. This isn’t a normal thing most people have.

If I still need more, I would take from fun, and then trip #3. No matter what, I don’t touch the money in trips #1 or #2.

In a way, you can see how I’ve made things a priority but also stuck to the idea that I have to take care of the basics of life first—even boring ones like over-paying car payments by just a smidge and saving insurance deductibles. I also prioritize local fun in the $500 over Big Fun, but then still prioritize Next Trip over Big Fun, if that makes any sense at all.

I firmly believe that everyone can budget, but it takes a hard look at reality and knowing your weaknesses and learning how to tell yourself no.

I also entirely understand that not everyone can save for three trips at a time. I probably wouldn’t attempt it if I lived on my own.

You can also see that I’m not currently budgeting for things like retirement or home ownership. Quite frankly, I’m just not there. When I look at the economic landscape, I don’t see retirement as an option for me in a very literal sense. However, I can budget soundly and still travel throughout my life.

I would absolutely start saving for retirement once I crossed the annual salary threshold of $45,000; but on my current pay increase trajectory, it’ll be a long while (I’d be over 40) without changing careers.

I’m also aware that all of this mindset takes into account the fact that I’m single with no children. Everything dramatically changes when you’re married and then again when you have kids. But I’m a firm believer you can budget anything, you just have to be honest through the whole process of setting it up.

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Money aside, you also have to budget your vacation allowance. Depending on your company’s set-up, paid time off is absolutely something you have to budget to travel. If your company lumps in your travel and sick time as one (I’ve been there) or if you have different amounts for each (currently there), it takes a bit of thought to sit down and go, “Okay, how can I use this?”

My travel hack? Travel around a federal holiday that you get paid for not working on: the obvious ones being Memorial Day and Labor Day as they always fall on a Monday—thus giving you two full weekends and only having to use four days of PTO to take a nine day trip, which is substantial time for just about any destination or two if planned correctly.

In 2018, I was able to take seventeen days of vacation on just eight PTO days and never saw a dip in my paycheck.

There’s also the budget assessment of if you’re willing to take a lesser paycheck and get permission to travel on unpaid time. For me, this is absolutely a nonissue and I would gladly budget in the money for my bills in the months ahead to offset the costs of missing the time not paid. However, again, this isn’t necessarily something that I advocate unless you’re very good at budgeting. On average, it takes about five paychecks to get out of a hole developed by missing one paycheck in my experience. Weigh your pros and cons.

Now to the fun stuff.