Saving and Preparing for a Summer of Travel and Adventure
Our planning began eight months before our departure date. I was working in Austin, Texas as a tax attorney with some wonderful folks at a startup. After my dad passed away, I lost my passion for that type of work. On top of that, Becca was living in Houston, Texas. She also had a great job with wonderful folks, but living three hours apart was taking its toll. She received a job offer in Austin in November, but it didn’t feel right and she couldn’t stomach leaving her work team right before year end – the busiest time of year for accountants.
We decided if either of us were going to leave our current positions, we needed some time off before accepting a new role. Neither of us were sure we would want those roles to be in the same vein as our previous experience, and I wanted Becca to experience a summer in Idaho. So, we whipped out a calendar and a map, and began plotting our dream summer.
We had essentially 6 months to get everything in order financially so that we felt comfortable quitting our jobs. We wanted to give ourselves the longest runway possible. First things first, we took a 360 degree look at our finances. We analyzed our spending to figure out where we could cut expenses and what lifestyle changes we needed to make to really boost our savings.
Mint was a great tool in starting this process. The website allowed us to see all of our accounts and past transactions in one consolidated location with graphs and charts showing trends. The real forward-looking mechanism we used though was a Google Sheet I created from scratch. I was able to fully customize the sheet to show data in a way that made sense to me. This was a huge factor in our success of getting to our savings goal, considering so many other templates had extraneous data or just didn’t flow in a way that helped me understand my funds flow.
Side note: I intend to post a tutorial to walk you through how that spreadsheet works. If anyone has any tips on how to put together an Excel video tutorial, your help would be greatly appreciated!
Some fixed expenses couldn’t be avoided. For example, my monthly rent was pinned at just under $1,500 per month through July. Becca’s rent was $950 and her lease was on a month-to-month basis, so we’re out of that at the end of April. We both had car loans. My car loan payment was $600 per month and hers was $500 per month. As of October 2017, I owed roughly $5,000 on my car and she owed $10,000.
Kicking the Saving into Gear
As fate would have it, my grandmother passed away over the summer after a wonderful life centered around faith, family, and gardening. In their will, my grandparents directed $10,000 to each of their grandchildren. So I directed half of that to paying off my car. Becca received a pretty hefty bonus at work and used a portion to pay off her car. While it may sound counter intuitive, we decided that avoiding the interest accumulation on those loans and reducing our required monthly expenses while on the road was the best use of those funds. Besides, paying off our vehicle loans opened up another $1,100 of our monthly income that we could dedicate to savings.
With the other half of my inheritance, I set up an account at Wealthfront in September of 2017, which would be the main savings vehicle for this trip. I started automated deposits of $500 into my Wealthfront account to be pulled on the first and fifteenth of every month. Becca let me experiment with the app before she got on board, and only started her deposits in January. That totaled another $10,000 bringing the total to $15,000.
Next, we addressed our lifestyle and how we could cut down discretionary spending. The biggest change I made was taking the bus to work. Not only did this reduce the out of pocket costs for gas and parking, but it helped to reduce the wear and tear on my newly paid off vehicle. Other folks like Scott Trench at Bigger Pockets have done a wonderful job detailing the true costs of owning and commuting in a car every day. My average transportation costs dropped from $125 per week to under $50 per week (including weekend trips to Houston). Becca’s biggest change was not going out to eat with friends for lunch and dinner all the time. She started bringing her lunch to work more often and cooking at home. Her average spending on food dropped from $170 a week to under $100 per week.
During this time I also ratcheted up my contributions to Acorns, turning on the double round up feature and setting a recurring deposit of $25 per week or $100 per month. I was now saving roughly $300 per month in Acorns. I can’t say it it enough: AUTOMATE. The savings come out in small amounts so you don’t even notice it!! Becca stuck with the basic round ups and was saving around $75 a month. From July 2017 to now, our Acorns accounts have grown to over $4,000 bringing us to $19,000. Appreciation of the low cost ETFs held in both our Wealthfront and Acorns accounts accounted for another $1,000 bringing us to our goal of $20,000.
Future Expenses and Looking Beyond 2018
At the same time, we sketched out how much we would need over the course of the summer. We made reservations at campsites along our route and calculated our camping fees to the dime. Those camping fees are coming in just under $5,000. Might sound like a lot, but we were paying around $3,000 in combined housing expenses PER MONTH. We estimated monthly expenses at roughly $2,000 per month based on our historical budget trends, my $575 required monthly minimum student loan payments, and some wiggle room for incidentals. The burden is somewhat alleviated given that Becca’s employer requested that she continue on as a contract employee. Becca can work remotely as needed until they can find her replacement.
Come the end of June, we will both have regular paychecks again. Becca will be working the front desk and I will be guiding, working in the shop, and running the overnight camp for Natural Retreats South Fork Lodge . We have created accounts on Upwork and have been monitoring the site for projects. Typically, these types of projects are shorter in duration and you can charge a high hourly rate for your services. Between our savings account balances and those income sources, we are confident we won’t run out of funds.
In preparing for this trip, we have learned to balance income and expenses. And we are still committed to contributing to Acorns so our savings rate doesn’t go to zero.
What tips do you have to save for something you want? Do you try to increase your income? Or do you try to cut expenses? Maybe a little of both?