You can see it in their eyes. It’s the question everyone wants to ask, but most are too polite to just come right out and say it. They want to know how we can afford this. How can we possibly afford to take two or three years off of work? At this point in our lives… IN THIS ECONOMY?!?
We saved. It really is as simple as that.
Countless travel blogs, presumably aimed at a younger audience than ourselves, detail a laundry list of tips for socking away as much money as needed, as quickly as possible. The idea is often to not delay, because tomorrow may never come. Get a roommate, take on a second job, cancel your subscriptions, shop second-hand, grow a garden, donate sperm; the list goes on and on.
We did none of these things. At least not at first.
You see, we knew we had six or seven years to save for this. Time was the gift given to us by our dogs, Kimo and Annana. We weren’t going to embark on this trip until our dogs had passed, which meant 2013 or 2014 at the earliest. We also had a five-figure mountain of credit card debt to pay off, some pesky student loans, two car loans, and all the rest of the budgetary detritus that comes with middle class American life. And if we were going to take this trip, I wanted to do it right. No strings attached. No anchors. No bills outstanding. I also didn’t want to spend five or more years sacrificing.
Step 1: Get Started
Despite our embarrassing level of credit card debt — we really had a problem saying “no” during our twenties — I was adamant that we open an ING Direct Savings account and set up a monthly deposit. We started saving just $200 a month and increased it by $50 every six months. Kind of like the old bit about the frog in the frying pan — turn up the heat gradually and you won’t feel the burn. Kristin argued that this was ineffective, that the interest we were getting from the savings account, around 3% back in those lofty times, was a far cry of the interest we were paying on the debt. She was right, it didn’t make financial sense. I didn’t care. I knew we had to get started.
So we started saving a couple hundred bucks a month while we finished paying off our car loans and focused on paying down as much credit card debt as we could… within reason. We still ate out occasionally, had our NFL season tickets, and even did a little travelling. Time was on our side.
Step 2: Get Smart
The so-called Great Recession was a blessing in disguise. When the interest we were getting on our savings account plummeted from nearly 4% to less than 1%, I knew I had to get more aggressive else we’d never get anywhere. We couldn’t afford to be too risk-averse anymore — and the stock market’s collapse was a once in a generation opportunity to invest in solid companies at a really low price.
So I started teaching myself the ins and outs of basic, fundamental stock trading. No options. No shorts. No day-trading. Just buy-and-hold investing in moderately low-risk companies. Ford, General Electric, Apple, Bank of America, etc. I took my lumps along the way — Skullcandy and Blockbuster were particularly ugly — but also doubled and tripled my initial investment on others.
The other thing I did — the BEST decision I made — was to shift nearly half of our trip savings to a target-date retirement fund. I chose one designed for folks hitting retirement age in 2015, as it would be the most conservative as these things go and it roughly coincided with our departure date. As the years went by and the balance continued to grew, the dividends alone ended up adding over a thousand dollars annually to our savings. The days of being happy with an above-average savings account were over, though we did continue to retain about twenty percent of our trip savings in the ING Direct savings account just to be safe.
I’m going to pause here for a moment to spell out what you may already be thinking: This isn’t anything like the other “how to save” articles you’ve seen on bike travel websites. No, it’s not. Kristin and I are attacking this a little bit later on in life than most other long-term globetrotters (we’ll be 38 when we start the trip). We’ve enjoyed successful careers and were fortunate to come out of the recession better off than when it started.
And believe it or not, these same advantages are the tether that keeps so many couples just like us from undertaking the same type of journey. For so many people, rather than looking at their good fortune as a tool that can help them build an adventure of a lifetime, those careers, the six-figure salaries, and that sense of achieving success ends up being the obstacle that holds them back. Stepping off the career escalator is scary as hell. But not as scary as working a lifetime for a retirement that isn’t guaranteed. Believe me when I say that it’s something we thought about. It’s impossible not to think what your salary might be if you continue climbing that ladder, or how much larger your 401(k) might be if you don’t take those years off. Maybe you’ll make VP. You can take that trip later.
But what if you can’t? What if you get sick? What if that special someone you can’t imagine travelling without is no longer around to accompany you? What if you’re dead?
Stepping off the career escalator is scary as hell. But not as scary as working a lifetime for a retirement that isn’t guaranteed.
Step 3: Get Creative
With the cars paid off, the season tickets finally surrendered — go Seahawks! — and our credit card debt down to a manageable balance, it was time to start focusing our attention on the money we needed to spend to outfit ourselves for the trip. And that meant getting an REI Visa card. Another credit card? Yes.
Between the bike racks, panniers, clothing, and camping gear, we knew there was potentially thousands of dollars in gear that we’d need to buy, much of it available at REI. At the risk of sounding like a shill for the local co-op, the REI Visa card gives you 1% back on all purchases and an additional 5% back on top of the 10% members already get from purchases made at their store. So we stopped using our debit card and used the REI Visa for nearly all of our purchases for an entire year. I wanted to even put our mortgage on the card, but that’s where Kristin drew the line.
We received over $700 in store credit (i.e. the REI “dividend”) following the first full year we had the card and several hundred back the previous year. I cannot begin to describe how amazing it was to add our front bike racks, Kristin’s Arc’teryx softshell, and a bunch of clothing to the digital shopping cart and use the dividend to pay for it all — with money left over!
Another way to get some “free money”, especially if you travel at all for work, is to take advantage of those hotel loyalty programs. I know a lot of people chafe at these programs or simply prefer to go with the cheapest option, but they really are worth it. I’ve had to travel an inordinate amount of time for work the past two years — I spent over 60 days out of town working on the guidebook for Diablo III alone — and I finally got hip to the Hilton Honors program. Now, with a year still to go, I’ve got over 340,000 points. That’s more than enough to spend a week at the Hilton in downtown Rome for free, with plenty of points left over. (Update: Doug has over 650,000 points at the start of the trip)
Step 4: Get Serious
We paid off the last of our revolving credit lines with 18 months to go, leaving just a student loan and the mortgage. It was at this point that we started making additional deposits to our trip savings, which had gradually increased to $650/month. Now we were able to add an additional deposit later in the month — most of the money we were sending to pay off the existing balances on the cards. We also ramped up the payments on the existing student loan to have it paid off at least six months prior to the trip, years ahead of schedule.
A funny thing happened during the last two to three years before the trip: we became really frugal. I’m not sure whether it was us subconsciously practicing for our planned $60/day budget while on the road, or the sheer excitement over the rapidly growing savings account, but we suddenly found ourselves living well below our means. This allowed us to make a third deposit each month. We went from putting aside $650/month to saving much, much more during the final 18 months.
Step 5: Get Light
We were never the type of people to get too attached to possessions. Our bikes, photos, and memories were always our most important belongings, with the only exception being a few pieces of Kristin’s jewelry. This made it easy to start looking at everything in our house in terms of what it represented out on the road. That Aeron desk chair? A hotel stay and dinner. My old Stephen King hardcovers? Some beers and tinned sardines. A stack of used Xbox games? A week’s worth of campground fees. The leather couches and television? A cabin on the Queen Mary 2. My Moots? Lets not get carried away…
So Kristin became the queen of Craigslist and we soon found ourselves meeting a never ending stream of e-strangers outside the local Starbucks to make sale after sale. We also spent a lot of time prepping for our neighborhood’s two annual yard sale weekends. Every time we thought about buying something new, we’d simply ask one another, “Is it really worth the effort it’s going to take to sell it twelve months from now?” The answer was almost always no.
Let this become your mantra.
Step 6: Get Real
The other benefit to taking such a long amount of time to save for the trip was that we had plenty of time to get a real handle on what our comfort level would cost. We did a number of bike tours around Washington and decided on a daily budget of $60 USD for the two of us. This gives us the flexibility to use campgrounds, share a restaurant lunch, and occasionally splurge on a hotel or dinner. Remember, it’s an average. Everybody’s daily expenditures are going to be different. Some travel on as little as $15 USD/day while others rely entirely on hotels and restaurants and spend more than $100 USD/day. The only way to tell what your comfortable with is by getting out there and touring.
Now we know that $60 USD/day may not get us very far in the UK, and that we’ll spend far more than that whenever we take some days off to sight-see in cities like Paris or Istanbul. But it’s also true that there will be places where we’ll probably spend less than $20 USD/day. The key is to monitor the amount we’re spending in the expensive countries and possibly shift our route or increase our miles each day to get someplace cheaper a little faster. Read all about our budget tracking system right here.
The rough itinerary I came up with gave us a ballpark number of 1000 days, so around $60k USD. But that’s just for daily expenses. It’s important not to forget about the cost of vaccinations, visas, ferries/trains, airplanes or cargo ships. Not to mention travel insurance, gear repairs/replacement, and any fancy extras you might want. We recommend adding 25% to 50% onto your initial estimate, just to play it safe.
And then there’s the money you’ll need when you get home. Now, if you’re lucky, maybe the proceeds from selling your house or car will be enough. You might even hit your target number months or even a year before you can realistically leave for the trip, for whatever reason. Don’t stop saving! Keep doing what you’ve been doing all along and stockpile as much money as you can for when you get home. Not only will this make it easier to take your time reintegrating and catching up with friends and family, but the more money in your trip savings, the more interest you’ll earn while out on the road. Using our $60 USD/day example, a measly 1% APY return on a $90k balance could net enough interest over the course of a year for an extra 2 weeks on the road. Over the course of three years, accounting for money spent, that could end up being a month of free travel! Or a deposit and first month’s rent on an apartment when you get home.
Everyone’s financial situation is unique and money is the necessary evil that nobody really wants to talk about in specific terms. I hope I shared enough here to be helpful without being awkward or boastful. My goal in writing this article was to fill a void that seemed to exist for those a bit further along in life, but nevertheless in need of a few tips. I’m sure there’s plenty of you out there who are far savvier savers and investors than we on both sides of the income spectrum. The important thing is to just go.
As I like to tell people, this whole “saving for our RTW bike trip” thing has been the best thing that ever happened to us. We learned how to really stick to a savings plan and now we’re in the best financial position we’ve ever been in — debt free! Even if our knees give out or we decide we can’t stand the thought of pedaling another mile, we’ll still have what we need to go where we want and take the trip of a lifetime. With or without the bikes.
But hopefully with.