Author Topic: Saving for Long Term Travel  (Read 1771 times)

medicaustik

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Saving for Long Term Travel
« on: April 17, 2015, 08:19:59 AM »
Mustachians,

I'm a 25 year old single guy with a solid career and very little to tie me down.

I've spoken to my employer many times about my desire to travel (small company, close with the owners) and I've been told that they would be open to me taking a sabbatical.

Thanks to MMM, YNAB and all the great personal finance communities out there, I've spent 4 months recalibrating my finances and priorities, and I've paid off $6000 of my $15000 credit card debt. I should be free by October.

I'm shocked at how much money I was spending on useless things that I don't even remember buying, and annoyed at past me because I could have saved $100k over the last 6 years of work had I not bought shots for everyone, everytime.

In any case, I've now freed up a lot of my income and I'm continuing to do so.

But, unlike most people here, FI is not my priority. I want to start saving up for a long term trip (talking 365+ days). My budget would be somewhere around $30,000 with a goal of leaving in early 2017. This would give me enough time to save for the travel and put aside some money for living expenses when I return home.

Should I just be dumping all of that money into a savings account? If I have anything left over every month after meeting my savings goal, should I pay into an IRA or anything?

I've done all this math considering my current salary, and I'm preparing to ask for a sizable raise next month. I have NOT accounted for the raise in this math. If I get the raise, I can move my timeline for leaving up, but I'd also like to make sure I come home to a good situation and give myself time and flexibility to get back in the job market in case my employer can't accommodate me (unlikely, but still, plan for the worst).

humblefi

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Re: Saving for Long Term Travel
« Reply #1 on: April 18, 2015, 11:09:03 AM »
But, unlike most people here, FI is not my priority. I want to start saving up for a long term trip (talking 365+ days).

IMO, there is danger in this strategy. Long term goals require investments/savings over a longer term. So, even though it does not look like you are in the FI boat *today*, start a small background goal towards FI because 10 years down the line when things are different, you may wish that you had started earlier. Trust me...yours truly was exactly like you many years ago :-) Here is my recommendation....use it or not as you please.

1.
Set up a list of financial goals for your life.
Take a peek at this for ref: http://humblefi.com/2014/07/21/what-is-financial-independence-to-me/comment-page-1/. Not all of them may apply to you now, but use it as a source of ideas. You can look at the blogroll for other folks and grab some ideas that appeal to you.

2.
Once you have a set of goals and a price target for each goal, you will need to assign how much money goes to each.
For example, you do not have FI as a big priority right now, but lets say you just put in $100 each month and let it slowly churn in the background....your later self will thank you for it. Ref: http://finance.yahoo.com/news/every-25-old-america-see-200000319.html

3.
In addition, knowing when you need the money helps you choose the investment goals you want to fund. For example, your travel fund needs money within this year...so, capital growth stocks are not a good bet. But, if you do not need the money for the next 30 years, then IRA is good way to save as well as reduce your taxes.

4.
Now, if you come across some extra money...either through savings OR some extra income like a tax refund, your set of goals are readily waiting to accept more money from you :-)

This question resonated with me because of my own experience...hope you do not mind the thoughts I shared here. It is impressive that you are starting at 25 years of age! Hope that helps.

Best of luck!

limeandpepper

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Re: Saving for Long Term Travel
« Reply #2 on: April 23, 2015, 11:27:24 AM »
I think you should aim to save enough so that you have a nice chunk of money still waiting for you when you return from your trip. Even if your company will hold your job for you, it's always nice to have that safety net. I think it would be good if you could have enough to allocate some money in long-term investments for the long run that you don't touch at all during your travels, as well as some in shorter-term investments and/or savings accounts that you can access easily for your travels. That's what I did and it worked well for me.