Fellow Steemdoggs.
Following on from my recent 'sneak peek' posts on how to escape the rat race and live a fuller life I am releasing a chapter about how to finance long term travel and stepping away from your career.
This post is in response to a comment on my last post, if you have any questions at all just ask at the bottom of the thread and I hope this helps Mark!
You can find me at www.princesoffthegrid.weebly.com
@princey1976 on the Tweet machines.
Chapter 6
Financing a travel lifestyle and escaping the rat race.
The podcast interview was going pretty well, my nerves had subsided and the host was really interested in how we had managed to homeswap our way around the world. My fears of being grilled about our lifestyle had abated and we were into a great flow chatting back and forth in a comfortable manner.
Then he hit me with it…
“How can you afford to live like this? You must be some kind of millionaire!”
Gulp, the dreaded money question/accusation, it’s what people always want to know and of course he had to ask it, if not for himself and his own knowledge, but certainly for his listeners of course!
Well, do you want to know the crazy truth?
It’s cheaper to travel than to actually sit still in normal everyday life. After two and a half years of non-stop travel, we needed a rest and hired a house in France for nine months. We were shocked to realise that we were spending in one month what we would have generally spent in three months when on the road.
We now have rent, electricity, water, telecom bills, school, school trips and other activities to pay for on top of the fuel and food bills that we would always have paid when traveling.
For now, we will dip into savings. That’s what they are for!
It’s important to stress that you don’t have to be rich to travel. That is a complete fallacy. Stop and ponder how dreadlocked hippy 18 year old students can afford it and you can’t!? Think about the single mom that is travelling the world with her two children versus the billionaire CEO who is divorced twice, never sees his kids and doesn’t have enough time to take a week off for a holiday, let alone six months to one year. Who is richer in that scenario?
Sure, you might not be staying in the usual five-star hotel rooms you have become accustomed to over the last few years, but you aren’t looking to. As outlined in the earlier home swapping chapter, you can actually get accommodation for free, and if you can drive to that location then you are saving a ton of cash on flights too.
If you don’t want to home swap but still want to travel long term, you can look at renting your apartment or house whilst you are gone. The monthly rental will likely cover stays in an Airbnb listed property with cash to spare for food and sight seeing. In fact, we met one American family that did exactly this and it worked out brilliantly for them. They had found good tenants and were safe in the knowledge that their home was being looked after whilst they were away. The money they made from the rent kept them travelling far longer and further than they could ever have imagined.
Note also that your home currency will probably go a very long way in other countries. Asia is especially cheap in places such as Thailand, Vietnam and Cambodia. Parts of Europe can be expensive, but others are amazingly cheap. In Southern Spain you can get beers and Tapas for one euro! Croatia is also a cheap place to visit and the friendliness of the locals is amazing.
Many travelling families we have met love other European countries such as Romania and Bulgaria, however most wax lyrical about South American countries as they are so unspoilt with an abundance of natural beauty and are dirt cheap to live and travel within!
Remember, you need to break your mindset from those five grand holidays you take every year in that same all inclusive resort. That is not your goal here!
We got into the habit of keeping a spreadsheet wherever we went and tried to fill it in everyday with what we had spent. Our goal every day was to spend nothing. Ridiculous huh? Well, not really once we started to get the hang of it. If we had already done a supermarket shop, what else could we possibly need?
For example, in the cities where we stayed, we could always walk to parks or tourist sites with free admission such as museums, churches, cathedrals, gardens, etc. If you pack a picnic and some snacks with a bottle of water, you needn’t spend a penny all day. You can always get the bottle refilled at water fountains or restaurants, bars, hotels or coffee shops. Just ask, people love to help!
We also found that, on the flip side, once that first penny leaves your pocket you are psychologically screwed and they start flowing out. Buy a coffee, then an ice cream, then a sandwich, then a postcard, then a whatever it is that your mind has suddenly decided you absolutely must have and somehow end up buying!
We found that by filling a great big juicy fat zero into the spreadsheet at the end of our day it set our minds up perfectly for the next day’s challenge of another ‘Zero Dollar Day’. Our best ever streak was 4 straight days, not one single penny spent, but still having an unbelievable time and seeing as much as we could of wherever we were.
As an example, I will share with you how much we spent for one month in Southern Spain. Naturally, accommodation was free as we were home swapping, but our total bill for that whole month still racked up to be €2712 euros.
I chose this particular month as an example because it was one of our most expensive months and I wanted to give you an idea of how it seems like a lot, until you realise what we did during that time.
What is important to remember here is that, of course, we are a large family and we all like our food. Feeding six people is always going to be our biggest concern and expense and this involves weekly shops in the local market or supermarkets. However, what the numbers don’t tell is that during this month we celebrated our wedding anniversary at a lovely restaurant and hosted Clair’s parents for four days over a special birthday celebration.
We had also hired a car for the whole month, so included in the aforementioned total is the cost of the hire itself, plus the fuel and various parking fees too. During the month, we visited Ronda, Gibraltar, Malaga, Marbella, Puerto Banus, Nerva and many more of the tiny, unheard of, beautiful Spanish villages and towns. We also visited friends in Seville for the Semana Santa festival during Easter and drove to Granada to visit the Alhambra palace.
Then, we had the small matter of celebrating Clair’s 40th birthday in style. With that came a privately chartered crewed yacht that sailed us around the Mediterranean from Marbella for the afternoon for eight people, a surprise spa visit, lunch and another wonderful dinner, again for the whole family.
With all of that in mind, does it not actually seem rather cheap?
There is no one magic budget for you to follow or for me to advise you on. Each individual’s situation is completely different to the next. It is going to depend a lot on where you are travelling and how you are getting there, how long you will stay and what you want to achieve there.
If you are going to South East Asia to rent a beach bungalow, eat fruit for five days a week and fast for the other two, then you will spend very little. However if you are travelling through New Zealand and want to go whale watching, jet boating, skiing, take a helicopter to a glacier and visit the Milford and Doubtful sounds, then it’s going to be expensive!
The underlying message I want to get across is that, ultimately, if you really do want to break free and take a work sabbatical, money is not your enemy. It will not and should not hold you back. You can make it work, it just takes a little planning and a tiny amount of discipline. You will be shocked how little you can actually live on.
“But Won’t You Go Bankrupt and end up living under a bridge?”
Yes we do get asked this kind of question and of course it was one of those big awful self imposed fears that we faced during our decision making process.
But come on….give me a break!
In retrospect, I can’t believe we actually ever feared this. It’s complete nonsense.
The way we got over this fear was again to ask ourselves, ‘if that actually happened, what would we do to fix it?’
The answer would be to live with family for six months or so until we got ourselves back on our feet. Nobody is unemployable, nobody is incapable of making money and nobody should ever fear having to live with the few people in the world that truly love and want the best for you.
If living with family in a warm house being fed three times a day with clothes on our backs, the use of the internet, car, TV and running hot and cold water, was a worst case scenario, why on earth were we fearing it?
I can live without money, but I cannot live without love.
Judy Garland
Another commonly asked question that follows the ‘you don’t have to be a millionaire” response is, “So… how do you make money?”
Good question.
My initial goal when we left to start travelling was to create some kind of business that I could run from a laptop from anywhere in the world. Ahem, that is still my goal, although at time of writing I have just accepted my first paying customer!
What I found once we started travelling was that the bulk of the day was completely taken up with sightseeing, schooling, preparing meals, travelling or tending to administrative tasks such as banking, researching home swaps, target destinations, flights, writing the blog, car hire, etc. etc., so for me it was an unrealistic goal to think I could just launch some kind of business from a laptop.
That being said, I have met many people who have managed to start their online business and get inspiration from their stories of how they have finally broken completely free from the chains of a company and office job.
There are loads of digital nomads out in this world who are working purely from a laptop and travelling the world at their leisure and there is no reason you couldn’t do it either.
I suggest the following people to get inspiration and ideas from, in no particular order:
Tim Ferriss: Twitter @tferriss
In his book The 4 Hour Work Week, he discusses the concept of a ‘Muse’, how to create a low maintenance business that will arm you with a residual monthly revenue.
“Our goal is simple, to create an automated vehicle for generating cash without consuming time.” - Tim Ferriss The Four Hour Work Week.
You can find Tim at his blog www.thefourhourworkweek.com where you can listen to his incredible podcast interviews with some of the worlds leading icons across many different areas of life.
Seth Godin: Twitter @thisissethsblog
Seth is an author of several best selling books, as well as an entrepreneur, marketer, public speaker and creator of awesome courses, check some out on Udemy.com. His teaching in creating value and helping you make the distinction between whether or not you are a freelancer or entrepreneur are just two of the invaluable courses he teaches. I have personally downloaded his Value Creation Master Class and found it to be amazing value. Seth is also the proud founder of the ALT MBA which can also be found on his website www.sethgodin.com.
Seth’s incredible daily blog is most arguably the most amazing free content on the internet to this day. He commits himself to writing small posts every day. The wisdom he shares is a wonderful daily kick in the butt!
Sign up to receive this goodness via Seth’s website www.sethgodin.com.
Ramit Sethi: Twitter @Ramit
Ramit is the author of the book ‘I Will Teach You To Be Rich’ and runs the site and blog of the same name. Ramit has created many different courses that teach people how to take life into their own hands, such as the course on finding your first profitable idea. He explains:
Whether you have no business ideas or too many, discover how to find the ONE profitable idea that will start making you money today.
You can also sign up to Ramit’s blog, which he writes and updates himself almost daily. The content is hugely insightful, but best of all it’s free!
Noah Kagan: Twitter @Noahkagan
Noah was employee number 30 at Facebook before ultimately founding his own company called www.Appsumo.com, which is a website dedicated to creating tools, tips and hacks for entrepreneurs. The site runs daily deals that are hugely beneficial to bloggers, online business owners, entrepreneurs and freelancers of all kinds!
Noah also designed and offers a course called ‘How To Make A 1k Per Month Business’, which aims to transfer you from a ‘Wantrepreneur to an Entrepreneur’. I have participated in this online course and found it to be hugely insightful. The FB support group for this course is also a great community in which you can ask questions, get support, inspiration and ideas.
Noah and the Appsumo guys are probably the most fun bunch out there, they have a ton of free content on their website and YouTube channel. Make sure you check them out and get to know them. I am sure you will be impressed with what they are doing!
For more in depth knowledge of the above people, make sure you check out Tim Ferriss’s podcast, each one of them has been a guest on his show and have shared their huge insights for your free listening pleasure!
Now, please don’t think I have tried to dodge the original question of ‘How do you make money?’
I have not yet built my passive income from creating a business, but do now trade my time formoney and am consulting for 2 young and exciting London based startup companies. I get great enjoyment from connecting with young and hungry people willing to action advice whilst learning new strategies and techniques to help them, their customers and their employees succeed. Otherwise we rely on investments I made before we left and have subsequently made along the way. Thankfully, for us, these investments have paid off and continue to do so.
There is no magic wand to wave here, or timely stock tip or macro market advice to impart. All I can really advise is that you should always try to look into investment opportunities that give you some kind of edge over the masses — or, as Warren Buffet would advise, do the opposite to the crowd.
Many books have been written about this subject, and many are terrible, however some are truly astonishing and give you a much better understanding of the economy and how you can grow your capital and make your money work for you so that you can step off the gas!
What’s more, thanks to the age of technology that we live in, independent broadcasting companies are coming to the fore to provide us with real insights instead of the usual rubbish you find on mainstream news and business channels.
If you are interested in learning from some of the greats, you should check out the following:
www.realvisiontv.com This site was founded by market veterans Grant Williams and Raoul Pal. They made it their mission to fly around the world and interview the world’s most incredible economic minds. Check out a free trial, you will be amazed.
One Up On Wall Street by Peter Lynch was the first book about the markets that I read, and today it still holds a place dear to my heart. If you have no prior knowledge of markets, Peter will show you ‘How To Use What You Already Know To Make Money In The Market.’
Tony Robbins’ book ‘Money: Master The Game’ is possibly the largest compilation of interviews and advice from investing masterminds on paper. Tony sets out a seven step plan for your financial freedom and talks you through each one in an easy to understand way, I certainly recommend you give it a read!
Does the idea of exchanging currencies fill you with fear and dread?
I worked in the foreign exchange markets for 17 years, so hopefully I can offer you some practical insights.
The worry of different currencies seems to strike fear into many people’s hearts as they feel they don’t want to be ripped off or lose out to bad exchange rates. The topic of Forex comes up almost weekly on different travel forums and FB pages, and there is always a plethora of differing information.
The stress levels this causes people is too high and I hope I can appease your troubled minds with a very basic understanding of how the markets work and how the banks and exchange companies conduct their business to make their money.
Firstly it’s important to know that the rates we see as consumers are very far away from what is referred to in the financial markets as the ‘Spot Rate’.
The Spot Rate is the rate at which the worlds largest banks and huge conglomerates are dealing with each other in multi-millions of dollars every second of every day. In terms of the volume (amount) traded day-to-day, the FX market is BY FAR the largest market in the world.
How can you play the game and get the best rate for you and your family? Well, you can also see the spot rate on the internet, it’s not a secret! Simply google the currency pair you want to exchange and you will be hit with lots of different sites quoting the up-to-date spot rate. I generally check www.XE.com. Others you can find are:
www.reuters.com
www.bloomberg.com
www.googlefinance.com
www.yahoofinance.com.
It’s super important that you understand that competition for business in this market is super high and you, as the customer, have great power.
Once you are armed with the information of the real price, you can negotiate the rate with almost any entity in which you choose to engage to change your money. Yes, even at the currency exchange booths in an airport (the worst place to change currency). Always ask for a better rate than you are quoted in the first place.
The vendors make their money from what we call ‘The Spread.’ Each time you look at an exchange rate board you will see the columns ‘We Buy’ and ‘We Sell’. The difference between these prices is called ‘The Spread.’
The vendor will be quoting this spread right around the middle of the real market ‘Spot Rate’ that the banks are quoting to each other.
Now let’s look at how the vendor is making their money.
As they are dealing with Foreign Exchange all day, the vendor will accrue huge sums of different currencies that they will need to change to their home currency. The vendor will have a professional trading account set with the large banks’ trading desks where they can get instant access to the spot rate to offset any transactions they make.
Therefore, the wider the spread, the more money they stand to make from any transaction.
Always look at the spread to see how wide it is. The wider it is, the more room you have for negotiation.
Let’s use a common currency pair as an example: Great British Pounds (GBP) vs. United States Dollars (USD). Let’s say Jake is travelling from the UK to the USA for a holiday, so he needs to sell GBP to buy USD. He has saved one thousand pounds for his trip and is going to use that money to get the USD he needs to spend when he is there.
He checks the spot rate on www.xe.com by typing in the two currency pairs, GBP and USD, and sees that the rate is 1.2600. This simply means that for every £1 GBP that Jake sells, he will receive $1 USD and 26 cents… or $1.26.
Multiply that rate by the amount of GBP he is selling and he will get the total amount of USD he will receive.
1000 x 1.2600 = 1260.00 USD
But, Jake will not get to see that rate because the spot rate is only reserved for the huge banks and conglomerates that are trading in millions and billions each minute. They simply don’t have time to do every FX transaction in the world.
This is where independent vendors and high street banks step in. Let’s break down how the vendor will make their money with a quick example.
After his two seconds of research, Jake is armed with knowledge and knows exactly what the spot rate is. He walks into a high street foreign exchange vendor to check the rates and sees:
GBP v USD
‘We Buy’ 1.2100 v’s ‘We Sell’ 1.3100 (a spread of 10 cents.)
(The rate GBP is bought in exchange for USD)v’s(The rate GBP is sold in exchange for USD).
Jake sells his 1000 GBP at the rate of 1.2100
1000 x 1.2100 = $1210.00 USD
So Jake walks out of the exchange with $1,210 USD.
The next customer, Michelle, needs to do the opposite to Jake and wants to sell her USD to buy 1000 total of GBP. To make this exchange, the vendor will use the ‘We Sell’ rate of 1.3100 for this transaction.
1000 x 1.3100 = $1310.00 USD
Michelle has to part with all $1310 USD to get the £1000 GBP. The vendor’s profit lies between the two transactions.
$1310.00 USD - $1210.00 USD = $100 USD profit
All of that for doing pretty much nothing! You can imagine how these volumes can move into the millions and billions very quickly as people are changing money every second of every day.
So how can you shop around for the best rate?
I use www.compareholidaymoney.com to get a clear picture of exactly which vendors are offering what rates. The rates are listed in order of best to worst and, I guarantee you, your high street bank or credit card provider is waaaaaay down the list.
After finding this list, I started calling each company to ask them if I was able to set up an account or do a one time transfer with them. In some cases, it’s not possible, but others were only too happy to help and I was now exchanging money as close to the spot rate as you will ever get.
Don’t forget, even when dealing with these companies that are showing you a much fairer rate, you still hold the power. Always ask for better. The worst they can say is “no”. Most times they will improve the rate just a tiny bit to keep you happy and to keep your business.
I have also found two other companies that are totally web-based, easy to set up, provide better rates than almost anyone on the street and charge very low fees.
www.transferwise.com
www.currencyfair.com
If you want to try Currency Fair, I have set up an account with them and am now fully convinced that they offer the best serve on the street. Their rates are (at time of writing) better than any other out there and their fees are set to just $3 USD per transaction.
Please feel free to use my referral code www.currencyfair.com/?channel=RVWJ31 for a test run to see how you like their service!
A Frequently Answered Question which relates to making yourself a little extra cash…..
How did you sell everything? And don’t you miss your belongings?
Oh, how attracted and attached we are to stuff! And that really is all it is at the end of the day, stuff.
We are a consumer driven society fanned into a frenzy of buy, buy, buy, even if we don’t need it, just buy it, it’s on sale and if you can’t afford it just buy it anyway on credit! Before you know it, you have a house full of stuff that owns you rather than you owning it.
Let’s take a look at a typical family with two kids who receive gifts for birthdays and Christmas and think about how much stuff might walk through your doors over the course of just one year. I guarantee you that each kid ends up with at least ten presents each per birthday, whether they are books, puzzles, trikes, Barbies, Legos, whatever it might be. Then, once all gifts have been opened from grandparents, aunties, friends, etc., another 20 presents each at Christmas time.
That is a whopping 60 different pieces of junk ending up in cupboards, never to see the light of day again.
Then times that by 20 years!
Here is another experiment: go and count how many pieces of underwear you have in your house right now. Socks, pants, bras, vests, whatever it might be that you class as underwear. You will be astounded, you could clothe a small army.
Do the same for chairs. Walk around and count how many seating options you have in your house, don’t forget the kitchen stools, garden furniture, spare chairs in the shed or attic, dining chairs, sofas and that chair in your bedroom under a pile of clothes, the seat in front of the vanity mirror, the piano stool, etc. Go ahead, add them all up.
I bet you could host the next town hall meeting.
How many TVs do you have? Most households have more TVs than people!
We started selling our stuff because we had to. We had a move to make and loads of gear to shift, but I wish we had done it a hell of lot earlier. I wish we had done an annual cull because the clutter you acquire is incredible.
We spent hours deciding on our plan of action and walked around the house with a clipboard, making a note of everything we definitely wanted to keep. For example, we had some very specific pieces of furniture and art work that were unique to our lives and wanted for ourselves again one day. Some pieces we stored with family, others we gave to friends to furniture sit for us on the understanding we could get it back one day if we wanted it.
Once we had our list completed, we set to work selling the rest. There are several ways to sell your belongings over the internet, such as eBay, Gumtree, Craigslist and Facebook. Then, of course, you have the traditional garage sales from your home, boot sales organised nearby, or other local markets or bazaars where you can pay for a stall and sell whatever you need to. We tried all of these methods and had great success. Anything we couldn’t sell but needed to part with we donated to charity.
We sold huge pieces of furniture, book cases, wardrobes, cabinets, coffee and side tables, furniture, the BBQ and our sofa set. We sold the washing machine, tumble dryer, dishwasher, fridge, vacuum cleaner, TVs, dvd players, stereo systems, power tools, rugs, beds, cots, high chairs, strollers, car seats, bikes, scooters, golf clubs, clothes and the car.
Even the kids became hooked. The toys they wanted and begged for us to keep were all sold, by the kids themselves, at garage sales. The whole family was on board and in full clear-out mode.
The effect it had to our mindset was amazing, the less clutter we had around us, the clearer we could think. It actually became highly addictive. The fact that we were making money from things we didn’t want anymore also helped keep up our momentum, every penny made was going to hold us in good stead over the next year!
I highly recommend you keep a spread sheet of everything you sell. We did, down to the last item, and we were stunned to come to the huge total of 15,000 Singapore dollars. We couldn’t believe it. All of that ‘stuff’ gone from our lives ,and in return we had a clearer mind, we were a lot happier and we had extra money to travel with!
Do not under estimate the value of the ‘stuff’ you have in your house and don’t even consider the pointless money pit of paying for storage. Why would you pay for your ‘stuff’ again in storage fees? If you ever return you can soon enough buy new stuff, or second hand items. But I can guarantee that once it’s gone you will likely never want it back again anyway!
Test yourself, throw a garage sale and see how you feel afterwards. I bet you will feel lighter, more energised, happier and motivated!
TOOLS AND TRICKS.
www.udemy.com is a website aimed at adults where you can choose from over 40 thousand online courses across multiple subjects that could change your life. You may be overwhelmed by the choice.
www.thefourhourworkweek.com
www.sethgodin.com
http://www.iwillteachyoutoberich.com
www.Appsumo.com
www.realvisiontv.com
Do you want to learn more from the best? Just reach out and say hi, seriously, what do you have to lose?
@tferriss
@ramit
@Noahkagan
@TonyRobbins
@ttmygh for Grant Williams of Real Vision TV
@RaoulGMI for Raoul Pal of Real Vision TV
www.compareholidaymoney.com
www.XE.com
www.bloomberg.com
www.googlefinance.com
www.yahoofinance.com
www.worldwidecurrencies.com