How to Save for a Big Trip

Last summer I took a two and a half month trip to Europe visiting 12 countries along the way and spending a budget of $14,500. I didn’t hold back on anything – except for Switzerland – yeah, that place will break you.

So how exactly did I come up with $14,500? Did I win big at the casino? Did I inherit the money? Nope and nope.

Step 1: Create a Budget

Before you start saving, you have to know where your money is going. I started using Moneywell which is essentially a digital envelope system for budgeting. I created a “bucket” for all my expenses and then another bucket for my travel savings where I set a monthly transfer of $500 which equates to $6,000/yr.

Step 2: Eliminate Debt

Once you have your budget, you just need to stay diligent to it and make your payments on any existing debts. This mainly includes short-term loans with high interest rates like credit cards or lines of credit. I had two large outstanding lines of credit:

  1. HELOC (home equity line of credit) – ~$5,000 out of a $20,000 limit.
  2. Business Line of credit – Maxed out. $15,000 limit.

So in total, I had about $20,000 in loans in Dec. of 2010. I wasn’t very smart with my business and ended up using my business line of credit to pay my office mortgage. Yeah…live and learn.

This is where I started chipping away. I walked away from my freelance business in Dec. of 2010 which resulted in me having a negative monthly cash flow and I attained a job as a consultant at Best Buy in June of 2011. This was my first corporate gig and dramatically turned my cash flow around. 80% of my monthly check went into eliminating my debt and I made my last payment in December of 2011.

The feeling of not having that debt over my head was freeing. It was at that point I made a decision to save for a big trip.

Step 3: Save!

Now comes the fun part. Each month I saw that bucket increase from $500 to $2,000 and finally to $6,000 after the first year. It was a great feeling to see that amount grow. At the end of 2013, I reached my goal of $12,000,  however, I just kept saving the $500/mo and directed that towards my emergency savings bucket. In the end I had to use some of my emergency savings and ended up with a total of $14,500 spent on the trip.

You might ask yourself – how did I get here – why I would spend close to $15,000 on a trip. Isn’t that frivolous? Why not invest it or buy a car? To that I would say, to each his own. You might want to invest that money or save for a big down payment on a house. For me, it’s travel – I can’t put a price on the wonderful experiences I had and the beauty that I witnessed. Whatever the case may be, find out what your goals are, and get started!

What are some goals you would like to save for?