Budgeting Overview and Tips

Now for some specifics on what we spend on a trip.

First of all, the way we prioritize saving for a trip goes like this:

at the end of every month we look at how much we earned and subtract that month's expenditures. With whatever is left over (no matter how little) we put 1/3 into a travel fund and 2/3 into long term savings. Since our expenses are fairly consistent, we have a basic goal of what we want to put into our trip fund every month. This is what we use to estimate how long it will take us to save up enough for our next trip and this is how we know when to book our plane tickets.

Plane tickets we have a habit of buying way too early. Rick Seaney, the FareCompare.com CEO, recommends buying tickets around four months ahead of time and towards the beginning of the week. He notes that Saturday is one of the cheapest days to fly while Sunday is one of the most expensive (see article here). Tips like these are available all over the internet.

However, if you're like me and are too excited to wait to buy tickets when you decide on a destination, try some of these tips.

• My airfare booking website of choice: kayak.com
  
  This site is easy to use and compares flights from all different carriers quickly and allows you to see the full price of your ticket (with fees, taxes, etc.) quickly. It also lets you compare with sites like Travelocity and Orbitz instantly so you cover all your bases. Additionally, Kayak allows you to set your dates with complete flexibility so you can find the cheapest month, week, or day to travel if you have a pretty open schedule.
  
  The "Explore" feature helps you decide on a destination by showing you prices all over the world from your designated home airport. The "Buzz" feature allows you to find the cheapest time to fly to a given destination.
  
  This is pretty much a traveler's dream as it gets rid of the rigidity of other fare searching sites and allows your travel dreams to wander.
  
  In addition to all this, Kayak allows you to set price alerts. I would HIGHLY recommend doing this even if you don't think you will be taking a trip for awhile. With this feature you get the lowest prices to certain destinations emailed to you at set intervals. Even if you do not end up booking these trips it gives you a great idea of what a ticket should cost and what would be a good price to aim for. Knowing this ahead of time will get rid of that "I have no idea if this is a good deal or not!" feeling when searching for airfare.

• After you book your ticket, sign up for a free account with Yapta.com. This site tracks the cost of your flight and alerts you if you are eligible for a refund from your airline if the ticket prices drop lower than what you paid.
  
  For our tickets from Minneapolis to San Jose, Costa Rica (with no overnight layover this time, thank God) we spent about $600 each. I have seen them go as low as $500 but as high as $900 since then.

After buying a ticket it is important to make a budget for the rest of your trip. While this might seem a bit premature, it is easy for pre-departure expenses to get lost in the shuffle. We like to count things like guidebooks, luggage, and travel gear into our trip budget so we get a better idea of the real cost of our vacation.

• For Costa Rica- Nicaragua we are planning on spending $600 a person for 16 days. This includes food, lodging, transportation, activities/ tours, souvenirs, the works. That's $37.50 a day.
  
  As you can see, plane tickets are a HUGE part of your expenses. Time at the destination is actually quite cheap (depending on where you go). You may actually be thinking "Whoa, I spend more than that living HERE!"
  
  During our trip we will post daily budgets to show what we spend where and to see if we make our budget goals.  It's always important to have more money than you budgeted for your trip in case of emergencies but so far we have completed every trip on (or very close to) budget!

• From past experience, lodging can cost the most but if you travel with another person, it is cheaper than two individuals traveling alone.  In other words, travel for two (or more) is not equivalent to double the expenses for one. You are able to share rooms, transportation costs, food costs, etc. which makes a huge difference.

• Also, as much as we enjoy trying local cuisines, we always look for hostels with shared kitchens.  Going to the grocery store can be a cultural experience in itself and you can save so much money by not going out to eat for every meal, even just for breakfast.

So we will see just how close we can come to our budgeted goal...

Question Number 1...

How do we afford to take these trips? 

1. We make a very strict budget and stick to it. Also, travel isn't all that expensive if you are willing to put up with a few inconveniences and are prepared to deviate from a perfectly structured vacation. We are shoestring travelers which means we are prepared to lug our 25lb packs around for an extra half hour to find somewhere $3 cheaper a night to stay. It means we bargain down an item that costs $2.50 until we hit that $2 mark. It means we opt for the jeep-boat-jeep option instead of taking in country flights. Some of these things are probably ridiculous (the haggling) but there are also ways to get cheaper (if you can put up with mice on the ground or have the patience to take local buses that are likely to break down for 4 hours en route you can save even more). Our last trip to Costa Rica was actually quite full of splurges: comfortable shared shuttles, tour guides, and private double rooms. Even so, staying cheap is easy when you travel to "cheap" countries. You can easily spend more in Europe in a week than you would spend in Central America for a month. We pick destinations that maximize our dollar.

Our strict budget also means that we do not buy many souvenirs. What we do buy are from local markets, vs. gift shops, and are things we would actually use once we get back home. In addition, we have spent whole days shopping around for that one item we decided we had to have. Our guidebooks become our main souvenirs.

Our next money saving tip: do use budget/ shoestring guidebooks as a starting point. I want to emphasize that these are to be a starting point because most travelers will jump down my throat for insisting on using guidebooks. However, having an idea of what things should cost, what the most efficient way to get around, how a town is laid out, hostel price ranges, etc. will save you a lot of money in the long run. While we do enjoy just showing up and figuring it out as we go, having guidelines and some knowledge of what you are getting in to will help enormously. This also means knowing the exchange rate for the country you are visiting ahead of time, knowing whether you will be charged more if you pay in American dollars or local currency, knowing if taxis use meters or rely on a price decided up front, etc. This research should be enjoyable, so start enough ahead of time that you do not feel stressed or rushed and you peruse guidebooks, the internet, and talk with fellow travelers about your upcoming plans.

(See later budget post for trip-specific budget information)