Monday, April 21st 2014

Money Lessons from My Backpacking Days

by Mr Credit Card

With so many Americans deep in credit card debt, I was fortunately enough not to fall into the trap of spending beyond your means. Part of the reason was my upbringing. My parents always told me not to something if I cannot afford it. Looking back, I cringed that how I saved when I was much younger. So I have decided to write a series on my frugal ways (and not so frugal ways) when I was much younger in college. I shall call this series the “Turn Back the Clock” series.

Today, I start with my recollection of the days when I went backpacking. When I was in college, I saved enough from my summer jobs and together with Mrs Credit Card (she had graduated and started work), we took a couple of budget backpacking trips together. Our first trip was to New Zealand and Australia and the second one to Europe (Italy for the most parts).

Given that we had a strict budget, we had to plan everything in detail. We knew how much we could spend for meals a day, our budget for youth hostels and sight seeing. If we had to rent a car, we had to take the cheapest one, period. We also had to plan in advance where we were going to stay.

We used travelers checks rather than cash or credit cards (though occasionally we had to use our credit cards). We also learned to guard our belongings very carefully. We locked our backbacks before we went to bed and locked them to our beds. We carried our travelers checks in a small “travelers checks pouch” that we hung around our necks tucked underneath our shirts.

Being on a tight budget also meant some sacrifices in terms of the quality of the place we stayed. I remembered when we were in Sydney, all the youth hostels was at King’s Cross, the red light district. We stayed for two nights and got the cheapest room. When we got to the room, we found one double deck bed and a room full of cockroaches on the wall! We had to room the bed to the middle of the room. But since we were on a budget, we lived with it. We got up as early as we could and came back as late as we could. For some reason, the roaches did not come to our bed, they only hung around on the wall!

Another interesting phenomenon when we were backing was how many ideas other backpackers had up their sleeves. I remembered discussing how to get very low fares if you volunteered to be the person to look after the overnight mails on DHL or UPS! How to get free food at various restaurants!

In fact, looking back, those trips were an eye opener in terms of how to budget and the sacrifices you have to make when you have monetary constraints. As a matter of fact, since those days, we have not been as diligent as we ought to be. But those were good memories.

One of the reasons why I think we managed to get our act together during those backpacking trips was simply because we had no choice. We had a strict budget. We simply could not afford to overspend and be caught with no money overseas!. Back then, credit card use was not really prevalent. We also wanted to avoid any international transaction fees.

One of the key lessons from these experiences was that if you were set to committing to spend only a percentage of your income and save the rest, it can be done. I think the reason why most people get into debt is because credit is so easy! Just charge to your credit card. If you have a problem with overspending, perhaps keeping your card at home is the best solution. Write checks and carry cash.

Another reason that we did not mind traveling on such a tight budget (and kept ourselves sane) was we were enjoying ourselves. We were in love and enjoying each others company (we still are in love and enjoying each others’ company!), so living in budget youth hostels and eating cheap meals did not bother us one single bit. Every once in a while, we also gave ourselves a treat, a little nice gelato.

So here is my two cents worth with regards to saving and not getting into debt.

1. You have to enforce a budget and live by it.

2. You have to enjoy life. – If life is miserable simply because you do not have the 50 inch plasma which your fellow neighbor has, then you are in big trouble. That is because you will always be tempted to spend on things you want but cannot afford.

3. Be around people like yourself. – Because we hung out with people who were also backpacking, people who were also on a budget, we were never caught in a situation where we had to overspend. If you are always hanging out with friends who spend freely (either because they have more money or that they like to eat out often etc), then you will find it much harder to stick to your budget.

With that, I shall end my first “Turn Back the Clock” series on money lessons I learnt when I was younger.

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