March 28, 2011

How Much Do You ‘Live It Up’ With Spending on Vacations?

beachAs a follow up on my post last week about spending while vacationing in Spain, I wanted to reflect a bit more on how I spend money on vacations, especially big trips to places like Europe.

The quote that I’ve heard before and always think about when I’m on a trip is “You’re on vacation, so it’s okay to splurge.”  To some extent I would agree.  Yes, I am on vacation in an exotic location.  There are lots of special things to do and they cost money and can’t be done anywhere else.  If you have a full-time job, your vacation time, no matter where it’s spent, is limited, too.  Still, I think there’s a lot to be said for what you can get out of a trip without spending a lot.  Here’s what I will and won’t spend money on.

What I will spend on:

– Trying new foods I can’t back home.  Obviously, paella was at the top of my list for Spain, and I was excited to try it.  I also enjoyed eating tortilla, bread with tomato, and other seafood.  The wine was great, too.

– Museums and historic sites.  Some things you just can’t see elsewhere, like Velazquez’s Las Meninas or Gaudi’s Sagrada Famila.  These are truly extraordinary sites to check out, and I wouldn’t miss them.  Admission is usually affordable, so there’s really not much to debate here.

– Transportation that’s convenient.  In Spain, we flew from Barcelona to Madrid and then took the high-speed train from Madrid to Sevilla.  These were probably not the cheapest ways to get around, but they were fast. We simply didn’t have a lot of time in Spain, so it wasn’t worth it to try to save a few bucks but lose a lot of time to sight-see.

– Just about anything that a local would do.  I’m always really curious what people do for fun in the places that I visit.  If it’s something that is off the beaten path of tourists, that definitely gets me interested.

What’s not worth my money:

– Expensive hotels. To me, if you’ve planned your trip right, you’ll be at your hotel (or hostel) as little as possible.  More than likely, you’ve already spent hundreds or thousands on airfare.  Why tack on hundreds more simply for a fancy bed to sleep on?

– Lame, tourist-trap attractions.  No, I’m not gonna cruise around on a boat or ride the hop-on, hop-off bus.

– Mediocre food. It’s one thing to seek out good places to eat for a nice dinner.  But when you’re hungry, it’s easy to pick any restaurant that’s around.  This usually results in less-than-stellar quality food, and it might not be a bargain either.

– Most souvenirs.  I’m happy to send postcards or buy something else small to remember the trip by (my girlfriend bought a scarf for less than $10).  But Barcelona t-shirts are totally out.  There’s a lot of knick-knacks that are cheaply made that I don’t know what to do with once I get home.  If I want to remember a trip, photos are by far the best way to do this.

– Anything else that’s marked up in price for tourists.  This can encompass a lot of things.  But, generally, if you’re hanging out in touristy areas (i.e. Times Square), prices will be higher while quality may actually be lower.  I try to avoid these areas, but often there are things worth seeing nearby.

– Doing anything that I could back home.  Please don’t try to take me to an Chinese restaurant in Spain. There’s plenty of those in New Haven (and I don’t like them here, either).

Overall, I’d much rather extend the length of my trip, if at all possible, rather than pay for anything on the “not worth it” list.

What’s your vacationing style? Do you try to get the most for your money? Or do you prefer to live it up, no matter what your vacation destination?

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photo by: www.jordiarmengol.net (Xip)

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March 25, 2011

Spending Happily in Spain: What I Learned (and Loved)

During my break from Money Spruce, I was traveling in Spain for 10 days.  This was my second time in Europe, and it did not disappoint. There are many reasons to travel, but my favorite is to see how those in other countries live and do things differently than I do in my daily life.

These are some of my observations from Spain.  While they may or may not be new or remarkable to you, I found them intriguing.

1 – Tipping isn’t customary.  I know that there are different tipping customs in virtually every country, but it feels weird not to tip someone for their service.  However, no one really tips in Spain, so we only left small amounts at the places we ate at (and never tipped for drinks).  This made me think that we probably tip excessively at times in the U.S., but that’s probably more of a product of U.S. severs and bartenders that make an hourly wage of only a few dollars.

2 – Food is still expensive.  Especially if you dine for every meal, like we did.  This is probably a lesson for traveling in general, but we shelled out waaaay too much money on food.  A lot of it was great, but we also got sucked into some crummy tourist traps that were definitely not worth the money.  This is probably my only financial regret for the whole trip, and it wasn’t a huge deal anyway.

3 – Staying with locals is awesome – for both saving money and the experience. This was, by far, what I loved most about this trip.  For 7 of the 9 nights we were in Spain, we stayed for free with friends (or friends-of-friends).  They both had nice apartments, and it was far superior than staying in any sort of hostel.  But that’s not even the greatest benefit of all, which is: we learned, saw, and tried things we never would have without them.  While we sampled some great food in restaurants we picked from tour books, the best meal was one our host in Barcelona, Ana, prepared for us one night.  She also toured us around the city with ease and brought us to restaurants that were harder-to-find gems.  In Madrid, our other host, Natalia, took us to great places for Churros, vegetarian food, and drinks where locals actually hang out.  We had even another friend, Melissa, that we met up with Barcelona, and she helped us find even more fun things to do.  Without them, I’m sure our trip would’ve been totally different.

4 – If you’re an unmarried Spaniard and in your 20s, you live with your parents.  This was true for the majority of people my age that I met (and for many others, I was told).  The ones that didn’t live with parents were working or studying in a different city from where their parents lived. While I didn’t entirely get a firm grasp on the reason for this, it seemed to be the custom more than anything. While I’m sure many kids don’t enjoy this (just like I don’t – sorry, Mom), perhaps it’s a little different there since it’s the norm.

5 – Spain has economic problems, too.  Big ones.  But you wouldn’t really know it from just being there.  I can’t say I experienced anything because of this, but I had some questions after hearing about potential Spanish bank collapses on Planet Money.

6 – The supermarkets have a lot less variety.  The ones I went to were a fraction of the size of the ones here in the U.S.  To tell you the truth – I like it that way.  Personally, I shop at Trader Joe’s 99% of the time, and enjoy the lack of variety there, too.  I’m simply not convinced that having more “options” (or, really, just the same stuff in different packing) improves our life in any way.

7 – Greetings in Spain are much warmer than in the U.S. The whole cheek kissing thing was a bit weird to me at first, but I got used to it and actually kind of wished we did that in the U.S.  Seeing that this is the norm in Spain made me feel like we’re so cold and distant in the States, where everyone seems to value their personal space and that kissing someone you just met is too “weird.”  The standard U.S. greeting could certainly use an overhaul from something that isn’t so uptight and stuffy.

8 – Most people there speak English (and we should be speaking more Spanish in the U.S.) I hate the fact that most of the world is now at least bilingual, yet the U.S. always seems to lag behind.  The easiest way to make up for this would be to teach Spanish (or another language) starting in pre-school or kindergarten and place more emphasis on languages throughout our primary education.  It’s much harder to learn languages later in life.

9 – If we had planned better, we (probably) could’ve spent less money. I think we got at least a decent deal on flights ($600 round-trip to fly direct), but we only spent a few hours researching.  We also could’ve tried to get cheaper rates on the train but we probably booked too late for that.  Perhaps buses would’ve been cheaper, but we didn’t even consider that option. As I mentioned earlier, we definitely could’ve saved on food.  We didn’t cook any meals ourselves, even though we had access to kitchens.  We also could’ve settled for cheaper options from the supermarket for lunch rather than dining at cafes all the time. Oh well, lesson learned for next time.

Overall, it was an awesome trip, and I’d love to go back (and I could see myself living there, too). In case you were wondering, Barcelona was my favorite city, but Madrid and Sevilla were absolutely worth the visit, too.  It was an expensive trip, but definitely worth the cost to do it every couple of years (or more frequently, once I can afford it).  If you’ve been taking trips to boring-old Florida every year, definitely head to Europe instead.  It really doesn’t compare.

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February 23, 2011

Living In the Present With Your Finances

I’ve always aspired to “live in the present” since reading Eckhart Tolle’s The Power of Now. The basic premise is that one should not dwell on the past or the future but simply enjoy the present moment without worry or anxious anticipation of what is to come.  The concept that  stood out to me the most was that one should only concentrate on the problems that can be dealt with at that very moment.  Money-related issues are just as applicable as anything else to these principles.  Here’s my take on the past, the future, and how those impact decisions made in the present.

Learn from the past

We’ve all done things we regret.  That’s perfectly fine, just do your best not to repeat.  My initial thought (and maybe yours, too): where do I begin?!  I’ve made some foolish money-earning decisions in the past.  One summer, during college, I was unemployed and broke.  It was the worst summer I can remember (even worse than when I worked 6 days a week, starting at 5:30 am).  But I learned this from it: I always need to have “work” to do, not just for income, but also to keep motivated and feeling as though I have a purpose.

I’ve gone through credit card debt problems, but I’ve vowed never to go down that road again. I’m actually glad that this happened earlier in life.  I learned quickly how frustrating and difficult dealing with credit card debt can be. Now that I know what it’s like, I’m much more careful with how I manage and use credit.

But definitely repeat the good decisions you’ve made.  Buying a used car (apologies for writing about cars so much lately) tops my list.  It’s been cheaper to own, and my quality of life hasn’t suffered one bit versus buying a new car.  I’m also thankful that I avoided loan debt through college, and I hope to stay out of debt of all kinds whenever I reasonably can.

Look to (but don’t live in) the future

Live on what’s in your bank account, not what you’re expecting to be there. Be cautious with credit cards and spending money you haven’t been paid yet. While I do not carry a balance on my credit cards month-to-month, I’ve run into times where I spend on my credit card before I receive my direct deposit.  This is the wrong approach.  I should be making the money first and then spending it.  Fortunately, I receive a salary for my job, so there’s never any doubt of if I will get paid or not. But it’s definitely a tough cycle to break.

Don’t spend based on future fortunes you think you’re going to make.  This is an easy pitfall for anyone but especially those still in college.  The attitude is “I’ll live it up now and pay for it when I make that fat paycheck later.”  There’s a few problems with this.  First off, you don’t make the big bucks yet.  You can dream all you want, but until you are actually pulling in that amount of money, you shouldn’t be spending it.  Secondly, paying back the debt won’t be fun.  With crazy high interest rates, your debt will increase at a rapid pace.  While you may look back on that time of spending fondly, you’ll surely wish at some point that you hadn’t racked up all that debt.

But do save for the days to come.  This goes with the last point.  It’s actually the exact opposite.  Instead of spending more than what you have at the present moment, you should be spending less than what you have and saving for the future.  The last point involves living in the future, which I don’t condone.  But smart planning is always okay.  You should be prepared for the unexpected with emergency funds and for retirement with investment accounts that are funded regularly and adequately.

There are a lot of emotions tied to our past experiences of money and our anticipation of a better financial future. But the most importance lies in the decisions that we make right now, in the present, since those are the only decisions that can truly shape our future.

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photo by: iamliam

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February 11, 2011

What’s My Minimum Wage?: Getting By On $13k a Year

I’m living on about $13k (or about $1,100 a month), which is just slightly above poverty level.  Before that, I lived on about $22k/year for my two years of graduate school (2008-2010), and I lived fairly comfortably yet still cheaply.  Having lived on a stipend for the last 3 years, I feel like I have a great sense on how much the minimum is that I can live on without major sacrifices.  The whole experience has been difficult, but I’ve been able to do it without amassing credit card debt and still maintaining a happy and enjoyable life.

Living on about $1,100 a month is no easy feat and certainly requires some sacrifice.  Here are some things that I know I can’t afford to do:

– Eat out for dinner more than once a week (and I never eat out for lunch).

– Buy “things” like DVDs, iPhones, or other gadgets.  I’ve basically eliminated these things from my budget, and only make one or two purchases of “things” a month (and sometimes I make none).

– Do just about any sort of traveling.  Weekend camping trips can fit into the budget here and there.  Flying to Europe definitely can’t.

– Implement any significant savings or investment plan.  I still have automated savings accounts, but they aren’t funded at the levels I would like them to be.

– Live alone or in an expensive apartment.  Right now I pay $400/month for a modest apartment with 2 roommates, but I can’t imagine affording more than that.

– Try to get by without a budget or without tracking my spending.  I know I need to be very aware of my spending and where I’m at with my monthly budget.  I work with this for at least a few minutes on a daily basis.

– Not fall back on my savings here and there.  Car ownership is virtually impossible, especially with unexpected costs. I’ve had to rescue myself with savings a few times.  I hate having to do it, so I avoid it at all costs.

Yikes! Looking at that list, you must be thinking “that kinda sucks!” But I can honestly say that I don’t notice it much in my day-to-day life, and I’m genuinely happy.  Is it sustainable long-term? Absolutely not, and I don’t plan to try to make it so, either.

What I do think like about this level of income is that it’s forced me to be really frugal and has given me real life experience of what my minimum income level is (and what living in poverty is like, too).  I would say my realistic minimum wage is probably more like $17k, but clearly I could get by on a little less if I absolutely needed to.

After my service work ends in August, I’ll undoubtedly be earning more than $1,100 a month.  Envisioning what things will be like then, I feel like just about everything I earn above that sounds like a bonus to me.  For example, say I double my earnings with my next job and earn a still-modest $26k a year. That kind of salary sounds like the high life to me right now!

Despite the fact that I really can’t save much currently, I’ve had time to plan for the future when I will earn more.  Let’s take a look at where I would put my money if I’m earning a “great” salary of $26k:

1) Donate 10% of what I earn ($2,600)

2) Long term savings 10% ($2,600)

3) Invest 15% ($3,900)

Remainder = $16,900

So even with these better-than-average financial goals (at least in terms of % of earnings), I would still have $16,900 ($1400/month), which is about 27% more than what I earn right now! Even at those numbers, I think I could live a very good life.  Can I drive around in Mercedes? No. Can I go out for fancy dinners several times a week? Doubtful.  But that isn’t the point.  I don’t want to do those things anyway.

Just to be clear: I’m definitely not striving to make $26k a year for the rest of my life or even next year.  I’m really just looking at these calculations because:

a) This should be an easy level of income for me to obtain no matter what money earning path I choose,

b) I could live at this level of income for short periods (a year or two more), if needed,

c) I plan to maintain a degree of frugality similar to where I do now, and

d) I don’t have to panic about going out and getting a high-paying ($50k+) job if I don’t want to.

If somehow my life goes terribly wrong, and I end up back at $1,100 a month, I know I’ll be able to handle it.  That is a very reassuring feeling.

What’s the minimum you could live on? Can you survive on $13k?

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photo by: Casey Serin

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