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TRAVEL FINANCES

 

 

When we began to think about travel back in 1998, we had three financial questions:

 

          - What's the cost of long-term travel?

          - How can we pay bills back home when we're on a long trip?

          - What's the best way to carry/obtain money in foreign countries?

 

 

COST OF LONG-TERM TRAVEL

 

How much does it cost to travel for long periods of time? It depends on where you want to travel, the comfort and security you require, and your willingness to shop for the best deals. Below is a comparison of what we actually spent on two long trips. The first was in 2000 when we traveled through 15 countries: from New Zealand through Southeast Asia and all the way to Uzbekistan in Central Asia. The second trip was in 2004, when we traveled in seven South American countries: from Ecuador down to the southern tip of the continent. This table indicates that the cost of long-term travel (shown here in in US dollars) can vary a great deal.

 

 
 

Asia in 2000

(10 months)

 

South America in 2004

(8 months)

 

Tours and Admissions

Air Tickets

Ground, Water Transport

Food and Lodging

Internet, Mail, Phone

Photography

Health Care

Visas, Club Memberships

Travel Books

Souvenirs

Language Lessons

TOTAL

19,000

14,500

  1,300

14,500

    600

  1,600

  2,000

  1,500

  1,200

  7,000

         0

63,000

 4,200

  1,300

  1,500

12,700

    600

    400

    400

    500

    300

  2,300

  1, 100

27,800

 

These costs are for two people and include everything. Note that we traveled mostly in Third World countries - not in high cost Western Europe. The costs in Asia (Australasia, Southeast, Central and South Asia) were $210 per day. The costs in South America were $115 per day.

 

Although they are major items, food and lodging don't explain why our Asia trip cost so much more than our South America trip. The cost was almost the same: $57/day in Asia and $61/day in South America. We normally keep our lodging costs down by staying at hostels and small family-owned hotels, but we eat well and usually have wine or beer with dinner. Occasionally, we splurge and stay at a better lodge (up to $45/night!) or have a special meal. In the photo below we're celebrating our 40th anniversary in Istanbul, although it wasn't really an expensive meal. Mezze (appetizers), warm flatbread, shish kebabs, red wine, grapes and watermelon for three (our daughter Shanna was with us for two weeks) cost only $30 in all - and the champagne was on the house!

 

 

 

 

 

The big cost differences are in three other categories: tours, air tickets and souvenirs. Our Asia tour costs were higher because we signed up for two guided tours before we left the U.S. - 3 weeks in Irian Jaya and 3.5 weeks along the Old Silk Road - for a whopping $16,000. (The tours were actually reasonable by tour standards, costing about $175/day apiece. But to us the total bill was huge.) In contrast, the longest tour we took in South America  was for a week, and we arranged for almost all tours locally. Our Asia air tickets cost more because we took 51 flights covering far greater distances; on both trips we used free miles for the long trunk flights from the U.S. Photography costs for the first trip were for development of prints only; for the second trip they included half the cost of a new digital camera with accessories. Health care costs were mostly for pre-trip inoculations not covered by our regular health insurance. We are "bookies" and went a little overboard buying travel guides, history and art books. The souvenirs in 2000 included four carpets, plus tailored clothing, paintings, wood carvings, weavings, silver jewelry and antique masks.

 

Some costs back at home continue during periods of travel. Inevitably, there are income taxes to be paid. If you rent a house or apartment, your rental payments will continue. If you own a home, there will be mortgage and insurance payments, upkeep or depreciation and property taxes. If you sublet or rent your home, there may be property management fees. If you have a car, even if you temporarily stop the insurance, there will be depreciation costs. In our case we have no home and our 1990 pick-up truck costs nothing while we're away - it can't depreciate much further! Our only financial obligations besides income taxes are life insurance policy payments and $183/month to rent a 10x10-foot storage unit for personal belongings.

 

The U.S. dollar has fallen by one-third in relation to many other currencies during the last year (2004-5), making it more expensive for us Americans to travel. The cost figures in the Asian column would be much higher today. Those in the South American column would be slightly higher. The relative strength of the dollar must be factored into estimated future costs of travel.

 

BOTTOM LINE:  Our Asia trip was a wonderful splurge; afterwards, we cut back on travel spending. Since then, our all-inclusive costs of living on the road actually have averaged about the same as the costs we would have incurred if we'd lived year-around in California. That means our extra costs - for traveling instead of staying home - are about ZERO!

 

HOW TO CUT TRAVEL COSTS

 

The easiest way to cut travel costs is to travel in the developing world. With a few exceptions, we've avoided the First World in the past few years and spent our dollars in less expensive countries. (This wasn't a deprivation, as we already had traveled in Western Europe, Canada and Japan.) However, those who demand the same level of comfort on the road as at home will pay plenty to travel - even in poorer countries such as Bolivia and India. By relaxing into near-local standards it's easy to save a lot and have a more authentic experience.

 

Independent travelers usually spend only a fraction of the cost of package tours, which is one good reason to travel on your own. In some instances, however, a tour may be the best option - especially where there are logistical and security problems such as we encountered in Irian Jaya and on the Old Silk Road, or in places where a guide is required - such as the Galapagos Islands or the trek to Machu Picchu. Unless you have a tight time schedule, don't sign up for a tour with an agent in your home country. You can cut costs substantially by waiting until you arrive at a destination; once there, talk with other travelers, get their recommendations of tours and guides, and shop around at local agents. This approach can lead to huge savings as well as higher quality tours. We signed up for our four-day Salar de Uyuni jeep tour in Bolivia just a few days in advance ($85 each, including transportation, lodging and all meals) and had a great time!

 

 

 

 

 

You can reduce travel costs dramatically by staying on the ground. In some countries - such as Turkey and Argentina - comfortable night buses (the Argentinean "cama suite" bus has almost totally reclining seats) simultaneously cut your lodging costs. If you need to fly, reduce air travel costs by avoiding generally expensive international flights. Instead, take a bargain domestic flight to a country's border, make the crossing by taxi or bus and take a domestic flight within the new country. Whenever we've done this, we've saved a bundle.

 

Admittedly we went overboard on souvenirs - especially the four carpets we bought in Morocco, Thailand and Pakistan in 2000. But Lou cut the price of these expensive items by patient bargaining - a tradition that typically reduced our cost to 25% of the dealer's opening offer. We purchase mostly local handicrafts when in foreign countries, which tend to be wonderful souvenirs and gifts, very reasonable, and less likely to be stolen while being mailed home.

 

It's important to have effective medical insurance of some sort, as health care can be a big expense if you have a medical emergency while abroad. Medicare isn't valid outside the U.S. but many regular health insurance policies are in effect no matter where you are. We've never purchased evacuation insurance, but there were a couple of times when we came close to needing it. (It could have cost as much as $50,000 to be flown out of New Guinea to a good hospital.) Next time, we may buy evacuation insurance before heading into a remote area.

 

Other ways to cut costs can add up to big savings. We bought a digital camera before our trip to South America and saved over $1000 in film and development costs. Books are a great temptation. For pre-trip planning we use the library and Internet as much as possible, but inevitably buy a couple of hundred dollars worth of guidebooks to plan a long trip. (On the other hand, a good guidebook can save many times its price the first week of a trip!) Seven weeks of language lessons in three different countries of South America cost us $1100 and they were well worth the money. By shopping around, we found non-profit schools and probably saved another $1000.

 

PAYING BILLS FROM THE ROAD

 

How do we pay our bills at home while we're traveling for many months at a time? Being homeless, we have no permanent address so we use the California address of Joan's sister for hard mail, but ask her not to bother opening or responding to any of it. We're out of touch with our creditors for long periods of time, but that's not quite as bad (or good!) as it sounds because we don't have many bills. Our bank automatically pays a few regularly scheduled bills and the storage company automatically charges our credit card for our storage unit. We gave our daughter some stamped addressed envelopes with signed checks inside for estimated income taxes, and we remind her via e-mail when it's time to mail them. The biggest problem has been medical bills. Just before we leave on a long trip, we have dental and medical check-ups and get travel inoculations. It takes time for clinics to bill and for Medicare and Blue Cross to pay their share. By the time our portion is normally billed, we're long gone. We once returned from a ten-month trip to letters from a medical clinic threatening to turn our account over to a collection agency! We've learned to contact health insurance companies and medical business offices before we depart; we pay our estimated share in advance and make adjustments after returning.

 

We maintain regular contact by telephone with our bank and credit card companies while we're abroad. We call Visa and American Express each month to authorize payments from our bank checking account. (There has never been an unauthorized charge in our five years of travel - knock on wood!), We never make financial transactions over the web from a foreign Internet cafe, as security easily can be breached on public computers.

 

GETTING MONEY ON THE ROAD 

 

How we carry or obtain money depends on where we're going. Sticking a debit card into an ATM (automatic teller machine) is now the easiest way to get local currency in the developed world. In developing countries it can be difficult to find ATM machines outside large cities. We have long carried a MasterCard debit card good for cash at Cirrus, Maestro, or Star ATMs, but - for security - not usable for paying merchants. As we write this, we're headed to Africa where there are very few ATMs that accept this card. So we have obtained a Visa debit card, as well - useful in most African countries. This means we'll have two separate checking accounts at two different banks from which we'll draw money with the two debit cards!

 

We typically get local currency from an ATM machine once or twice a week. We use this currency for almost all purchases, except large ones such as plane tickets and carpets - for these we use Visa or American Express credit cards, both of which give free air miles and insurance. (Note: most ATMs require a four-digit pin number; some foreign ATMs also dispense U.S. dollars; and tourist visa fees and airport exit taxes often must be paid for in US dollars, not with credit cards.)

 

We usually begin a long trip (4-10 months) with about $3-5,000 in U.S. currency, in denominations from $1 to $100. In many developing countries these must be in good condition and printed since 2000 or they may be rejected. For security, we distribute them in several places - in zippered chest pockets, money belts and backpacks. Yes, we take a humorous number of precautions - AND we haven't lost a dollar or had one stolen during 40 years of foreign travel. (Again, knock on wood!)

 

 

 

 

 

We also typically begin our long trips with $4,000 in American Express travelers checks. (However, we should have taken more to Africa, as there were fewer ATMs there - especially in West Africa.) We try to find banks and bureaus where they can be cashed for local currency at little or no charge. It's now possible to buy double-sign travelers' checks, so that either you or your partner can cash any or all of them. Take purchase receipts with you, as some foreign banks require them. While travelers checks are good insurance, we've seldom cashed ours - except in Africa, and once in eastern Turkey when our ATM cards unexpectedly expired and we had to cash most of our travelers checks at local banks and money changers - cheaper than taking cash advances on credit cards. Our bank sent new cards to our hotel in Istanbul, the next big city on the trip, and they were waiting for us when we arrived a month later. Before leaving on a trip, we now check our cards to be sure they aren't going to expire while we're away.

 

When we are abroad, Lou carries the only American Express credit card and Joan carries the only Visa credit card. We leave our duplicate cards at home, because if one card were lost or stolen we'd have to cancel it - invalidating the other. While out for the day we carry only one of these two cards, leaving the other back at the hotel. While traveling, we each carry two identical MasterCard debit cards (not useful for paying merchants) and two differently-numbered Visa debit cards (useful for paying merchants) linked to our two checking accounts; if one of the two MasterCards (or Visa cards) is lost, we can still use the other; no one can access our account at ATMs without the four-digit pin number. Lou carries (or stores in his backpack) the purchase receipts and record of half the travelers checks (the ones carried by Joan) and vice versa. In our backpacks we carry photocopies of credit cards, passport id pages, airline tickets, etc. We also store a complete file of this information with our daughter in the U.S. and in our e-mail in-box.

 

After taking these precautions, we can relax and have a good time on the road!

 

 

 

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Joan and Lou Rose    joanandlou@ramblingroses.net