How We Saved Enough Money to Quit our Jobs and Travel (Free Download!)
How can you save enough money to quit your job and travel? Here we take a look at NUMBERS. Sure money saving tips are great and everyone is familiar with popular suggestions like:
Direct Deposit into a Savings Account you don't touch
Budget. Know what you're spending, on what
Cut out Cable
Bring lunch to work and eat-out less
We’re here to truly breakdown the numbers and show you exactly how the two of us saved money while living in downtown Chicago to travel full time for 1 year. All of our personal numbers below are listed from our lifestyle before we traveled in 2013-2015.
When preparing for our RTW Honeymoon I found myself reading tips in blog posts but felt like I was spending more time reading than actually changing my lifestyle. I felt a little silly putting out a piggy jar in my oh-so-cute apartment. Besides, I never carried cash anyways -- why would anyone?! You don't earn points on cash transactions! (But that's another story).
DOWNLOAD OUR SAVING PROJECTOR
The real celebration of earning a higher income came when we sat down together to review our Savings Projector Spreadsheet (available below). We recognize how "nerdy" that sounds, but does swimming with whale sharks sound nerdy? Using that self-made spreadsheet Tim and I could actually see and predict how much money we could have by a certain date.
Download the form below, then watch the below video to learn how to correctly use it to track your savings.
My goal here is to lay down the dollars and cents and SHOW you how QUICKLY you can save money. Maybe you'll use the money to travel, maybe you use it as a down payment on a house or to pay off student loans, but once you start putting in place well-known "Money Saving Tips" watch what happens....
How we saved $60,000 to quit our jobs and travel
How we did it:
SACRIFICE
We sacrificed for years, made smart decisions, and planned far in advance. But ANYONE could do the same thing. Though we do not have kids or own a home yet, there are loads of people who incorporate travel into their life that do still have those life responsibilities. Do not use your children/marriage/mortgage as an excuse NOT to chase your dreams. That's not healthy and you and your family deserve to be happy!
AVOID LIFESTYLE CREEP
We did everything we could to avoid "Lifestyle Creep".
What is Lifestyle Creep? The tendency to naturally increase spending habits as salary increases. The issue? If a new raise or promotion only means a better car, a larger apartment or more expensive food then your bank account will never realize any of your salary increase! That's cash flow, baby!
Tim and I choose to celebrate our raises and promotions over dinner at home and a bottle of Kirkland Cabernet, not new apartments, furniture or fancy watches.
USE A SAVINGS PROJECTOR
The real celebration of earning a higher income came when we sat down together to review our Savings Projector Spreadsheet (available below). We recognize how "nerdy" that sounds, but does swimming with whale sharks sound nerdy? Using that self-made spreadsheet Tim and I could actually see and predict how much money we could have by a certain date.
"Oooh! Now that I make $70,000 we together should have $60,000 amount saved by August 2015!" (We've been having that conversation since 2013).
We estimated that if our incomes and expenses stayed the same, we could see how much money we will have saved at the end of each coming month! Talk about INCENTIVE on keeping expenses low!
In the spring of 2013 when we looked at the money we had already saved and then started projecting what we could save, we would scroll to the future, pick an arbitrary date and say: "Look! By Aug 2015 we could have $60,000! saved for travel” (Based on 2 incomes around $70k annual salary. More specific numbers below).
But YEAH RIGHT - it totally felt unrealistic at the time. "$60,000? No way! That's what I make in a year!" But, it was incentive enough to stay the course...and here we are. We projected our own success. Just like the spreadsheet promised, $60,000 in the bank August 2015.
Daydreaming and Pinterest helped to inspire. We're not extremists, crazy or hermits. I don't even think our friends would describe us as "frugal". We lived in a nice 1br apartment in Lakeview, a beautiful neighborhood of Chicago along Lake Michigan and lived what would probably be described as a "normal" life.
BUT this was the apartment that I moved into, alone, when I was making $40k/year. I stayed in that apartment longer than 3 years and even got a roommate (my husband!) even though I have changed jobs and earned promotions and raises. Because of this one choice and a few other smaller sacrifices we ended up with our target. (Cash held in savings accounts and invested in mutual funds; 401k and Roth IRAs.)
How someone with a $55,000 annual salary In Chicago could save enough THIS YEAR for 3-6 months travel in SE Asia.
Googling "Average Chicago Salary" (May 2015) reveals several results between $65k - $70k. (WHAT?!) Well I think that's ridiculously high. More realistically, let's say you make $55k/year.
$55k is about $4580/mo or about $3200/mo after taxes and healthcare (automatically deducted from your pay check). Of course you contribute to your 401k at 4% or $120/mo. (If you don't, change that habit! We contribute 8%-12%). Now you have $3080/mo to live, save and spend (and pay off debt if you have any).
Monthly Expenses
Rent $700/pp (living with partner in a 1br $1400/mo apt)
Living with a roommate in a decent Chicago neighborhood (Lakeview, Wrigleyville, Wicker Park) but you can certainly find cheaper in Logan Square, Ravenswood and Uptown. (We each pay $550 to share our $1100/mo 1br in Lakeview, grandfathered in with a price from 3 years ago.) But if you live alone? Plan on paying double. (A roommate is worth visiting 12 countries in one year, I promise!)
Groceries $400
$400 Groceries: This is a highly variable field. You almost end up spending the same amount on groceries with two people versus buying for just one. Find a friend. Cook together. This is about what Tim and I spend and we even get our groceries delivered.
Restaurants $250
Let's not call this Saturday night between 11pm - 1am (that's for the "other" category below). This is dinner after work, date night, Sunday brunch with friends and "we don't have any food let's grab Pad Thai down the street". I'm sure this category of spending varies across an enormous spectrum. Thinking about some of our friends I doubt they've ever had a month of spending this low in this category (although perhaps they spend less on groceries).
Tim and I as a couple don't really prefer to eat-out. That's just us and we know we are the exception. It's not even a frugal money thing, we just prefer to prepare our own food and eat-in, but then then go out for a walk around town and duck in to a few bars or an ice cream shop. You should be able to hone-down close to this even if you are a foodie. Save by bringing lunch to work so you can go to happy hour with friends.
$55k Spending vs Saving
$55k Annual Salary = $3080/mo after taxes, 401k contribution and Healthcare x 2 people = $6160
$1400 RENT
$400 GROCERIES
$250 RESTAURANT
$90 PHONE
$50 CABLE/INTERNET
$480 TRANSPORTATION
$700 OTHER
$500 RAINY DAY SAVINGS
$700 TRAVEL FUND
$90 Phone bill
Let's be honest. You have a phone. I'm not considering this an expense we can just "erase". There are, however, ways to minimize your bill by holding a lower GB plan. We are lucky enough that my company pays my bill and Tim's subsidizes his, resulting in a large savings in this budget line for us.
$50 Cable/internet
My favorite line-item to talk about! (Restaurants are a close second.) This low number represents you splitting the cost with a roommate. Let's go ahead and say "no one" can live without internet. BUT can you live without cable? We do! That doesn't mean that we're freaks. It just means that when you're talking about "that so-funny commercial"we don't know what the heck you're talking about. (This is certainly changing since this article was first published in 2015. Netflix, Amazon Prime, Disney +.. just stick to one or find a friend to share with ;)
Our $17/mo Netflix account satisfies any TV need we have. Sports fan? Try watching the game with a friend (at his house) or catching the game at the bar (just make sure to order the Happy Hour special!) My company also subsidizes our internet cost since I am a remote employee, so that has helped us too.
$480 Transportation
This line item, is EASY to push out of control. Look at this number in your life. Do you have a car payment? How much do you spend on insurance? DO YOU TAKE AN UBER EVERYWHERE YOU GO?
For fun one month, total up this number just to see. In Chicago you could easily spend $700/mo on transportation (public transpo, taxi, Uber, Car lease, insurance, gas). Hell, you could spend twice that if you have a lease on a decent but non-luxury car.
Tim and I own 2 cars (a '96 Camry and a '05 Cadillac) but we outright own both of them and do not make any monthly payments. We, of course, pay for car insurance and have to pay for gas when we drive them (that's how cars work).
Public transportation is our go-to choice around the city, but, depending on where you're travelling to, if each person pays $2.50 to get on the bus, the two of us might take a $8 Uber ride that could save 45 minutes on a trip across town. We probably spend close to $150/pp on Transportation.
$700 Other
This category is more defined in the Savings Projector Spreadsheet.
Now that you have a roof over your head, food in your belly and some other key essentials, that leaves you with plenty of extra cash... but money still flies out the door with loans/debt, prescriptions, haircuts, dog food, donations, those shoes, that Groupon deal, Carly's Bachelorette Party, Taco Burrito House at 2am, etc. The less you spend in this category, the more you get to save, but $700/mo should be PLENTY.
$500 RAINY DAY SAVINGS
Your “savings” categories should be a bit more specific than just “savings”. Between retirement, your “rainy day” fund and your travel fund, make sure you have all of these totals either itemized in your budget or actually sitting in different bank accounts. Your travel account should not be in lieu of having savings in the bank for an unexpected health bill, backup for job loss or anything in between.
You’ll also want to allocate money to “come back to” at the end of your trip.
$700 travel related Savings
This is the number, more or less, left over based on how you did in the above category. No matter whether this looks like a lot or a little to you, watch how it can accumulate over time:
3 months: $2100
6 months: $4200
1 year: $8400
So, assuming you make $55,000, live in Chicago, and are living/traveling with someone who makes the same salary and push your spending habits to meet the requirements listed above, you would have enough money after one year to travel around SE Asia for 6 months. Just like that! Incentive enough?
I am just putting a label on that amount of money to make a point. You could certainly travel for less in that region, you certainly could travel for more. You could also blow it in a week in the Maldives - but hey, it's your money, and you SAVED IT! WHOO!
PSA: Please do not go away and travel until your last cent leaving yourself no safety net! Make More, Save More, BUT DON'T SPEND MORE.
How to save even MORE money
This Santorini wine tasting was only $20/pp. Stay in this weekend and instead use the cash for splurges on your trip. Wine tastes better overlooking the Mediterranean sea anyways.
Any salary, then, above $55,000, could increase that savings number. It's insanely harder to live like you're making $45k when you're making a combined home income of $150k. It's hard to avoid lifestyle creep or to upgrade your car, or your apartment, but keep reading below to see how salary raises can impact your savings.
Living in a less expensive city than Chicago increases that number. Living more frugally in Chicago than my projected outline increases that number. Playing around with your own budget is when you can really see what you are spending money on, and which areas can you decrease spending. Let's say you make:
$70,000 annual salary
A $70k annual salary in Chicago is what 6 websites suggested was the "average salary". I still don't believe that, but let's just say you do make $70k/year. If you make $70k per year but in turn, go out more, live in a nicer apartment and have a bad shopping habit, you, my friend, will end up with no different of a savings account than example #1 above (it may even be worse!)
The only way someone making $70k can save more than someone making $55k is if they live like they still make $55k.
$70k SPENDING VS SAVING
$70k Annual Salary in Chicago = $3920 after taxes, 401k contribution and Healthcare
$1600 RENT
$400 GROCERIES
$400 RESTAURANTS
$90 PHONE
$50 CABLE/INTERNET
$500 TRANSPORTATION
$700 OTHER
$1480 SAVINGS
$1500 TRAVEL FUND
SPENDING VS SAVING
$70k Annual Salary in Chicago = $3920 after taxes, 401k contribution and Healthcare
f you successfully avoid Lifestyle Creep and make $70k but spend like you did when you made $55k then:
3 months: $4500
6 months: $9000
1 year: $18,000
Change your life in 2021.
No matter your salary, change your spending habits to find the lowest comfortable cost of living. From there, just be patient and watch the $$dollars$$ roll in!
The Challenge
While we watched our savings account grow and grow, we became more financially comfortable and confident. But that's when the crazy mind-warp started to happen. We HAD money but couldn't (wouldn't) spend it!
"But we need a new coffee table. We have to go to dinner with Samantha. I have nothing to wear! A $50 top isn't even going to put a dent in that $20k of savings!" Says the devil on my shoulder.
"But you can LIVE on $50 a day in many places in the world" The Nomadic Matt angel on my shoulder reminded me.
Each top I didn't buy is another day of travel.
BUT YOU STILL MADE IT?
Yes. We got sick of our 1br, 700 sq ft apartment with no dishwasher or garbage disposal; using quarters for laundry; only owning two chairs and moving one from my desk over to the kitchen table every night to consume another Costco-created meal. We constantly felt in each other's way and like we didn't even have enough space (or chairs!) to have friends over. (Sheesh, on paper that all does sound pretty ridiculous!) But the most ridiculous part was sitting there feeling like that when we were looking at $30k in the bank. Then $50k. Then $70k. Things could be different.
We lived like this together for 2 years. (I was in that apartment for 3!) But let me tell you not a day went by that we weren't proud of what we were doing. Yes, it was hard, and we had to continuously remind ourselves that we had money and that eventually this would all pay off (pun!).
At the end of June 2015 our lease on our apartment ended. We temporarily crashed around between our parent's houses (thanks) and although this is not the dream of many newlywed couples, treehouse airbnbs, Mediterranean road trips and Philippine beaches called our name.
Recipe for Success
Regardless of whether we traveled or not, living like that while we were young was one of the best ways we were able to set ourselves up for success. We had a good head on our shoulders about the challenges of budgeting and the struggles of sticking to a budget (despite having cash in the bank!)
Because of our safety net we were also able to start our own business. Check out our 5 year “overnight success” story here.