What is the first reaction you receive when you tell someone that you’re traveling? I ask this question, out of curiosity, because whenever me and Ruby go traveling during the year, people we talk to sometimes express surprise and often ask us how we can afford to travel so much. One of the most common questions we’ve received is, “Are your families rich or something?” (for the record, no!). Travel is classified as a “leisure” activity, but that leisure word really means “luxury” for most people in the United States, at least from my experience. It’s as if there is a bit of a stigma attached to the word here, so that when you say, “I’ve been here and here”, people are usually thinking “Must be great to travel like that.” So let’s re-examine the real cost of travel: is it really as expensive as people think?
Consider two couples:
Couple A – Buys $250,000 house, 30 year fixed mortgage at 4%. Down payment is 20%. Total basic cost of house after 30 years is $393,000.
Couple B – Buys $115,000 townhouse, 30 year fixed mortgage at 4%. Down payment is 20%. HOA is $2,000 per year. Total basic cost of house after 30 years is $280,000 (includes HOA).
*HOA – Homeowner’s Association Fees. These are additional costs that homeowners pay for various things: some developments use this fee to take charge of your exteriors (ie painting, landscaping, security, roads, lights in the complex). It can be a bad thing for some, it can be a good thing for others. We discuss this more in other articles within the Homestead section.
Now, over the course of the next 30 years, both couples would like to travel. Couple B has more room in their budget and spends $6,000 every year on travel. Couple A has more money tied up in the more expensive house, so they spend $2,000 on travel per year.
After 30 years, the total cost of travel + house is:
Couple A – $393,000 house + $60,000 travel = $453,000
Couple B – $280,000 house + $180,000 travel = $460,000
If we assume that it takes $2,000 to travel to one place (be that domestic or international), then Couple A traveled to 30 places over 30 years and Couple B traveled to 90 places over 30 years. Pretty wide chasm there between the two. Granted, this is crude mathematics at its best, but I believe the point of it makes you ask yourself, “Which Couple do you wish to become?”
What I usually tell people who ask us how we can afford to travel:
Travel is a very high priority, and therefore any major financial decision that we make, be that a car or a house, has to revolve around that priority
Don’t get me wrong, it would be great to have a nice car and grow up in a big house with a backyard and pool, but 30 years of traveling around the world will bring us more satisfaction than a big house with a backyard. That is the real cost of travel for us.
Traveling doesn’t necessarily mean cutting down on your lifestyle. If you are willing to spend $300,000 for a house, then you can certainly downsize to a $200,000 house and spend some of the money that you would have spent on the $300,000 house towards travel. It’s not wasteful, just long-term planning.
Of course, having kids in the future could change that outlook, because life is never linear and symmetrical. We will be posting the details of our travels and adventures throughout the year, which will include how much money we will spend on each trip. Thankfully, we use travel hacking tools (which we will also talk about in detail) to increase the amount of trips we can make in a year and spend less money doing so (hello free flights, hotels and activities!). In essence, we wish to stress that you, too, can travel more than you think, it just requires a re-think in terms of how you wish to live your life.
If you want to book that flight to Mexico, then book it and don’t buy the new iPhone version. Chances are, that older version is still fine and the Mexico trip will give you more happiness than longer battery life and a fancy screen. So what is the real cost of travel? Well, it depends on you: What are your priorities?