Wednesday, December 4, 2013

A Brief Guide to Arbitrage - Why Long Term Travel is More Affordable than You Think

Since we started adventuring in 2012 with our 5 1/2 month sabbatical to hike the AT, we've heard countless people say "I wish I could afford to do what you're doing".......what we're doing being travel and adventure for extended periods of time.  But the ironic truth is that they can, and we'd like to set this post aside to explain how.

Let's use the best example I know of - the Aussies.  If you've ever traveled internationally, you've seen them.  They are absolutely everywhere.  Australians have a magical ability to live lives where they work for 6 months, and then travel all over the world the rest of the year - every year.  It almost becomes comical to ask them about it....."oh, I'm just backpacking through South America for 15 months, or maybe I'll go to the states for awhile, I'm not sure yet."  Seriously?  How do they do it???

I think it all comes down to culture.  This seems to be the best kept secret of all time - life in the US is extremely expensive, both of it's own right, and by the fact that our culture makes us feel like we need to spend a ton of money.  In the same vein, our culture has taught us to make traveling and taking time off even more expensive than daily life.  The crazy truth is that for many people, traveling is not necessarily more expensive than day-to-day life in the US.  There are countless great books out there that are trying to get this truth out (Vagabonding: An Uncommon Guide to the Art of Long-Term World Travel by Rolf Potts and The 4-Hour Workweek by Tim Ferriss, to name a few), but since this discovery has made such a huge impact on our own lives, we want to do our part to share the message too.

On the whole, Americans treat vacations like a binge.  We work hard for most of our waking hours 50 out of 52 weeks of the year (maybe 48 weeks if your job has a rocking vacation policy), and then we take the remaining 2 - 4 weeks, and cram into them a year's worth of holidays, weddings, visiting with friends, relaxation time, sightseeing, and travel.  And because we only get to do this a few times a year, we feel justified to go all out - so we fly to Hawaii for a week, stay in an amazing hotel (or let's face, even a moderately-decent hotel there for a week can break the bank), eat out every night, drink some great wine, go parasailing, and suddenly, we've spent a small fortune on one wonderful but very expensive week.  

And then we find ourselves asking the question "how can some people afford to travel so much???"  Well, long story short, long-term travel is nothing like blowing a chunk of your savings on a typical vacation to Hawaii. To illustrate, let me share a few examples from our experience.  Below are some sample cost comparisons from a few of our bigger monthly expenses on our adventures, side by side with those same expenses while living in downtown Chicago.

These aren't by any means comprehensive or exact figures, but they are a few realistic examples based on our experience, and I think they get the point across.

Sample Cost Comparisons

Realistic Monthly Expenses for a Couple
AT Thru-Hike
Traveling Ecuador
Living in Downtown Chicago
Monthly Rent/Utilties
Storage Unit
Monthly Total
6 Month Total

As you can see, living in Chicago is relatively expensive.  Once you factor in just the savings for these few bigger expenses (i.e., rent), you've got a whole lot of wiggle room to play with in terms of funding flights and other travel expenses.  I would also like to emphasize that in Ecuador, we were doing anything but slumming it.  For example, for $400/month, we had (with two roommates) a brand new three bedroom, three bathroom condo in the dead center of downtown Quito, including utilities, WIFI, 24-hour doorman, spa, gym, and a maid who cooked and cleaned all day for three days/week.  There is NO WAY we could afford that in Chicago.

Proportionally, it may not cost much more to travel internationally for 3 months than it does to do the same thing for two weeks. In fact, renting an apartment for three months in Quito is cheaper than staying just one week at the Holiday Inn right down the street - true story!

Of course, a major consideration in all of this is income - sure hiking for 6 months may be cheaper than living in Chicago, but you still have to have some sort of income, or you'll eventually run out of money, right? There are several ways to address this, but first, it's important to try and accept one idea that for some reason many people have a hard time believing - there are a lot of other ways to make money outside of getting an office job and working 40 - 50 hours per week every week for the rest of your life.  Some of the most common ways to fund long-term travel are outlined below:

1.) Save Up and Request a Leave of Absence
Take a page from the Aussie's book - work for a while, save some money, and then ask your employer for an extended leave of absence.  That's what I did when we hiked the AT.  Employers worth staying with will be happy to consider this.  And it's amazing how quickly you can save money by cutting a few things that you think you "need", but actually make no impact on your happiness whatsoever.   My favorites include:
  • Drop your cable service and use Netflix, Hulu, and/or iTunes instead
  • Rent Kindle books from the library instead of buying them
  • Find an amazing, cheap, BYOB restaurant and make it your go-to if you love to eat out as much as we do.  Andy's Thai Kitchen in Chicago is ours!  
  • If you have a gym membership you use less than once/week, ditch it and buy one-off classes at a yoga or cycling studio instead, or look for studio specials on Groupon.  Super embarrassing, but I had one of these for a really, really long time.   
These little things could easily save you more than $1,500 over a six-month period of time, which can go a long way toward a trip to somewhere like Ecuador.  Not so painful, right?  

2.) Negotiate a Flexible Work Situation that Allows Simultaneous Travel/Work
If a leave of absence isn't your cup of tea, another option is to negotiate a remote, part-time work situation, and travel while you work.  This is what Brian and I are currently doing; he's working part-time remotely for his US-based company, which is covering the cost of our travel in Ecuador.  And this brings us back to the title of this post - arbitrage (or basically, making money by exploiting price or currency differences).  By earning a US salary and spending your money in countries where things are much cheaper, your dollar goes a lot farther.  As Tim Ferriss puts it in The 4-Hour Workweek, "Fun things happen when you earn dollars, live on pesos, and compensate in rupees."

3.) Work Your Way Through Another Country
Another option - while you travel, use work-for-stay or volunteer-for-stay arrangements, teach English lessons, and find work along the way to fund your trip.  In foreign countries there is often decent demand for native English speakers in the education and tourism industries.  Our current Spanish tutor (yup, she's Australian) has been working her way through South America for over a year in this manner. 

I will make one concession - I recognize that all of this is much easier to do being a (relatively) young, unattached couple without a mortgage, car, kids, or even pets to consider.  But the basic principle applies to everyone just the same:  If you can afford daily life in the US, and especially if you can afford 2+ weeks of "binge vacations" every year, then you can afford long-term travel.  You just may have to think outside of the box a bit to make it happen.  I know it's hard to believe, but I promise you it's true.  We're living, breathing proof of it!



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