Mo’ Money Mo’ Problems

Originally I was planning on expanding on what Theresa said in her latest post, just below this one. If you haven’t read it yet, check it out, it’ll make you realize how affordable a RTW trip can be with some planning. But reading through it, I realized she already pretty much covered what I planned on saying. To sum it up in one sentence, it’s very financially doable.

So I thought I would give you a little insight into what we plan on doing financially while we are traveling. I know that this isn’t the sexiest of subjects, but it’s a pretty necessary component to traveling. It is a very different financial world abroad than it is here in the US. Both of us, like most people our age, are creatures of the modern financial world. Our preference for using credit cards is met by almost ubiquitous acceptance of them everywhere from parking garages to the corner deli (we, of course, pay them off every month, and we get some great rewards from it). We rarely carry cash. Our salaries are directly deposited. We dabble in the stock market. A lot of these things are going to change when we go on this trip (starting with the no more salaries part).

There are a few main goals we have financially while we are traveling:

1. Maintain a reasonably sized pool of cash that will be on our person.

Our travels will be mostly in the developing world, where cash is most definitely still king. Credit cards and other forms of electronic payment are by and large not accepted, at least outside of major cities, where even there they are mostly confined to pricier hotels and restaurants. For daily usage, we will need to be carrying cash.

2. Keep enough funds for our entire trip in savings with easy access.

One thing that has become pretty easy to find (again, in most major cities) are ATMs. That is how we plan to maintain the aforementioned cash pool. We also want to avoid ATM fees and while earning as much interest as possible, and fortunately, a number of checking and savings accounts have started to offer this features. We probably will open a Fidelity high yield checking account that seems to meet all of these requirements (I’m sure other companies have similar offers, but we have been happy with our previous experiences with Fidelity).

3. Minimize the number of credit cards we carry and minimize foreign transaction fees we pay

As I said, there are not many places to use credit cards in the developing world. They have their moments of extreme usefulness, however, so we will carry a few cards (a primary one and two backups) with us and use them when we can. We do have too many credit cards; this stems from me applying for cards for a myriad of great benefits — this has also contributed to our frequent flyer mile collection. So we will cancel or consolidate many of these that we will not use. Some cards are better than others when it comes to travel because there are extra fees added on for foreign transactions. There is a standard 1% fee that Visa or Mastercard adds, and the issuer of the card (ie Chase or CitiBank) usually adds an additional 2% charge. Even with these fees added, credit cards still offer the best exchange rate … banks and currency exchanges will charge heftier fees. Some card do even better though. We will be using almost exclusively a Capital One, that not only has no fees of their own, but they refund the 1% Visa fee, and our card pays 1.25% back, for a total savings of 4.25% on everything we charge compared to an average card. Another useful card to carry is an American Express card, because although they are rarely accepted outside the US, they have travel offices in many larger cities accessible only to members that can be very helpful. You can find the foreign transaction fee policies for most credit card companies here.

4. Simplify our investments and long-term cash.

Like I mentioned, we dabble in the stock market. This is not something we are going to want to think about at all during our travels, and a lot can charge in a year. Just think back to how hot real estate was at the beginning of the year compared to now. So we want to change our investments into something simple and safe. We’ll be selling most of our individual stocks and putting some money into some safer mutual funds and CD’s, but I won’t bore you with any more specifics here.

I think we’ve all had our share of finance for today. But with this simple set of changes, we will have easy access to cash, the best value from our credit, and won’t have to worry about our money for the trip or for afterward. So we’ve got that going for us, which is nice.

One Reply to “Mo’ Money Mo’ Problems”

  1. I’ll take care of your money for you when your gone…I can put it to some good use. College is pretty expensive these days I hear. Ha.

    That’s why I tend to keep my funds low so I don’t have to worry about all these money issues.
    That’s what I’ll keep telling myself atleast.

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