How We Travelled For a Month With No Income

November 24, 2014 Permalink

You want to travel but you don’t have enough vacation time from work, and you have a mortgage and other bills to pay. So you never end up going on that trip, and opt instead to go on short, week-long vacations to get away.

I hear this a lot from readers, friends, and family members. We had the same concerns when we booked our honeymoon in late 2013, not knowing whether we would be able to be paid for the time off.

My husband does not get much vacation time from his job each year (just the statutory minimum) and because we got married in our hometown, he needed to take some time off for the wedding.

I left my full-time job with excellent benefits and vacation time the week of the wedding for a temporary position offering me a raise but no benefits or vacation time at all.

This left both of us with no income from day jobs when we went on our trip.

I can also tell you that I worked very little on our trip. Because of the nature of the honeymoon – travelling to third world countries in South Asia and spending a large portion of the time trekking and/or travelling on unreliable busses, with our bags in the capable hands of strong young Nepali men – I did not bring my laptop. Any work that I did manage to get done was via my iPhone, through a weak and unreliable wifi signal.

prayer wheels

Despite our lack of income for the month we were gone, we still have a mortgage and bills to pay. It was surprisingly simple to prepare financially for no income for a month. Here’s how we did it:

Ramping Up the Side Income

Besides the day jobs, both J and I have side income. J runs a small eCommerce business that we built earlier this year, based on the things that I design, and I have some decent side income from my various side hustles.

When we knew that we’d be left without an income during our honeymoon, so we got to work making extra money. Between following up with clients, raising product prices, and working more, we were able to save even more than we’d normally be able to save.

We Sold Some Things We Weren’t Using

After our wedding and before we left on our trip, I spent the summer cleaning up several of our rooms and listing the things that we didn’t need on Craigslist.

We ended up selling some clothes that we no longer wear, some household items, books, DVDs, and electronics. I didn’t sell things just for money for our trip, but because we got many wedding gifts and we wanted to create space for everything.

I was also horrified when my husband started calling one of our spare rooms the “room that makes things disappear”, because we tended to put things in there and close the door, pretending they didn’t exist.

We ended up with just over $500.00 to bring on our trip, which we used for spending money for about half of our time in Kathmandu and Bali.

Cut Back and Check Priorities

When we initially booked our trek, we thought that we would be going away for twelve days. That’s how long our time in Nepal was, and we didn’t consider going anywhere else after that leg. A few weeks later, though, we noticed a good price on a flight to Bali, so we quickly booked it and extended our stay.

We knew that being away for a month would be expensive, both in opportunity and travel costs, we decided to cut back.

Instead of eating out each week like we had previously, we tried to have date nights at home. We watched our grocery spending more closely and cut expenses that we didn’t need but had somehow crept up on us.

This helped not only to provide us with a bigger financial buffer when we did leave, but also ensure that we weren’t charged more than necessary for services when we left.

 

If you travel to a country with a far lower cost of living, your expenses will be very low when you are travelling. With enough preparation, it’s really not that hard to take off somewhere without an income for a period of time and still come back with money in the bank and crisis free.

2 Little Known Ways That Retailers Are Making You Fat and Broke

November 17, 2014 Permalink

Hi everyone – I am doing some research for a new project I’m doing, and would highly appreciate it if you would please answer a few questions on SurveyMonkey with respect to employment. The survey will be quick and easy! Click here to complete it. 

Every year, consumer spending on unhealthy, fatty processed “food” increases.

It’s not that North Americans are starting to get weaker willed as the years pass – it’s that retail giants collect more and more data each year. They are getting more savvy when it comes to pricing, product placement, and general consumer manipulation.

Human behaviour is heavily influenced by environment. Have you noticed that when you walk into a health food store, you get excited about eating healthy food? You probably walk out of the store with fresh produce, nuts, and organic food.

When you are in a mall, chances are you’ll consume some sort of unhealthy mall food, such as hot dogs, cinnamon buns, or fries, because it’s there.

Our environment influences what we spend money on, what we eat, and even what we think about.

You are far less likely to want potato chips if they aren’t out on the counter. You are also far less likely to want to watch television if your television isn’t positioned in front of your couch.

Knowing that human behaviour is so heavily influenced by environment is how many retailers get us to buy things on impulse.

There are many studies that examine consumer behaviour and movement throughout a store. It has been found that consumers automatically turn right when they walk into a store.

This isn’t something that you think about, but it was observed again and again.

Grocers (or at least the smart ones) take this into account when considering product placement. Consider how most chains place fresh fruit and vegetables to the right of the store, to ensure that is the first thing that consumers see when they walk through the doors. As a result, customers end up getting their produce first, before going down the aisles and perusing other goods.

Studies have shown a huge increase in unhealthy, processed foods purchased if the customer shops for healthy food like produce first. So it makes sense that the grocer would set up their stores this way. More products purchased = more profit.

Thus, if you went through the packaged food aisle first, you would be less likely to cave to impulse purchases of these unhealthy foods.

Consider also that the pharmacy is usually at the back of the store. You have to walk through aisles of junk food before hitting the pharmacy. If you only went to the store and only picked up your prescription, the store wouldn’t benefit from your business as much as if you were to buy something.

Large retailers like Walmart spend a lot of time and money analyzing this type of data. They use it to manipulate what you buy under different conditions.

You Buy Things You Don’t Want Or Need Because They are Relatively Desirable

There have been dozens of studies to analyze consumer behaviours resulting from different pricing schemes.

It has been shown that humans need reference points to make decisions. We need to compare our decisions against something else. If we are given three options – for instance a plain donut, a plain donut with icing, and a chocolate donut – we will almost always choose the option that is slightly better compared to the option like it. So most people will choose the plain donut with icing, even if they really prefer chocolate.

That’s because, relative to the plain donut without icing, the plain one with is better.

Retailers know this about humans, so they will price their goods accordingly.

This is described in great detail in Predictably Irrational, a fabulous book by Dan Ariely. In the book, Ariely describes a pricing observation with a popular newspaper. There were options for only web access (cheapest), only print (more expensive), and both print and web (comparable in pricing to the print only access).

Regardless of whether you only wanted web access to the newspaper when you were looking to sign up, you’re far more likely to pay for the print and web package, because relative to the print only package, it’s a better deal.

Now you know the results of these two studies and can probably think of a dozen times you’ve fallen into these traps. I know I can.

After I read about that study, I was driving to the mall to get some sunglasses. I pulled into the parking lot, and saw a handful of parking spots available. There was one parking spot under a tree, which provided shade on a hot summer day. There were two parking spots, side by side. One was next to a small car, and one next to a large truck.

You can probably guess which parking spot I chose. Instead of the desirable parking spot on its own in the shade, I chose the parking spot next to the small car. Relative to the one next to the huge truck, it was the better spot.

Think about how you’ve previously been sucked into these traps. You’re not immune to them (neither am I!) but recognizing them for what they are and how you’ve been influenced by them in the past can be a powerful behaviour hack.

If you have a hard time controlling impulses when you are at the grocery store or find yourself buying things you don’t need because they are a good deal relative to another package or product, you can use this information to your benefit. Keep these studies in the back of your mind next time you go to buy something or go grocery shopping. Manipulate your environment to ensure success.

How to Fail at Your Big, Hairy, Audacious Goal (And How to Set A Goal That You’ll Reach)

November 10, 2014 Permalink

A few years ago, my husband and I set a huge, exciting goal: to save up $80,000 over the course of 3 years for a down payment.

Initially, our goal amped us up. We imagined the huge benefit that having an $80,000 down payment would eventually provide. We got to work budgeting, doing the math, and analyzing the numbers. Then, we started to actually transfer money into the down payment account as our money trickled in.

There was something wrong, though. The savings were anticlimactic. In the grand scheme of $80,000, putting away $100 here and $300 there seemed pretty pathetic.

After saving for two months for $2,000, we realized that we’d only reached 1/40th of the goal, and gave up.

Our big, hairy, audacious goal was a bust, and left us feeling like failures.

What Went Wrong?

We had this great goal. It met the “SMART” criteria – it was specific, measurable, attainable, relevant, and timely.

We certainly could have saved up $80,000 over the course of three years. At $26,000 per year, it would have only been $13,000 each, which was attainable with our incomes and expenses at the time.

What went wrong was simply that the goal was too removed from what we were already doing.

We weren’t actually saving any money at the time toward a down payment. There were no small steps or changes in our habits to build us up. We wanted to go from saving nothing to saving over $1,000 per month each, every single month.

Small Wins = Big Gains

Instead of being a huge motivator, our big, hairy, audacious goal ended up being discouraging. We made very little progress over the few months after we set the goal, despite our best intentions. If we had set a goal like saving $300 per month each and then working our way up from there, we would have seen actual progress. That would have been motivating for us. We would have been able to move from $300 per month up to $500, then upward from there.

Our brains need to see small successes to remain motivated.

This is why Dave Ramsey’s Debt Snowball method of debt repayment actually works, whereas it’s rival, the method of paying off the highest interest debt first isn’t as successful.

If you are unfamiliar with Dave Ramsey’s Debt Snowball method, it looks like this:

  • List all of your debts, from largest to smallest by amount owed
  • Continue paying the minimum payment on all debts, and funnel all extra debt-repayment funds toward the smallest debt
  • When the smallest debt is paid off, funnel all extra funds toward the second smallest debt, and so on.

This is quite controversial in the world of personal finance (lol, I know, right?). Many will argue that the debt that is repaid first should be the one with the highest interest rate, which makes sense from a savings point of view.

On paper, this is far better advice, but it doesn’t work. People don’t stick to it. Humans need the affirmation of small wins. It gives us the sense that we are making progress and gives us the confidence we need to continue. Ramsey’s Debt Snowball method takes care of the psychological need to have those small wins.

Is it smarter financially to pay off the debt with the highest interest rate? Sure! But in reality, the financially smarter route is the one that you’ll actually take.

When the first debt is paid off – maybe it’s a $250 credit card – it provides a sense of accomplishment. It’s a small win that makes you believe you can do what you set out to do.

Use Psychology to Set Goals You’ll Actually Reach

Knowing how our brains need small wins to stay motivated, actually make progress by avoiding logical thinking (our brains are NOT logical) and set goals that are almost easy to attain, especially when you are starting from scratch.

– Instead of setting a goal to pay off $40,000 worth of debt in one year, focus on getting to the first $5,000 of debt payoff. Once you reach $5,000 per month, focus on the next $7,000.

– Instead of setting your sights on losing 50 pounds, focus on losing just one. Once you lose one pound, increase your goal to two more.

– Instead of trying to figure out how to build a business that will bring in $5,000 per month, work on earning $500 per month.

With these goals, every time that you transfer $100 onto a credit card, go for a jog, or earn $75, you are making huge progress toward your goal. Reaching 25% of your goal feels far better than reaching 1% of your goal.

Sure, we probably could make progress faster than this – but we don’t. Instead of setting these goals and actually reaching them, we set these goals, realize we can’t run before we learn to walk, and give up completely.

In our situation, going from $0 to $5,000 saved would have been motivating. After we gave up, we spent a couple of months just letting the money accumulate and then set another goal of saving just $5,000. This was far more effective.

So it’s easy. Scale it back. Sure, keep your huge goal, write it down somewhere, and don’t forget about it. But to actually reach it, set yourself up for small wins. And don’t forget to change your environment.