The first step of planning a family gap year (after all of your research) is setting aside money to make your dream a reality. Every family will have a different budget, depending on their level of comfort, size of family, cost of living, etc. Please remember these are very personal decisions and what works for us may not work for everyone.
Here is how we saved $40,000 towards our dream of taking a family gap year.
The number one priority for us was to reduce our monthly expenses.
We moved from a 2-bedroom home to a 2-bedroom condo than to a studio to save more money. We reduced our monthly rent payment from $1,895 to $1,400. We do not have a problem being near one another. We like to think of it as training for our life on the road.
Cut the Cord
Who still pays for cable? The cost of cable is continuing to rise, and it seems like there is no end in sight. We subscribe to Netflix, Amazon Prime, and Hulu. The total costs of these services are less than $30 a month.
Couponing is a great way to reduce your monthly expenses on items such as toilet paper, paper towels, soap, shampoo, razors, lotion, and toothpaste. We have not purchased any of those items in over a year due to my wife’s obsession with couponing.
Buy in Bulk
Costco, Sam’s Club, or BJ’s are great alternatives to traditional stores because you can buy in bulk and save more money per unit There is an annual membership, but you make up for the costs in savings. These memberships often come with other benefits such as vacation packages, car rental discounts, tickets to attractions, and home services. Don’t forget you may also be able to save on gas using your membership as well.
I do not see anything to automatically debit from our account except for our cell phone bill and Netflix. Although it may be convenient to set it and forget it this can lead to you paying for services that you may no longer need or use. I set up a spreadsheet to review, track and pay our monthly expenses. This makes it easier for me to know exactly where our money is going.
Understanding Wants vs. Needs
When our son was born, I wanted to buy a shiny new SUV. I searched for weeks and could not decide between a Toyota Rav-4 and Honda CR-V. After a conversation with my wife, I realized I was being crazy. Why does a newborn baby need more space? What about the insurance cost? How about gas?
After realizing all of this we decided to only have 1 car. We did not need a second car even though I wanted one. This worked out for us because I could drop off my wife and son on my way to work and pick them up when I got off. Her job was on the way to my job, so I did not have to go out of the way. We only have 1 car to maintain and plan to sell it before we leave.
Don’t get me wrong we still enjoy life, but we do not spend frivolously on “wants”. This is especially hard with a baby and being within walking distance of Target (the struggle is real). We realized we were spending on average $250 a month at Target on mostly nothing (cute baby stuff, Starbucks, décor, and randomness). We challenged ourselves to $40 every 2 weeks to spend on anything but once that was gone there was no more money. This forced us to become creative and think of a lot of cost-efficient ways to have fun. One of our favorite things to do is a picnic in the park. This is a fun free activity that we all can enjoy and get us out of the house.
There are a lot of different ways to approach debt. The approach that we use is taking the “quick wins”. We pay off the least amount of debt first and chip away at the larger amounts. Luckily, we do not have much debt outside of regular credit card use (for rewards points) and student loans. We pay off our credit cards in full monthly to avoid the interest and reap the benefits of travel rewards.
How I paid off $50,000 in student loan debt in 2 years
Our money-saving strategy is to have a certain portion of our paychecks deposited into a savings account every 2 weeks that we do not touch. This allows us to save without any effort. You can’t miss money you don’t see. To reach our goal faster in 2017 we decided to live on one income. We saved 100% of my wife’s income and used my income to pay for all the bills. This was great because we saved more and spent less. This strategy saved us $20,000 over 2 years.
The final step is to increase our income in the event of an emergency. I know what you are thinking “that’s what savings are for”, but it breaks my heart to take money out of our savings account. I have always used the method of taking my annual pay increases and rolling them into my retirement account. For example, if I get a 2% raise, I increase my retirement contribution by 2% to keep all the money. This practice has led me to a retirement contribution of 15% every 2 weeks. Since I cannot access this money until I am 59 ½ we have decided to reduce that contribution to 10%. With the additional money that we are bringing in from that reduction, we are using to take trips during my remaining maternity leave from work.
We set up this blog and my wife started teaching English to generate more income. Although we are not making a lot of money, something is more than nothing. We also started selling a lot of the items that we no longer need.