Tuesday, June 9, 2015

Budgeting in Central America

I don't think I've talked at all about how I planned my gap year from a financial perspective. That's one thing I always assume people wonder about, but social manners don't really allow you to ask someone "how are you paying for that?".

I quit my job in July 2014 and didn't plan to work again until at least Labor Day 2015, so 14-15 months without an income. The accountant in me was very deliberate in making sure I could fund this time off without breaking the bank or using a ton of savings. Not having a significant other, wedding or child to spend money on definitely helps :) (not to say I wouldn't love to spend money on those things). My daily spending habits also changed. No more buying clothes or shoes (for the most part). Where I use to wander the aisles of Target on a weekend (and easily accumulate $100 when nothing was on my list), I now wander the aisles of Salvation Army or Goodwill. I find less and what I do find is cheaper :). The other big change is going from a credit to cash wallet. I still need credit cards for some stuff and I use them for gas but I try to use cash for daily purchases. Actually seeing my money dwindle down in the wallet is helpful protection against impulse purchases.

I then looked at what my monthly outflows would be. Luckily no rent (thanks mom and dad!) and I had managed to pay off any old debts while I was still working. That left health insurance as my next largest monthly expense. I've been lucky in the health department and managed to save a lot of cash in the HSA offered by my old employer's health plans. So I can keep my health insurance under COBRA (up to 18 months) and pay the premiums from my HSA and not my bank account.  

My remaining monthly expenses include cell phone, food, gas and Hulu/Netflix subscriptions. 

All of these are factors into how I saved up some money and how I would limit my expenses going forward. Airline miles and hotel points (and friends with hotel points) have helped a lot up to this point. And in the U.S., when I camp it ranges from no cost (free) to maybe $30/35 at a KOA. Between camping and staying with friends and cheaper gas prices, it hasn't been too bad. Also my activities are focused on National Parks and related areas (monuments, battlefields, forests, etc.). An annual pass is $80 and then you get in free everywhere. I keep an iced cooler in my trunk and try to maintain my own little pantry. So traveling cheaply in the U.S. hasn't been too hard. 

Finally to my main point - how to budget for a winter in the tropics! I wanted to escape the worst of winter but not blow my budget on hotels and eating out every day. First I did my research. My airline miles go the furthest if I went south. I speak Spanish so Central America would be good for that. Costa Rica and Belize are the top two spots people will talk about (based on personal observations). They are the most developed and therefore the most expensive as well. But I wanted a beach and snorkel experience, so Belize was on the table. Guatemala ended up being the other country that was cheap, somewhat developed and had a good variety of places. El Salvador and Nicaragua are a couple other good cheap options. I gave myself one week in Belize at the end (sort of as something to look forward to) and the rest in Guatemala. The longer you stay in one spot, the cheaper per night rate you can get. So I stayed my first place for one month. Also, it had a kitchen and it allowed me to buy groceries and not always eat out. 

I didn't do a detailed budget but wanted to spend $1,000 to $1,500 per month ($2-3k total). I rounded that down to $2k, backed out my first month of housing ($600) and last week of housing ($400) as these were booked and essentially spent already. Then I used a slightly high estimate of per night lodging in Guatemala for the rest of the days. I didn't book any of that prior to leaving the U.S., but I had researched to get an idea of cost. I used $30/night (30*3 weeks = $630), which brought total expenses to $1,630. That left $370 for food, transport and activities/shopping if I went with the low budget. Whoa. Math sucks sometimes :). That's roughly $6 per day at the low budget or $23 per day on the high budget. I decided to give myself $13 per day. Not sure why, just did. 

The first week I did great and on budget. However I didn't really do much of anything. No tours. Just walk to town, eat cheap food for one meal, walk home. I decided I needed to stick to $13 for daily stuff (mainly food) but had to spend for activities and whatnot - but within reason. I still looked for the bargains. I kept a running total each day of all expenses and how I fared against budget at the end of the day. After that first week I was never again positive against my budget :). But this is also why I aimed low with $13/ day instead of $23/day. 

How did I do? Probably a fail.  $3,811 (roughly based on estimated foreign exchange rates) for 59 days of summer during winter :).  That excludes any airfare related costs but does include housing, transportation, tours, tips, food, souvenirs, gifts and mailing home that big package. 

I don't have the data in excel like a good accountant, so I can't analyze it too much. But here are some break outs. 
Activities $1,162 (tours, tutoring, entrance fees)
Food $805 (eating out, groceries, snacks)
Souvenirs/gifts $173 (painting, boots, postcards, gifts)
Transport $275 (shuttles, taxis, buses)
Housing $1,296 

Clearly I did better on housing than expected but my activities weren't really budgeted at all and ended up being a lot of the budget. They were all definitely worth it. I could also tell my financial restraint grew more relaxed as the trip went on. I'm not sure why other than I got tired of telling myself 'no'. Definitely makes me appreciate my old employment and that I've been lucky enough to not need to be on a very strict financial diet before. I do hope when I work again that I can keep some of my good financial habits from this gap year :). 

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