The True Cost of Travel

The True Cost of TravelI’m leaving for Lima, Peru in less than two weeks, and the trip planning is going strong. I’ve got a packing list ready, dug up all my backpacking essentials and I’ve briefed my dad on how things are going to go. We’ve decided to head north from Lima to spend a little time on the coast to soak up the sun, sand and surf for the first week or so. It will make for a nice holiday before the adventuring begins!

To be honest, there isn’t that much to plan since I prefer more of a spontaneous and plan-as-you-go approach to travel. We’ve got our flights booked, and I will book us a hostel for the first few nights in Lima. I’m also arranging for airport pickup to the hostel since we will be arriving around 1am so I don’t really want to deal with the taxis. They are notorious for overcharging or trying to bring you to a hostel run by their brother/best friend/third cousin instead of where you want to go.

The Coast of Lima, Peru

The Coast of Lima, Peru

For me, this is the first time I take an unpaid leave from work for travel. I went backpacking through Europe during university and I took six months off to backpack across South East Asia, Australia and New Zealand after graduation. But this is the first time where I actually have to consider the loss of income as a real expense. This got me thinking about all the other “hidden” costs of travel. This trip might end up costing me a lot more than I had anticipated.

Tangible Travel Costs

This includes your flights, accommodation, food, overland travel, activities and spending money while travelling. This is what I generally think of as the total cost of my trip, and makes up a large portion of the total costs.

Bonus Travel Costs

These are costs directly associated with your trip that are generally paid before your departure. This includes visa application fees, travel agent fees, travel insurance (don’t travel without it!) and any immunizations you are required to get before you leave for your destination.

Travel Gear Costs

If this is your first big trip, then the amount of gear you need might add up to a lot of cash. Think luggage/backpack, packing cubes, travel-sized toiletries, travel towel, or new walking shoes that you will be spending hours a day in. Some of these items are non-negotiable for an efficient trip, so factor in these costs. This could also include the cost of a new camera, books for the plane, or going to the tanning salon to get a base tan for your beach getaway.

Recurring Bills

You may be gone but your lifestyle back home isn’t going anywhere. You will still be left with the mortgage or rent payment, your car insurance, your cell phone bill, you cable bill and your gym membership fees. You may be able to put some of your expenses on hold while you are away, but there will certainly be some extra bills to pay, even if you aren’t using the services.

On all my previous trips, my only recurring bill had been my cell phone. And on my 6 month adventure, I’d even arranged for someone to take over my phone and contract. So this cost will be quite larger than I am used to!

Lost Income Cost

This is the money you would have made had you stayed home and worked instead of taken a leave from work. For me this is actually the biggest chunk of change since I will be losing more income being away from work than I will be spending while away: South America is a pretty budget-friendly destination.

It kind of makes me cringe when I have to include this in my costs of travel. But the reality is, the money I’m not making while away is money that is not going towards my financial independence, and it’s a big hit.

Lost Benefits Cost

If the loss of income wasn’t a big enough hit, then there are also the lost benefits from taking a leave of absence from work. My employer doesn’t cover their portion of my benefits package while on leave, so there’s an additional cost there. I also don’t receive any matched RRSP contributions from my employer, which is free money that I have to forfeit for the duration of my leave. Depending on your employer and their policy, this might be different for everyone, but it’s definitely not a cost that I had ever considered related to travel before.

 

When you add it all up, the true cost of travel is much more than just the tangible travel costs. Compared to the days when I was a student, travel is much more expensive! It really does put the cost of travel into perspective for me. It is that much more motivation to create sustainable passive income streams and work towards reaching financial independence!

 

Are there any other costs of travel that I may have missed? Do you consider all these related costs when you budget for your trip?

32 Comments on The True Cost of Travel

  1. Bridget
    January 15, 2014 at 7:54 AM (7 months ago)

    omg so jealous. You’re going to have an incredible time! It is WORTH the lost income!

    Reply
    • ThisLifeOnPurpose
      January 15, 2014 at 8:18 AM (7 months ago)

      I value travel immensely and so yes, definitely worth the cost. But I can see why high-salaried employees with a lot of recurring expenses have a hard time getting away for any substantial amount of time.

      Reply
      • eemusings
        January 17, 2014 at 3:26 PM (6 months ago)

        One of the perks of being a lowly writer is you don’t miss out on THAT much income compared to some :) I believe if you’re making a six figure income it makes more sense to milk it for years and then retire early to travel. But yeah, our 6 months cost a little more than what I would’ve earned in that time. Worth it though!

        Reply
        • ThisLifeOnPurpose
          January 17, 2014 at 4:36 PM (6 months ago)

          I think the higher the salary you make, the more difficult it can be to abandon it for travel. This is probably why most travelers I meet are students or recent graduates.

          Reply
  2. Kraig
    January 15, 2014 at 8:32 AM (7 months ago)

    Noëlle,

    WOW, this is so awesome that you’re doing this! Who cares about those costs. You’re sitting pretty and can obviously afford to do this. That’s what living below your means and prioritizing your spending will do.

    Gosh, just like Bridget above, I’m seriously jealous as well. I wish I wasn’t stuck in this Minnesota tundra this winter. It’s been just brutal.

    I’m already making plans for travel either this spring or summer.

    I hope you’ll continue to write on the blog while your away. We all will be looking forward to the posts coming.

    Have a great time and I’ll talk to you soon!

    Kraig

    Reply
    • ThisLifeOnPurpose
      January 15, 2014 at 8:42 AM (7 months ago)

      Thanks Kraig!

      Yes, this trip is definitely the reason why I live below my means and prioritize my spending. Otherwise it just wouldn’t be possible! And getting away from this frigid climate doesn’t hurt either.

      I’m not sure what my posting schedule will be like while away, but I’ll be sure to update as often as I can, photos included!

      Reply
  3. donebyforty
    January 15, 2014 at 9:49 AM (7 months ago)

    I love the holistic analysis. Opportunity costs are real but don’t always make the way into our CBAs. (Presuming that we even do them!) Still, I’m glad you’re going and think you’ll love Peru. Be sure to eat some ceviche! Lots of great places in Lima.

    Reply
    • ThisLifeOnPurpose
      January 15, 2014 at 11:25 AM (7 months ago)

      Thanks. I’ve only tried ceviche once before, but I will have to scope some out as soon as I arrive!

      Reply
  4. Michelle
    January 15, 2014 at 11:00 AM (7 months ago)

    I am so jealous! And this is why I am so happy that I am able to just work from my laptop, because I can go places and still work. You will have a wonderful time though! :)

    Reply
    • ThisLifeOnPurpose
      January 15, 2014 at 11:48 AM (7 months ago)

      Yup, it’s definitely a strong motivation to become location-independent!

      Reply
  5. Sonik
    January 15, 2014 at 2:08 PM (7 months ago)

    Hi Noelle

    What you are doing is amazing and probably the only chance you might get for such an extended trip. When I left for my Round the world in 2012 (wow time flies!), I was 32 and I sacrificed my career to do such a trip. You’re much younger than me, so going away for a few weeks and losing out on income, benefits etc isn’t such a big deal at your age in my opinion. I can’t go away for weeks or months now as my priorities have changed since I came back late 2012, now I’m looking to buy my own apartment and getting promoted at work. So im taking holidays out of my work allowance instead. Also if I wanted to go, I’d have to leave my job completely, and it’s hard getting a job in my field (IT) And I wouldn’t be able to buy an apartment. You’re lucky to be travelling with someone,(I think so) and better that it’s family and male, I went alone for 10 months on my RTW but I dont regret it at all! best thing I’ve ever done in my life. Plus I was lucky to get unpaid leave from work with enough money to fund my trip, having worked through my twenties saving. So go enjoy! You’re only young once.

    Reply
    • ThisLifeOnPurpose
      January 15, 2014 at 9:28 PM (7 months ago)

      I hope it’s not my only opportunity for a trip like this! But it could be, either way I am grateful for it.

      Sounds like you had an amazing time on your round the world trip! Hopefully you will be able to do something like that again some day.

      Reply
  6. Broke Millennial
    January 16, 2014 at 12:20 PM (7 months ago)

    You’re fortunate to be able to take leave like that (even unpaid) without having to quit your job or getting fired. I’m fortunate that I get five weeks of vacation (very generous in the US) so I’m able to take some nice long vacations. Most folks get two weeks — especially only a year or two into a career. Traveling, in my mind, is always worth the money!

    Reply
    • ThisLifeOnPurpose
      January 16, 2014 at 1:21 PM (7 months ago)

      I really do feel fortunate, and even with the added costs of lost income, I’m very grateful to be able to take this kind of trip.

      5 weeks paid vacation is amazing, especially in the US where I’ve heard you have some of the lowest paid vacation rates worldwide. I hear Europe you can sometimes start at 6 weeks, and it goes up from there. Maybe we should take a hint from them!

      Reply
  7. Groovy
    January 16, 2014 at 11:19 PM (7 months ago)

    Have you considered the possible costs to your next job? This employer may be very understanding, your next may not. Especially taking a LOA in your first year. I hope this does not affect your future. Have an amazing time. One always needs holidays!

    Reply
    • ThisLifeOnPurpose
      January 17, 2014 at 9:55 AM (6 months ago)

      In all honesty I doubt it will have much effect on a future job. If anything, travel can teach you more than any education. You learn problem-solving techniques, independence, adaptability and you are seen as someone who likes to take on challenges.

      I’m also interested in working abroad, so showing these traits are even more important when looking for an international assignment.

      Thanks for stopping by!

      Reply
    • eemusings
      January 17, 2014 at 3:28 PM (6 months ago)

      For only five weeks?! Granted I am not from the US but I highly doubt it! If any employer views taking five weeks off as a problem, then gosh, there is something seriously wrong with the culture.

      Reply
  8. Elroy
    January 17, 2014 at 6:44 AM (6 months ago)

    Sounds great. I think spending money on experiences is far better than tangible things. Have fun and keep us updated!

    Reply
    • ThisLifeOnPurpose
      January 17, 2014 at 9:56 AM (6 months ago)

      My thoughts exactly!

      Reply
  9. Kraig
    January 17, 2014 at 9:14 AM (6 months ago)

    I just have to chime in here once more to say some things:

    This IS the right move. You live ONCE. And you’re ACTUALLY LIVING as opposed to most people out there.

    I cannot believe some of the things that have been said here. This is the way life should be lived. Of course, many people won’t be happy that you’re doing this but just remember you saved for it and you prepared for it therefore YOU CAN do this.

    That’s what preparing is for. You can make anything happen that you want (you know this).

    You rock and I’m so excited to hear about your journey!

    My gosh.. I want to call out so many people here.. I’m seriously upset with some of the things said. For crying out loud, this is YOUR LIFE and YOU CAN DO THIS. Who the flip cares what anyone else thinks of it in the future. I’m impressed that you’ve been able to make this happen and I’m sure many others will feel the same way in the future.

    AND…. Just think of all the experience you’ll have because of this. Experience that will give you a new perspective.. one that hardly anyone else has. Talk about competitive advantage in the marketplace…

    Reply
    • ThisLifeOnPurpose
      January 17, 2014 at 10:11 AM (6 months ago)

      Thanks for your support Kraig!

      I’ve had a lot of support with my decision to travel, from my family, my manager, my friends and my coworkers. Most people who show any concern are generally just curious, or jealous, as they would like to do this kind of thing themselves but haven’t found any way to do it.

      It may not be typical for someone like me to be able to do this, but by showing that it CAN be done, and without any negative effects with respects to my career, my finances, or my relationships, I believe it can encourage those that are considering something similar to take the leap and pursue those goals.

      And yes, travel can be an advantage in the marketplace. You learn problem-solving techniques, independence, adaptability and you are seen as someone who likes to take on challenges. Travel can be a marketable skill if you know how to sell it to an potential employer. Plus most people like to travel as well and it can an easy conversation starter with almost anyone.

      Reply
    • eemusings
      January 17, 2014 at 3:29 PM (6 months ago)

      Ditto! I hate the general American attitude toward travel. Amanda, go forth and rock this. It will be priceless.

      Reply
  10. eemusings
    January 17, 2014 at 3:56 PM (6 months ago)

    One of the benefits of travelling for six months was we were able to eliminate all those ongoing costs – rent, bills etc. We definitely could not afford to travel AND maintain our lives back home simultaneously. If you’re travelling for less time the only option with those expenses I guess is to sublet if you can.

    Reply
    • ThisLifeOnPurpose
      January 17, 2014 at 4:33 PM (6 months ago)

      Definitely. I traveled for 6 months after graduation and it was the perfect time since I had no job, no house (was living at home), no bills and no commitments. Best decision!

      This time I have no choice but to maintain my current expenses, but that’s because it is “only” five weeks of travel. If my boyfriend was coming with me, we may have looked at subletting temporarily, but that’s not the case this time.

      Reply
  11. Tonya@Budget and the Beach
    January 20, 2014 at 9:55 AM (6 months ago)

    What a fun trip! I’m in the same boat with time off. I freelance, so unless I want to take work with me for certain travel (and I have) I lose money going on vacation. I think there is also the fact that some people need pet sitters/people to watch their place when they leave.

    Reply
    • ThisLifeOnPurpose
      January 20, 2014 at 10:26 AM (6 months ago)

      Pet care, childcare, and home sitters add another level of expenses. One that I am happy to not have to deal with yet!

      Reply
  12. Justin @ Root of Good
    January 21, 2014 at 3:45 PM (6 months ago)

    That sounds like a pretty cool trip! We have Peru and Machu Picchu on our to do list one day. It looks like you have a good handle on the costs (direct and opportunity costs due to missing work). Enjoy your trip! I doubt you’ll ever regret the expense.

    Reply
    • ThisLifeOnPurpose
      January 21, 2014 at 4:31 PM (6 months ago)

      Thanks Justin! I am really looking forward to Machu Picchu.

      Reply
  13. Jon
    January 22, 2014 at 3:07 PM (6 months ago)

    That sounds like an amazing trip! I think a lot of those fees and such are definitely really hidden costs often that people don’t think about… it is good you seem to at least know where all of the costs are going to be coming from. Hope that you have an amazing trip, looking forward to hearing more about it!

    Reply
    • ThisLifeOnPurpose
      January 22, 2014 at 3:49 PM (6 months ago)

      Thanks Jon!

      Reply
  14. Stefanie O'Connell
    January 23, 2014 at 10:45 AM (6 months ago)

    I always try to sublet my apartment when I travel. Even if it’s just a few weeks. It’s a major way to help offset costs.

    Reply
    • ThisLifeOnPurpose
      January 23, 2014 at 11:11 AM (6 months ago)

      Absolutely! Unfortunately for me, I’m leaving the boyfriend behind, so no way to sublet our condo. But it also helps if you are in a high-demand area.

      Reply

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