The VanNess Vagabonds

As we come down to the wire before leaving for our trip, things are setting in fast. One thing we put off until now- how we are going to keep our money as we travel. This is a major concern considering the amount of money you need to save in order to go on a year-long trip with no income. We mulled over what the best way to go about taking money and came to some surprising decisions. Keep in mind, this is what we think is going to work best; if, as we travel, this strategy doesn’t work out, we will be sure to let our readers know.

Major factors to consider:

1. Are we leaving anything behind (to come back to). I would not have done this because I am pretty irrational about some things. I see most things as “all or nothing”. Normally, as soon as I had enough saved to travel, I would have been outta here. Fortunately, I have Mark, who is responsible, rational, and sometimes right about things. So we have savings that we are leaving behind- hoping we have some stability/ way to survive when we come back to the states.

-The question is what to do with this money:

a. Invest in high-risk , high-yield stocks so when we get back we have tons of extra money, or come back to nothing at all.
b. Leave the money in a slow earning money market savings account- earns about 2% per year, but you will not lose any money no matter what.

What we did: We thought about giving our savings to a Stock Broker, investing in low risk stocks, and put a small amount in high-risk stocks, hoping to make a little money. But, if you read our post Sell vs. Rent: Why we sold our house in the midst of one of the biggest housing crashes in US history you know how well our “quick money” ideas work out for us, so we decided against the high-risk option. Once you take away the high-risk yield from the equation, the low risk options wouldn’t make us much more than a money market savings account (NO RISK) around 2%, which we already have opened. I know it’s not much, but it’s a little something, we don’t have to open a new account, and its free. We just leave our money in the bank while we are gone and make money for letting the bank borrow from us!

2. What form you are going to take the money for the trip

-Are you going to use a Debit Card?

We are taking a debit card that earns points when it is run as credit. If we do use this card, it will only be in situations where we feel totally comfortable (for example buying a flight at an airport, at a high-end hotel/resort, etc). To cover our butts (from someone having access to all our money) in case any fraud does happen, we are spreading our money out into multiple bank accounts. This way if one account has weird activity going on, there is only a small amount of money that could be lost, not our entire savings.

- Are you going to use one bank account?

As eluded to in the question above, in order to protect ourselves from being totally wiped out if there is an occurrence of fraud, we are spreading our money out in separate accounts. One, that we will use regularly will have a limited amount of money, the others will have the rest of the money split up.


- Are you going to take a credit card?

Yes, after much research into the best credit card for travelers we came to an interesting decision. To not get travel rewards credit card. For us it didn’t make much sense. Once you tack on the annual fees, the daily compounded interest on the account (they add interest to the amount you owe, every day that you owe that money, not every week or month, every single day! Say you buy something that is $5, you are charged interest on that purchase the next day, then the next day you are charged interest on the $5 & the interest they charged you the day before; you end up paying interest on interest), and international transaction fees not getting a new card outweighs, monetarily, the reward points that you earn. If you feel like you still want a rewards card the best I found were the Capital One Rewards Card, American Express Rewards Card/British Airways Card (which the offer is now over for) For example- Capital One Rewards Card looked like the best deal, it advertised-

1. No annual fee
2. 0% APR for 1 year-

The catch, after 1 year the variable interest rate skyrockets (* just for anyone who hasn’t had a card like this before, you still have to pay a monthly fee and whatever balance isn’t paid after the 12 months 0% time period, they back track and charge interest on what you still owe for that entire year, as if you created an interest owed savings account and piled all the interest up for the end of the year!!! So any purchases on the card from the 0% period needs to be entirely paid off before the period is up.)

3. 0% international transaction fee
4. Online account management
5. No blackout dates on points
6. No restrictions on points
7. For every $1 spend you earn 1 point.

The catch- to redeem points, you multiply the cost of a flight by 100. So, for a $200 flight you have to use 20,000 points which translates to you spending $20,000!!! Even if we did end up spending that much on the card, where will $200 get us (maybe to NYC from NC and back for $20,000)! In addition, you have to have impeccable credit (and apparently be a homeowner) to get this card. Is it worth it to get this card considering the fact that every capital one review is horrible and some customers talk about the companies fraud, worrying about another card, the interest rate that will kick in? Oh and by the way, if you make one late monthly payment, they can take away all of the perks listed above with one felt swoop, then you are stuck with a crappy new card that they hassle (I know no-hassle, not so much) you about closing. We didn’t think so, we stuck with the credit card we have, a MasterCard that earns the same points, with 1% international fee, no annual fee, no blackout dates. We already had this card. For most people out there, if you have a current credit card, good credit, you have paid on time, and your cradit card company offers card with rewards, if you speak with your credit card company they will upgrade you to a rewards card for FREE! No need to get an additional card.

We will also have a visa debit card from one of our banks in case we run into issues with people not accepting MasterCard. Side note: I tried to get the Capital One Card and was denied because I am not a homeowner! Funny to me because back in 2003 capital one issued me a card without me even applying (I was 19 year old, a hostess at a restaurant, and lived in a $300 a month apartment). It took 3 months for them to close the account and only because I told them that this was fraud! I never opened a card with them. I am not sure what is going on with the Credit Card industry, but I guess being a homeowner is the only way to get a credit card these days. After my denial, I felt lucky, I realized that we are better off without Capital One or getting another card. When I called to ask them why I was denied I spent 30 minutes being redirected by a computer before I actually spoke to a human who then told me they couldn’t tell me, I would get a letter in 4 weeks!

The only other card that looked good for travel rewards was an American Express card. We didn’t go with this card because American Express is not as widely accepted as Visa or MasterCard for a variety of reasons, but the main one being that they charge higher transaction fees to vendors.

When I started accepting credit card payments for my artwork (My Truck Leroy), I opted out from accepting American Express, because it was an additional monthly fee and higher transaction fees.

When is comes to bank accounts- HSBC claims to be the bank of the world, offering the best options and most banks all for travelers. After a little research they charge higher international transaction fees than our regular banks. Even if you go to one of the own banks in another country you have a 3% transaction fee. Pretty crazy because our banks allow you to go to any bank in the world and charge only a 1% transaction fee. Moral of the story-Don’t believe the Hype. Ready the small print!

- One important note: Do take either credit or debit cards with 2 different credit card companies. For example take a Visa and a MasterCard or an American Express and a Visa. Do this just in case a vendor doesn’t accept one of the companies’ payments or if you lose or damage a card, you will still have a back-up card.

- How much cash?

a. This is a good question. We are only taking small bits of cash. Mark will be guest spotting and we will live off with that cash. If we know we are going somewhere he is not working, we will go into an actual bank and request the funds from a teller.

- Travelers Checks?

Travelers Checks are for Grandmas.

Summary:

-READ THE FINE PRINT.

- Make sure to put any saving you are leaving behind in (at minimum) a Money Market Savings account. It will earn free money while you are away.

- Don’t put all you eggs in one basket. Spread your savings out to different accounts so if a crook gets a hold of one account your savings is still safe.

- Take two forms of credit card- like a Visa and a MasterCard or an American express and a Visa. Do this in case one of the cards isn’t accepted somewhere or use the card as a back up in case something happens to your other card.

- It is pretty easy to find a bank in major/hub cities. Take the small (compared to the length of your trip) time to go inside the bank and have the teller take out cash.

- Get travelers checks if you’re Grandmother will be meeting you or backpacking with you.