When first tackling the financial aspects of making adventure possible, start by managing your debt.
No matter how intent you are on embarking upon your next adventure, your debts will often stand in the way of you achieving your goals.
Depending on your situation, your debt may seem so burdensome that you cannot think of a way out from underneath them, not to mention saving money for an adventure.
Don’t be discouraged, but gear up on grit and guts because you may need to make some big financial moves to manage, reduce, and eliminate your debt so that you can realize your adventure travel goals.
Below are several sections detailing the various debts that may pose obstacles to adventure.
If you don’t have any debt, skip ahead to Analyze Household Spending Before an Adventure.
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Home Ownership and Mortgages Could Help or Hurt Adventure Travel
Owning a home with a mortgage can seem like a huge roadblock to your goals when you’re striving for a long term adventure.
Mortgages are often a person’s highest living expense, and if you had to service mortgage debt while traveling and making very little money, you’re likely to burn through your adventure travel kitty in a hurry.
When evaluating what to do with a home with a mortgage, most adventurers will need to consider selling their home or renting their home.
Selling Your Home Option
If you want complete freedom from your mortgage, sell your property and pay off your debt.
Completely eliminating mortgage debt is not difficult in theory, even if it proves complicated in practice, involving buyers, agents, attorneys, and other third parties.
If you can, be flexible on when you sell. Selling when your real estate market is hottest and moving in with friends, relatives, or renting a while before you leave on your adventure can mean a much bigger savings account at the time of departure.
Renting Your Home Option
If you plan on returning home after your adventure, an alternative option would be to look for someone to rent out your house or apartment.
As the first step, determine what to charge for rent, which is easy to do because the market sets the prices. Check comparable rentals in the area to determine how much you can expect to get for your house on a monthly basis.
Let’s hope that rental charge is at least enough so you can cover your monthly expenses, including mortgage, insurance, taxes, and other expenses.
In the best of cases, the rent you charge will actually put money in your pocket, helping slow the adventure travel burn.
Plan for property management costs and aim to cover those in the rent as well. You will almost certainly need someone to manage the property while you are out, to handle required visits, manage tenants, or even oversee the placement of new tenants.
The cheapest (but not necessarily best) option for property management will be a friend or family member that you can pay a small fee to help you take care of landlord tasks. The more expensive option will be a full-fledged property management company, which can charge up to 10% of monthly rent.
If the monthly rent that you can get for your house does not exceed the expenses, then you should look for ways to reduce those expenses, such as going with the cheaper property management option or refinancing your mortgage loan to lower monthly payments.
If you can’t reduce costs, then you’ll need to determine what the gap between revenue and expenses means for your budget and goals.
For example, if you owe $1,000 / month for mortgage, insurance, and taxes and can only rent for $850. You’ll have to decide if the $150 deficit plus property management expenses are acceptable in your budget as you’ll be covering this gap out of your own pocket, potentially the money you had set aside for traveling.
Just beware that by making the choice to rent your home, you are still taking on a fair amount of risk that could jack up your adventure travel plans.
As a landlord, you will have financial responsibilities for big ticket items that break in the house, such as HVAC, water heaters, and roofs.
If you pursue the route to rent your home, make sure you have a solid stash of money set aside to cover repairs.
If the market will not support a price that is high enough to cover your expenses or to an acceptable level so that you can cover the gap out of pocket, or if being a landlord simply doesn’t interest you, then you need to consider selling your home.
Still have questions about what to do with your home? Check out this article for a detailed analysis of whether you Should You Sell or Rent Your Home When Traveling Long Term?
Cars are a No-Go for Adventure Travelers
If you don’t already own your vehicle outright and you are planning to leave home and travel on an extended adventure without your car, then your best bet is to sell or return whatever you are driving before you leave.
Cars generally depreciate in value, and as long as it is sitting in the driveway or garage, you are losing money whether the car is paid for or not.
If you have a lease, look into early return and lease-transfer options.
If you have a loan, work to pay off the debt. This may involve selling the car and settling the difference with the bank.
You may end up spending some cash to get rid of your car debt, but get rid of it.
If you are in the planning stages of an adventure, squirreling away money in an adventure travel kitty, you certainly don’t want a car taking money out of your budget each month.
Sell that car and get a low-cost beater car, paid for in cash, that can get you through to your adventure departure date.
One more thing. If you’re adventure includes a car, such as towing an RV across America, then you should buy that car in cash or own it outright.
Don’t take a car payment on the road with you.
Still uncertain about selling your car? Check out this article detailing 6 Reasons to Sell Your Car Before an Adventure.
Student Debt May Be A Part of Adventure Life
An often unavoidable consequence of the US education system, student loans can be a huge burden.
I know you’re going to say that there’s no way you can afford to travel when you have $50,000+ in debt, but there’s no reason paying off your loans cannot become a part of your budget.
With loans like this, your monthly payments stay consistent and you can plan for and continue to pay them as you travel.
You just have to make sure to set aside enough money to cover the monthly payments for each month you’re traveling.
I know it sucks that the debt is still there, but unless you can get some sort of deferral or forgiveness, you’re going to need to service the loan while you travel or get super serious about paying off the debt.
This will mean that you either need to save more before you travel, reduce spending on other things while you travel, or find ways to make money and travel so that you can service the debt and fund adventure travels at the same time.
Credit Card Debt Will Crush All Your Dreams
With high interest rates and the ability to spend more than you have, credit card debt is a very dangerous financial obstacle to long-term adventure travel.
Making the minimum payments may keep the problem out of sight, but that only benefits the credit card company, not you.
It doesn’t matter whether you are planning to leave on your adventures now or many years down the road, you need to get rid of credit card debt. The interest rates can be crippling, and you run the risk of getting even deeper in the hole the longer you hang on to the card.
If you have just one card, start putting as much money as you can each month towards paying off your debt. Get it to $0 and shred the card.
Using multiple cards is more complicated, but start by paying off the card with the lowest outstanding amount, then the card with the highest interest rate.
If you have strong credit, you might also look for a new credit card offering a 0% interest rate for 12-18 months which you can put new spending on as you work on paying down your old cards.
If you are in serious need of help managing credit card debt, I cannot recommend more highly Dave Ramsey and his baby steps.
Creating and executing a plan to eliminate debt can be a huge challenge, adventure or not, so if you need help, then check out Dave Ramsey.
I have long followed (most) of the financial philosophy of Dave Ramsey, with the main exception being that I do have mortgage debt.
If you have troubles and questions with debt, Dave Ramsey is the man.
If you’ve got your debt well managed and your consumer debt (i.e. car and credit card debt) down to $0, then the next step is to Analyze Your Current Household Spending.