Monthly Archives: April 2017

London on a Budget

 

In August, my wife and I are traveling to London for our 10th wedding anniversary.  In the past, we have avoided traveling to London because it is one of the most expensive cites in the world.  In October of 2016, as the result of the uncertainty surrounding Brexit, we were able to book a trip to London for an amazing price.  We managed to book our trip for only $2,500.  That price included airfare from New York and 7 nights at a 4-star hotel in Kensington.

The first major part of planning the trip is complete.  Now we have to work on establishing a budget.  We will have to budget for food, guided tours, as well as having money for enjoying the city.

Food:

My wife and I are foodies, so exploring the eclectic flavors that London offers is exciting.  Now we need to create a budget for our meals.  When booking the trip, we selected a hotel that included a daily breakfast.  That would save us about $140 for the week.

For lunch, we are going to budget for $30 per day.  We are just planning for sandwiches or kebabs.  We are satisfied with eating lunch at street vendors.

For dinner, we are going to budget for $40 per evening.  Our dinners will mainly consist of going out for Indian or Chinese food.  We also would like to visit a pub for a traditional British meal.  We don’t drink alcohol, so that will save us money.

We will bring our own snacks from home.  We will pack almonds, jerky, protein bars and other snacks. That will cost about $50.  While in London, we will buy fruit or beverages for our hotel room.  We will budget $50 for the snacks and drinks we buy in London.

Guided Tours:

The next section of our budget is for guided tours.  We are planning on enjoying two full day guided tours.  A large part of our budget will be spent on these tours.

Our first tour is to Windsor, Stonehenge, and Bath.  My wife is excited to see the English countryside.  This tour will cost a total of $202.

Our second tour is an anniversary gift to my wife.  It is a one day guided tour of Paris.  It includes the Eurostar passes, Eiffel Tower, Louvre Museum, and Seine River Cruise.  This tour will cost $620.  It is expensive, but it is a special occasion.

Pocket Money:

The rest of our vacation will be spent exploring London.  We will visit all of the tourist hot spots.  I want to go to Piccadilly Circus.  My wife wants to see Big Ben.  We will also go on a bus tour of the city.  I have gone on bus tours in other cities and you do get a good feel for a city that way.  We will budget about $400 for roaming around the city.

We don’t tend to buy too many souvenirs when we travel.  We do buy street art when we find something we like.  A painting is a souvenir that lasts forever.  We will budget $300 to be safe.

Total Budget:

Our total budget adds up to about $2100.  That is most likely on the high side.  It is our 10th anniversary, so I am not going to focus too much on the budget.  This trip is just about having fun and celebrating our special occasion.   I am  happy, however, with the thought of enjoying a fun filled week in London for under $5K total.

Saving $100,000 by age 30

Saving my first one hundred thousand dollars was the hardest.  When I started on the road to financial independence (FI), I was only 20 years old.  I wanted financial independence and reaching my first $100K was the first goal that I set.  I was aware that it was a lofty goal, but I embraced the challenge.  I wanted to reach this milestone by age 30.  On my way to reaching this goal, here is what I did:

Work

I had to land a job and start earning money.  When I looked for a job, my options were limited.  I did not have a college degree yet.  The economy where I lived was not great.  My options were a factory job, construction, or working in the food industry.  I selected working on an assembly line in a mattress factory.  There was nothing glamorous about the job.  It paid a decent hourly wage for unskilled labor.  It was a means to an end, so I was grateful to have it.

Learning to Save

To reach my goal of building a net worth of $100K by the age of 30, I had to save.  Saving came easy to me.  I was working hard for the paycheck and did not want to waste the money.  Every month, I would put at least $500 away towards my long-term goal.  I also put additional money away for vacations, car expenses, and costs associated with college.

Investing

I had to learn how to invest the money that I was saving.  It was the year 1997.  It seemed as if growth and technology stocks were soaring to new market highs daily.  There were often commercials on television advertising new day-trading platforms.  I was fortunate to have read a few books that taught me to stay away from such speculative approaches.  I learned to invest in mutual funds that tracked indexes such as the S&P 500.

I needed to earn 8% on my investments based on my savings and time horizon.  Historically, the stock market earned 10%.  I was confident in the information that I read.  I dollar cost averaged money into my investment account every month.  I ignored the market volatility and just kept moving forward.

Education

Getting a good college education was important to me.  I knew going to college would help me to learn skills that would put me in a better position to earn a larger salary.  College was, however, a financial challenge to manage on my path to reaching $100K by age 30.  I did not want to incur a large student loan balance.  To avoid that, I took 60 credits at the local community college.  I paid cash for those credits.  That allowed me to incur only $18K in student loans for the additional 60 credits I needed to complete my BS degree.

Conclusion

Yes, I did reach the first goal on my journey to financial independence.  By age 30, I saved almost $120K.  The only debt I had was my student loan of $18K, so that left me with a net worth of over $100K.

Looking back, I did put a great deal of pressure on myself to reach this goal because my salary never exceeded $30K per year during this period.  It was, however, worth it.  It set me up with a solid foundation to build upon towards my next goal of a $1M net worth.

Yes, my 20s were productive, but I also had a great time.  I went on nice vacations, went out with my friends, and dated the girl who later became my wife.  I would not go back and change it if I could.