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At the end of 2022 we wrote about how we were paying for Travel in 2023. For travel in 2024, we have decided to do things differently. Credit card points took us some great places in 2023. Denmark, Norway and Kaua’i just to name a few. We stayed in accommodations ranging from inexpensive hostels to resorts we could never have otherwise afforded. But I gotta be honest, the gamification of credit card points still makes me sweaty. So, for peace of mind and finances, we are paying cash in 2024.
Straight Cash Homie
In the words of NFL legend Randy Moss, “straight cash homie.” Paying cash just feels different than swiping or now more often than not, simply tapping a card to pay. Handing over a $20 that we are physically seeing and feeling in our hands is just a lot more real to us than that blind swipe. By handing over paper money we are just far more in tune with our financial resources.
The Envelope System
We recently started utilizing the envelope system. Whether you use physical envelopes or open multiple checking accounts with your bank (some banks allow you to open multiple named accounts for no fee) assigning purpose to your dollars is something most personal finance gurus recommend. Here’s a few ideas for categories or envelopes you might want to consider.
- Groceries
- Home Goods (cleaning supplies, toilet paper, soaps, etc..)
- Personal Care (shampoo, toothpaste, soap, etc..)
- Pets
- Car Maintenance
- Eating Out / Entertainment
Back to the Bank
One of our hang ups with trying it earlier was always, “What if I’m across town and don’t have the cash?” We do our best to think ahead but if we have to use our debit card, the first thing we do when we get back is take the cash from the category we spent in and place it into an envelope labeled, “Back to the Bank.” The first week we were putting money in that envelope but since then, it’s a little more rare now.
Travel in 2024 Trip Fund
Inside of the “Back to the Bank” envelope is our “Trip Fund.” Some of our envelopes we have set up to accrue meaning that each month we put in money and it compounds when we don’t use it. Categories like, clothes, car maintenance and our furniture fund are good places for the monthly allottment to accrue for later larger purchases or costs. For others like groceries or eating out, whatever doesn’t get spent goes to the trip fund which gets deposited back to the bank at the end of the month into our high interest savings account dedicated to travel. It usually isn’t much, maybe $50 bucks a month going back but this does add up and inspires us to be more frugal where we can be.
Are we cutting up our cards?
No. No we aren’t cutting up our credit cards. In fact, we’ll probably still utilize them for the benefits they offer beyond points. Most credit cards come with no foreign transaction fees, so we’ll use them abroad. In addition, if we need to rent a car, our cards come with insurance so we can safely elect not to take any additional coverage. We’ll still be using cards for these finer print benefits but we aren’t going to make them the main motion in our strategy for 2024. This year we aren’t planning to fly too many places but are choosing road trips instead so the need for points is minimal as long as we have a place to camp.
The Wrap Up
Credit card points are one way of traveling but as we spent we did sometimes struggle with keeping our eye on the balance. It is challenging even with the best of intentions of paying it off pre-interest to not fall into a “spend now and cross that bridge later” kind of mentality. When we were in Hawaii we did notice that kind of thinking come up a little bit. We certainly got a lot of benefit out of our cards in 2023 but the idea of setting aside a true budget for travel and not having a post trip financial hangover has us excited for travel in 2024. I have no relationship with them but one of my favorite financial education resources is Nerd Wallet. You can learn more about the envelope system by checking out this guide from them, What to Consider Before Budgeting With The Cash Stuffing Method.
