Give Me Back My Five Bucks

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How much is your car costing you?

I’ve owned a car for most of the 6 years I’ve lived in the Vancouver area, and it makes up a significant portion of my monthly budget.

Car expenses represent approximately 11% ($275-300) of my monthly spending (or 5% of my approximate gross monthly income) – and that’s just for gas and insurance. These are just my regular monthly expenses, and doesn’t take into consideration oil changes, repairs, wear and tear on my vehicle, or the actual cost of buying my car (obviously). Thankfully, my car is new enough that it hasn’t needed any repairs, but I know it’s only a matter of time until something needs fixing.

So what does that $300 get me each month? Let’s break it down (along with my reasoning):

  1. A shorter commute to work. Taking transit would take anywhere from 2.5 to 3 hours roundtrip. My commute by car takes 35-40 minutes each way.
  2. Access to the things that I love doing. Everything that I love to do in my spare time requires a car, and I do these things almost every day of the week – which is why renting a car or belonging to a car co-op isn’t that great of an answer.
  3. Transit is expensive. A full transit pass for Metro Vancouver costs $170. That’s approximately how much I pay for gas each month.

These are all somewhat valid reasons for owning a car. It’s worth it to me right now, because my car hasn’t needed a lot of maintenance. But will it be worth it in the future? I don’t know. I purchased this car new back in 2009, and the only other car I’ve ever owned always had something wrong with it – so it’s hard to say.

Here are my rebuttals to my own above-reasoning:

A shorter commute to work

  • I could move closer to work. This is a pretty extreme option, but there are definite downsides to living in the suburbs. And truthfully, I’ve thought about moving into the city of Vancouver on more than one occasion. It just hasn’t gotten to that point yet. And I really, really love where I’m living right now.
  • I could find a job closer to home. Not surprisingly, there aren’t many marketing jobs in the city that I live in, but it’s always worth investigating.
  • I could bicycle to work. There are no female shower facilities at my office. But, if I pushed hard enough, wouldn’t they have to provide something? That being said, I’m mostly concerned with the 50km roundtrip commute on very busy roads and bridges. Not that I couldn’t do it physically, but it would likely affect my running. Could I (or would I) really bike 25km in the morning, run 1-2 hours after work, and then bike 25km home? And what if I wanted to go out after work? I’d be all sweaty

Access to the things that I love doing

  • I could find alternate ways to have fun. Playing field hockey 3-4x/week is fun, but excessive and kind of expensive. Especially since the practice field isn’t located near transit (and twice a week, I go to practice straight from work – so no car pooling available). Plus games are spread across a very large area. If I wanted to quit the car, I’d likely have to quit field hockey too. But running is free, and there’s a great 20+km running trail just steps from my office that I’ve been using multiple times a week over the past few months.
  • Hiking could be done with a rental car. True. I bought my AWD car so I could have access to the mountains and ski hills. But really, I only do that once a month – maybe twice in the summertime. I think it would be cheaper to rent a car for those specific times.

Transit is expensive

  • I would save on the wear and tear of my vehicle. By taking transit, I will be prolonging the life of my car. This makes me happy, and it’s actually something I’ve really wanted to do. I love this car – it’s perfect for me.
  • Transit is a green solution. It’s obviously better on the environment if I leave my car at home.
  • I could buy a one-zone pass. It doesn’t really make sense to buy a one-zone pass, since I would need access to all three zones. But maybe it would be cheaper to buy a one-zone pass ($91/month), and then just add on additional fare when I need to cross to other zones. Otherwise a full-zone pass costs $170/month. Which is ridiculous.

I guess the point of this post is that I can justify having my car as a “need” all I want, but based on my own arguments, it’s obvious that a car is a “want.” My car definitely fits in nicely with the lifestyle that I want to live right now, but is it absolutely necessary? Of course not. Who knows if my thoughts on owning a car will change in the future, but I’m actually pleased (and a little surprised) with how easy it was for me to come up with solutions to get away from owning a car. Some of them are pretty extreme (like selling my house, quitting field hockey, or finding a new job), but all options have to be considered whenever you’re dealing with money.

Having an extra $300/month would be nice. But considering a bus pass would eat up half of that savings, I’d be losing many hours commuting by transit, and I’d be forced to quit a lot of the fun things in my life, I’m okay with the cost for now. But just barely.

How much is your car costing you – and could you live car-free if you had to?

France and Morocco: Booked!

Well, in 6 weeks I’ll be headed back to Europe – Lyon, France to be exact – for a week-long trade show with the company I work for. I’m excited to be traveling again, and am also looking forward to the vacation I tacked onto the end of the trip.

This fulfills one of my 2013 goals, which was to do one big trip this year. Originally I thought I’d be going to China, or Peru, or Nepal, or even Thailand… but it makes sense to take advantage of the company-paid flight to Europe and do something more local.

Which means, I’m going to Morocco!

I almost went to Morocco twice while living in Germany last year (once while visiting Malaga, Spain, and another was a tentatively planned trip), but in the end couldn’t justify going for such a short amount of time.

This trip will see me spend a total of 12 days in Morocco – 2 days by myself exploring Fez, and 10 days on a 12-person group tour with Intrepid Travel. I’m not really the tour group kind of person (I did it a few times in Mexico with my family, and wish I had planned it out myself instead), but Morocco is a bit intimidating for three reasons:

  1. I’m a single female traveling solo – it would be nice to travel with others and make some friends;
  2. I don’t feel like I have enough time to plan an amazing itinerary out myself;
  3. After doing some initial research, I don’t think the total cost of planning the trip myself will cost much less than if I just did a packaged tour.

To add on to #1, I’ve had a few female travelers tell me that while it’s safe to travel to Morocco by myself, I’ll likely get harassed a fair amount – even if I don’t stand out, and wear very conservative clothing. I’m okay with this, but it was a big reason why I decided to go with a tour group instead of opting for a solo trip. :)

xmsf_2013_0This trip will start and end in Marrakech. We’ll be exploring the High Atlas Mountains, checking out the Ait Benhaddou kasbah, journeying towards the Sahara Desert (including a camel expedition and camping under the stars – yes, please!), a trip out to the sand dunes, and finally traveling to a seaside town to hang out.

I think it’s the perfect mixture of adventure and relaxation – which will be ideal after a few months of stress at work. :) To start, I’ll head to Fez for 2 days by myself, then go to Marrakech and meet up with my tour group. Depending on flights, I could just end up skipping Fez altogether. But, that’s the plan right now.

All of my accommodation will be paid for with the tour, and some of my meals.

Here’s the estimated cost break-down for the 12-day trip:

Travel

$0 – Vancouver-Lyon flight
$0 – 7 nights accommodation in Lyon (# of days will fluctuate)
$60 – Lyon-Fez flight
$60 – 2 nights accommodation in Fez
$25 – Fez to Marrakech train
$1,205 – 10 day Intrepid Tour
$130 – Marrakech-Marseille flight
$0 – Marseille-Vancouver flight

Food

$350 – 3 breakfasts, 11 lunches, 10 dinners (approx $14.50/meal)

Miscellaneous

$20 – souvenirs
$200 – excursions & extras
$100 – (general) miscellaneous & tips

TOTAL COST = $2,150

Expensive trip for sure. But I think it’s worth it. I’m not exactly sure how long I’ll be gone for in total, but I think it’ll be around 3 weeks. As for the cost, I anticipated whatever “big trip” I took this year to cost about $2500, so I’m coming in slightly under budget.

My hope is to keep this trip under $2,000 once I finalize and pay for everything. So far, all that I’ve booked is the Intrepid Tour, which will be fully paid for by a freelance cheque that I will receive this week. :) And as for the rest of the expenses? I’ll be looking to book them in the next week or so, and maybe (just maybe) I’ll be able to get away with using only freelance income to pay for the entire trip. That’s the goal, at least.

Has anyone been to Lyon, or any of the places I’ll be visiting in Morocco? Any must-sees, or travel tips?

Budgeting for freelancers

I was thinking the other day about a recent post I wrote about how I became a freelancer. I talked about the anxiety I felt not having a steady stream of income, but I didn’t talk about what I did to remedy the situation.

Last year I created monthly budgets like I normally do, but with irregular payments coming in (and no full-time salary to anchor my income), it ended up being a somewhat frustrating experience. I didn’t have enough cash flow to bridge the gap between payments, so sometimes I was caught a little short on cash. :| It would have been relatively easy to dip into my (non-EF) savings account, but with PC Financial, taking money out of a savings account takes one business day. Besides, I had to figure out a better way.

Related: When does a freelancing career take over?

After the first few months, I realized I needed a better system that accounted for income fluctuation. The first step was to project my monthly income, and there are generally two methods to doing that:

  1. Average monthly income. Add up your monthly income from the past year, divide by 12.
  2. Minimum monthly income. Take the lowest earning month you have had in the past year.

When I was working a full-time job and freelancing, I based my budget on my minimum monthly income – which usually ignored any freelance income I earned. That way, I was sure I was satisfying my budget, without having to look at fluctuating secondary streams of income to compensate my spending.

However, as a freelancer, I didn’t have anchor income (or even many anchor clients) that would provide me a steady stream of money I could rely on. So I decided to change my approach and work my budget around my average monthly income instead. Then, I would pay myself a bi-weekly salary, as if I was still working for someone else – instead of just randomly spending/saving the money as it came in. So I went back and added up my freelance income from the past 12 months, and divided by 12 to get my average monthly salary.

That made me feel really good. I knew approximately how much I would bring in each month, and I felt secure that I could meet all of my financial obligations, and still have enough left over for the fun stuff – like travel. :) But my only problem was, if I was already starting short on cash flow, how would I build up a salary base so that I could start giving myself a bi-weekly salary?

It was then I realized why I’m always so overly cautious when it comes to my money – for exact reasons like this. I had about $5,000 set aside in a savings account (my $10,000 Emergency Fund is separate from this). I took out enough to pay me a bi-weekly salary to start, and started to used that savings account as my business account.

Related: Time management for the freelancer

This was a good short-term solution, but if I were going to make freelancing a full-time career, I would have done a lot of things differently:

  • Set up a separate business chequing/savings account. I should have done it before I left, but it just wasn’t a priority (even though it should have been).
  • Stay more on top of admin work. I’m still guilty of this. I have a really hard time replying to e-mails (especially advertisers/sponsors) in a timely manner – because all I want to do is write, write, write! But when I’m my own business, no e-mail can go unanswered.
  • I would have cared more about making money from my blog. Monetization has never been a big thing for me. A lot of bloggers make a killing with sponsors and banner ads and affiliate marketing. Sure, the money would be nice. But it’s just not something I care enough about. I’d rather cultivate personal relationships with companies. That’s why I focused on my partnership with HostelBookers, and a few other smaller companies last year.
  • I would have worked harder. Okay, well maybe. Last year I worked about 25 hours/week and earned about $57k. That’s a pretty decent salary, but if I were going to make freelancing my career, I would have gone at it harder. Pursued more opportunities. Said yes to all media interviews (I said no. Often.) Worked a full 40-50 hour/week. Of course, that was impossible to do while I was traveling so much… and that’s a choice I made.
  • Saved up for a business emergency fund. The only thing that was keeping me calm was my $10,000 personal Emergency Fund. I should have had a savings account set up for my business – so that if I lost a big client (I did while I was away), I could supplement my bi-weekly income until I found a replacement income stream. Thankfully I had additional savings outside of my EF that I could use if needed.

Anyway, that’s how I dealt with money during my year as a freelancer. Like I mentioned in last month’s post, freelancing gave me so much anxiety. But, I think that if I had created a better game plan (aside from: yep, I make enough money to quit my full-time job!), I would have been more successful at being less stressed out about finances last year. :)

Freelancers – do you have any budgeting tips to share?

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