Moneywise24 Personal Finance

I stumbled upon an article the other day, unfortunately I only quickly browsed the site and completely failed to write down the URL. Nevertheless, the article was an interesting one; it described how a woman from Latin America paid back her 25,000 USD loan within a couple of years, by taking on two jobs, letting her children live with her parents, and moving into a 100 USD per month apartment.

Although when I read the article, I felt great empathy and respect for the woman paying off a huge debt within such a short time, I felt somewhat confused when I started thinking it over. The article implied, that the woman had achieved something amazing, which she did in a sense. But:

• I live in Western Europe, it is impossible for me to find a place which would cost me only 100 USD per month.
• If I had children, would I really give them to live with my parents for as long as a couple of years?
• Would my parents approve of me giving them my kids to take care of?
• What is the use of paying off a debt, if it means living in absolute poverty for a few years?

Especially the last bullet point, whether I would sacrifice my life in order to pay off debt quickly, set me to think. Yes, living on the verge of poverty would let me pay off my debts much sooner. However, at the same time my life would come at a full stop; I would not be able to develop myself in any sense, since I would not have the financial means.

Usually, it is recommended (and many banks and land lords apply this rule also) to spend about one-third of one’s net income on rent or mortgage; in the more expensive metropoles, it could also be as much as half of one’s net income. This does not mean, that exepenses can not be reduced. Many people spend only 25% of 20% of their net salary on rent, meaning they are theoretically spending less than average on rent. The money that is saved could be spent on paying off the debt in addition to what is spent on paying off debt already. This way, debt can be repaid more quickly while a certain living standard is maintained.

I am big fan of finding the right balance between living standards, personal development, income and expenses. Sure, some people simply do not have this choice. But sometimes, people do have a choice and still they opt for the hard way. In many cases, this applies to income the same way; people choose a job or a profession which will reduce their social lives to virtually zero, yet offering them a great salary with a company car and bonuses. Five years later, some get a burn out… was it really worth it?

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You might ask yourself, how does traveling actually contribute to personal finance, and what can I learn learn from it? Actually a lot. A can speak from my own personal experiences; traveling has many benefits, which can be applied to your personal life, also personal finance. And I believe it’s a good thing, traveling broadens horizons, you get to know new people, new experiences, and generally get to see many different situations from different perspectives.

If you have traveled a lot already, especially outside of your own country or cultural circle, you probably know what I talking about. Applied to personal finance, I believe having traveled a lot offers major benefits. I want to discuss a few of them below, but of course you are more than welcome to post comments with additional ideas.

The Unknown

One of the major features of travel, in my opinion is being confronted with the unknown. In the most extreme case, you would not speak the language, the cultural differences are like worlds apart, and you feel fairly lost in this new surrounding. However, since you are in a foreign country, far away, you have no choice to deal with it. It can be quite overwhelming, and it is also why many travelers, who meet each other on distant trips, tend to stick together during their voyage; it is a way of trying to keep the known and the unknown balanced out.

Being confronted with such an unknown situation will surely lead to more flexibility and a more ‘risk taking’ mentality when you get back, at least it did with me. And the more often you throw yourself in such unknown situation, the more you get used to it. I can only tell from my own experience, it has definitely benefited me.

Your life isn’t really that bad

My trip to Kenya in 1998 made a huge impact on my life; Kenya is a very poor country, and myself being originally Dutch (I was 19 at that time) I realized for the first time in my life how good a life I am actually leading. I used to complain about the huge loan I had to take to study, and about the small room I was living in… but I had never truly realized that there are literally billions of people on this planet, who simply don’t have enough food to eat, and whose life conditions is beyond what I could have ever imagined. Sure, I had seen it on the television and in the news quite often, but it is nothing compared to going to such a country and seeing it all live. I became more of a relaxed person, and not so money focussed.

Different cultures, different mentalities

I find it fascinating, how different nations think differently. A great example is a Dutch/German comparison. I am originally Dutch, but currently living in Germany, and honestly the Germans are much more formal and closed than the Dutch. Usually, when I meet a German people and I tell them I am Dutch, they are always so amazed how open, relaxed, friendly and easy going the Dutch are, they really seem to like that, while on the other side they are complaining about their the closedness of their own people. Yet, these people don’t change, they are caught in routines of what they just said they did not like. A bit of a long trip might give you real in-depth insights of how other cultures think, act, and related to each other, and you could adopt something of that. But more importantly, traveling lets you related other cultures to your own, and you can look at your own habits a bit more objectively; it makes you a more free person in a sense.

Getting to know people

If you are an open minded person, you will surely make many contacts while traveling; either with other travelers or with some locals. This is a great way to expand your network, and who knows you have a business partner some day, or who knows what a network might be useful for.

Traveling is a great passion of mine, and I try to plan a trip as often as I can. I believe traveling greatly contributes to the quality of my life, my development, my way of seeing things, and definitely also my personal finances.

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