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Friday, 22 July 2016

It was a sunny day in 2008 when I walked into a San Francisco bank to ask for a $16,000 personal loan.

My palms were sweaty as I thought about the fact that I'd already put in my two-weeks notice at my job to go on a yearlong trip abroad with Tyler, my then-boyfriend (now husband). Two days later, the money from the loan was wired to my checking account.

The story of how I managed to take a year off for travel goes further back than my visit to the bank. It's a story that includes tears, sleepless nights, blind faith and plenty of lessons—lessons that taught me to be more financially conservative in the future.

Global aspirations

I didn't grow up with money. I also didn't grow up traveling very often. Growing up in the Midwest, my parents had/still have good jobs and most of our trips were to Michigan's Upper Peninsula. So when I enrolled at Michigan State University, I made it my mission to travel as much as I could, money or no money. I studied abroad in Britain on financial aid. I backpacked through Europe on a student discount and ate only doughnuts. I went on a cruise with money I made lifeguarding at the local pool. I worked as a server for a semester to earn enough to pay for spring break in Hawaii.

I moved to San Francisco after college and fantasized about living in London or Paris. I dreamed of backpacking for extended periods. But instead, I got a job. I made barely enough to live on, but I still enjoyed it. Tyler moved to San Francisco from the Midwest and we settled into a nice life.

Within months of him moving, we started getting restless. All it took was a good friend asking us to visit her in China while she studied there for her Ph.D. and the idea was planted. We were going to Asia.

What about money?

Tyler had saved about $18,000. He was good on money. I wasn't. I didn't have debt (outside of my student loans, which I could defer for the year we were gone), but I didn't have savings either. I lived paycheck to paycheck and knew I needed a nest egg because I didn't want to just use credit cards while on the road.

We committed to making the trip in September 2007 and bought flight tickets to depart on June 9, 2008. I had less than 10 months to make enough to live on for a year. I pondered how other people made money on the side, and found inspiration in my moisturizer. I would sell cosmetics door to door.

Off I went, selling base, blush, and skincare products to anyone who would listen. I went to the sales pep rallies, I tried selling Christmas baskets to law firms on my lunch breaks, I had parties that no one attended, I pestered my friends to buy just one more eye shadow. All the while, I ran up credit card debt thanks to the growing pile of product inventory in my closet. Insert tears and sleepless nights.

Simultaneously, I got another job at a chocolate/coffee shop. I worked as a barista and made minimum wage, but would spend most of my paycheck every night on the cab ride home. By March 2008, I realized I was in trouble. I was now in debt up to my eyeballs and still had no savings for my trip.

Last ditch effort

I gave up on the sales venture, and carefully boxed up my inventory and sold it back to company, wiping out my debt. I also quit the chocolate shop but not before taking advantage of employee benefits and stocking up on a mountain of sweets for the road.

Then I headed to the bank across the street from my office. That $16,000 loan was the only money I had when we left. Insert blind faith.

Fortunately for me, my loan had a five-year term and I was able to pay it off in three years. That loan enabled me to explore Asia, Australia, and New Zealand for a full year and learn how to stretch my dollar as far as it could go.

If I could do it again... I would be more diligent

Taking out a personal loan without a plan to pay it back is a high risk scenario that could have damaged my credit long-term. In the end, I paid off my loan early, but if I could do it over again, I would have saved money long in advance of my trip and followed the advice I wrote about in this piece. My biggest takeaway from this experience was to be diligent in tracking my cash. Giving up that latte from the coffee shop every day for six months could pay for a flight.

 

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