Holiday, a time to relax!

For most of us, the holiday time is a time to relax, and to re charge the batteries.

For some it is a stressful time, and a time when financial problems get worse, due to the costs.

There are however ways of decreasing the cost of holiday, and maybe making the holiday time a time for relaxation, and spending time with loved ones.

Holiday Packages:

Many people use package holidays for their plans, and it can for the inexperienced traveller be the way to create a holiday for which you give the responsibility for organising activities to the travel representative.

Using a package holiday can be a good way to get the type of accomodation you want, and the type of activities that are suited to your taste and needs.

One benefit is that the travel companies can negotiate good rates with the air-lines, or even have their own flights, but a negative that very often negate the savings on flights and accommodation is that the travel company will need to finance their holiday reps, as well as making a profit.

Even though I have sometimes used package holidays, I prefer to organise things myself, as I have better control of the costs, and can focus my spending on the things I find important in a holiday (i.e. the food and wine).

With holiday packages, the easiest way of saving money is to either book very well in advance, or to book last minute trips (the benefit is the price you get, but you have much less choice in where you end up going, and you might not get all of your needs fulfilled). You can however save more than half of the price, as long as you shop around, and are flexible on where and when you want to go.

Flights:

In the last 10 – 15 years alot of low cost airlines have appeared, and have made it much affordable with flights, and have made some of the normal airlines drop their prices, or create new low cost ticket types, in order to fight back. A lot of people are using Ryanair as a low cost airline, but unfortunately due to their additions on costs (especially when you need to bring a suitcase as you are going on holiday, and when you travel with children) they very often prove more expensive than normal airlines such as British Airways, Scandinavian Airlines, etc.

Ryanairs higher prices, along with the airports on either side normally being located well away (50-70 miles) from where you want to go has made me stop using them. Instead I try to book my flights well in advance (3-4 months) in order to get the cheapest possible prices.

Ryanair also seems to be using a model where they do not release their cheap prices until just 2 months before the flight, which means that if you book before then the price will be higher. This will vary between different destinations, so it is best for you to shop around. Take all parts of your flight into consideration when you compare prices. The full flight fare with Ryanair, which you will only see when you get to the part where you enter your credit card information, as well as all ground transportation to get you to and from the airport on either side. You can use holiday booking sites like expedia.com to check for flight prices. Airlines which are local either to your destination, or your origin airport tend to be cheaper, but by no means always.

Hotel or other accommodation:

For finding hotels suitable for where you want to go, you can use holiday booking sites, local tourist boards (some of them have search capability for you). When it comes to hotels, I try to use the criteria of finding a place in which I can get clean sheets, somewhere to shower, and an edible breakfast. For this I need to rely on testimonial of other customers. I don’t usually care if the hotel have a restaurant which serves lunch or dinner, as long as there are local restaurants available in the local area.

You can also rent a chalet, villa, or cabin. They will usually be cheaper than hotels as soon as you get to at least 3 people. They will sometimes give you more privacy, and also the availability of a kitchen where you can cook your own food, which should make the food part cheaper.

Swapping your house with another family is also an alternative way to reduce the cost of the accommodation, as you pay for the house you borrow by lending your own house out to the family whose house you use. These people tend to take good care of your house, as you are in theirs. I don’t have personal experience of this, but my immediate family does, and they praise it.

A cheaper alternative is also to rent a cabin or a caravan at a caravan park. Many caravan parks have a small number of simple cabins, which can be rented fairly cheap, and are suitable for people who do not fancy living in a caravan, or don’t have a caravan.

Also, if you are fortunate enough to know someone with a summer house, maybe you can borrow it. If you can’t return the favour by lending a house back, maybe you can help with some work that needs doing on the summer house (most summer rentals will need a bit of work at the beginning and towards the end of the season, so there should always be a way for you to compensate the owners).

Car-rentals:

Short term (day rentals), is probably cheapest to do when you are at the holiday place. Especially if you are in a holiday hot spot, and the weather is very nice (less people will need to leave the beach then, so should open up the possibility of deals). Always try to negotiate.

Weekly rentals. Cheapest is to pick it up away from the airports, as most rental companies charge extra for pickup and drop at airports, due to their higher costs in those places. There might also be local hire companies that are cheaper than the big ones like Avis, Hertz etc. Shop around, book early, and pre-pay for the rental with your credit card.

Monthly rentals. On these you can get even better deals, as they get very close to being a lease deal. Maybe a local car dealer can lease you a car for a month? Sometimes the big rental firms will have special deals during the summer. Look around, and shop around.

Food:

In touristy areas, try to walk a couple blocks away from where the restaurants with all the flashy signs are, and try to find a calmer place, and you should get better food, and cheaper than in the middle of the tourist trap. You will also most often find more authentic local food, instead of some of the tourist trap food which will be adapted for the tourists, rather than to the locals. Ask locals where they would go to eat, and you will probably find more exciting food, and better prices.

You can also cook yourself. I try to get inspiration from the place I am visiting, and cook food which is more like the way the locals cook, while still doing lots of BBQ’s. Visit the local butcher, fish monger, cheese shop, bread shop and green grocer, and you are likely to find the best goods, and be able to have a feast every evening without having to break the bank. I also try to drink local beverages, be they beer, wine, rum, or tequila.

Some people prefer the less worrying aspect of food by going for a fully inclusive holiday, but I think that it limits the choice. Especially the choice of beverages, as I am a bit picky over what wines I want to drink, and all inclusive wines tend to be basically undrinkable.

Travel Insurance:

Shop around for travel insurance online, and make sure it covers any special activities you might want to do, like skiing or scuba diving.

Do not ever get the travel insurance from the travel company, as they tend to charge you through the nose for it.

Holiday activities:

A very difficult topic to write about, as most people have very different taste on what kind of activities they like. As I am interested in history, and culture, I enjoy visiting old buildings. Especially castles, and forts. This is fortunately something that my children enjoy as well, so we can do these together. As long as we do enough ice cream, and visit enough play grounds, they will be more than happy to visit some old castle with me.

One castle that really stands out for me is Kreuzenstein Castle just north west of Vienna. It was blown up by the Swedes during the 30-year war in the 17th century when Hungarian forces were advancing. It was later bought, and in the 19th century it was re built with parts from different old buildings of different architectural style from all over Europe. It has been used in film recordings like The Prisoner of Zenda, and Peter the Great. It sports 2 working draw bridges, one large for horses and carriages, and one smaller for walking people.

Please all enjoy your holiday, and I will be back in 2 weeks this time.

/Fredrik Sohlberg

Balance your books (or Earnings & Spending)

First of all, before you can become financially independent, you need to learn some very simple things about economy (most people find it rather boring anyway).

  • Add up all your income (salary, interest, etc). This is your plus.
  • Add up all your costs (rent, or mortgage, car, food, insurance, credit cards, etc). This is your minus.

So, in order for you to become rich, all you need is that your plus, is more than your minus. For all the money you don’t spend, you can generate additional income (interest, increase in value etc).

What if your minuses are larger than your plusses (a very possible scenario in todays recession)?

  • All your activities with regards to money need to be done in order to reduce the spending, and to increase the income.
  • First of all you would want to reduce your debts (credit cards, personal loans, mortage). Pay of the ones with highest interest rates first.
  • Second of all you would want to reduce the regular spendings (e.g. You pay for cable TV every month, or you subscribe to your favourite magazine, or you are member of the local gym). All these things cost money, and because you will be working on sorting out more income in your spare time, you will not have enough time to enjoy them (not at this moment at least, so get rid of as many as you possibly can; ohh that reminds me to cancel our subscription to Heat Magazine).
  • Third, by reducing the number of times you eat out, or eat take away food each month.
  • Fourth, by buying less ready made food, and checking out alternative places to do your food shopping, you might save a bundle. Some of the low-cost places can be okay, as they normally keep the prices down by selling a limited number of brands, thus improving their barganing power with those suppliers.  You can also grow your own veg if you are that inclined, but in general the savings are not that great compared to the amount of work you need to put in. (I do it for the pleasure of eating what I myself have grown).
  • Fifth, getting a cheaper and more economical car, or getting rid of your car altogether (very difficult for most people, and I am no shining light here as we have 2 cars). We do however drive fairly echonomical cars.
  • Sixth, sell all your old stuff that you don’t need on your favourite auction site (e-bay), or at your local car-boot sale. You will be surprised as to what people are willing to buy.
  • Seven, if you still have problems getting that extra money to balance your books, and to keep you in the black each month.  Get another job, maybe for the weekend, or every other weekend.
  • Eight, seriously re-consider your holiday plans.

The more you manage to reduce your spending, the faster you will be able to accumulate wealth. If living like a church mouse is not your idea of fun, reward yourself once in a while for saving well, but don’t over do it. Find as many free things you can do as rewards to you and your family, and use a free weekends to enojoy them.

Once your money starts growing (unfortunately it will take around 7-8 years at good returns before you start seeing the big effect of compounding), having the money grow even faster will be exciting.

I will be back with more ideas on how to balance your books. Until then.

/Fredrik

What is the secret behind riches, and people who get rich?

Actually, there is not that much of a secret, but all advertising we are surrounded by daily works to break down the barriers to your wealth and fortune, and encourage us to spend it, rather than save it.

This is what actually keeps a majority of people from getting rich. Instant gratification. Buy now, pay later. All of the eighties, and nineties was all about buy now, pay later.

Our neighbour changes their car for a new one, and all of a sudden we feel inferious and want a new car yourself. If only we had the patience to wait until our passive income could grant us all that, without putting us further into dept.

Of cause I would want that new car as well, but I have realised that I will have to wait on some of those dreams, until I can affoard to fulfill them.

What am I doing then?

  • Cutting my spending. Trying to spend less on things I don’t need, and keep putting money into savings (how I save, and invest is something I will come to later).
  • Increasing my income. In my case it is not through work, but through the work I am doing for myself when not at the office. Actually this blog is part of that, eventhough it might not bring me a fortune anytime soon, and right now only costs me money.
  • Investing wisely. That means that I don’t keep my money in my savings account, but I try to find other ways that can make my money grow faster. Right now my investments include Wine, Stocks & Shares, and Fixed Income Instruments. I plan on moving on to Property at a later stage, but for now I am happy with what I am currently doing.

Next post will be related to earnings and spending, and how to make your income stretch longer.

/Fredrik