An Honest Conversation About Money (in Three Parts)
Part 1: A Financial Snapshot, and Plans for the AT
TL;DR: with a little financial awareness, planning, and hard work, money doesn’t have to stop you from hiking the AT.
Money is uncomfortable to talk about. It feels icky. But I swear, half the people I see who quit the trail or who never start do so because of a lack of money, so we’re gonna sit down and we’re gonna have a judgement-free talk. I’m going to provide a peek into a thru-hiker’s finances (ahem…mine), and hopefully help some people get a better grasp on their own for the future. It’ll probably be most relevant for that majority of hikers who are in their 20s, but hopefully there are nuggets of info coming that’ll be useful for people in all different financial situations.
In Part 1, I’m going to provide you with a complete picture of my personal finances and lay out the financial goals I’ve set to prepare for the AT.
In Part 2, I’m going to share how I cut expenses in the 15 months leading up to the trail.
I’ll wrap up in Part 3 by laying out how I earn my money, and how I plan to spend it on the trail.
I nerd out sometimes about money and finances. I find it fascinating, like a game of you vs. The Man. There are two resources that I really must insist that everyone check out IMMEDIATELY if you want to take control of your finances instead of letting them control you and limit your future.
- My husband and I found a financial blogger a while back called Mr. Money Mustache and he kind of changed our whole relationship with money, and set us on the path to retiring early. His tagline is “Financial Freedom Through Badassity”, which I feel like is right up the alley of lots of hiker-type people. If you can tear yourself away from thetrek.co for a month or so, go read every single article Mr. Money Mustache has ever written from the beginning. I swear, it’ll change your life.
- You have to know where your money is and what your money is doing if you’re going to control it. The FREE app and website Mint does a phenomenal job of tracking and organizing every single penny you spend and earn, putting it into delicious little graphs and charts (the image at the top of this post is my personal net income chart for May 2014-Jan 2016) and giving you a crystal clear picture of your financial self.
Thanks to the power of Mint, I can share with you all of my financial dirty laundry and explain how exactly I’m prepping my bank accounts for my AT hike. A quick summary of my recent working life:
Jun 2013: I was 27 and quit my job in pharmaceutical research making $60k/yr. Spent my entire savings on living in Bali for two months and doing a yoga teacher training. So we’re basically starting from less than zero, because I still had $18k in student loans from my Bachelor’s in Psych at the University of Richmond. Not my wisest money move, but this was before I educated myself and set financial goals, and I have to say the experience was truly amazing. Also, I’ve earned enough at this point teaching yoga to pay for the trip, so I say it was worth it.
Since then, I’ve been in school off and on and earned an Associate’s in Biology (county college), a Certificate in Plant-Based Nutrition (Cornell University), and half a BS in Dietetics (Rutgers). I’ve paid another $15-20k in tuition (out of pocket), plus about $3k in student loans. I was working anywhere from 2-5 part-time jobs at once and still didn’t think much about money beyond being able to pay my bills.
Dec 2014: I discovered Mr. Money Mustache and basic personal finance. I started seriously prepping for the AT, financially and otherwise, but I still don’t have a surplus of cash in my life.
My point is, I’m not hiking the trail because I have loads of money and nothing else to do with it. In the interest of complete transparency, here is a snapshot of my finances as of January 25, 2016, exactly three months before I set out from Springer.
Savings account: $3002 (this is exclusively for my hike; I don’t touch this money once it’s in here)
Checking account: $775 (out of which I pay bills)
Credit card balance: -$6500 (almost entirely tuition, and hopefully paid off in time for my hike)
Student loan balance: -$8900 (this just sucks and must be paid while I hike)
Thanks to some other odds and ends, Mint tells me my net worth is exactly -$9,917.18. I know: I’m writing an article about money, and yet I have a negative net value of almost $10k. Let me explain.
First of all, in the last year, I’ve actually INCREASED my net value by about $10k in preparation for the AT, and I did it when I only made $29k in 2015. I worked really hard at decreasing my expenses. In the last 15 months or so, I cut my monthly spending from about $2000 to $1200, and have further decreased it to under $1000 in the last 6 months before the trail.
I realize I’m not starting the AT in ideal financial circumstances. I’ll be hiking instead of working while still carrying student loan debt. It’s not the most responsible decision, but I’ve thought it through very carefully and discussed with my husband, and this truly is the best time for me to hike. I’m 30 and recently married, and we want to have kids soon, so after this year the next time I can expect to have a free summer is approximately 2035. With that in mind, I have carefully planned this hike in order to minimize its impact on my long-term financial goals.
Several 2015 thru-hikers have recently posted about their expenses while hiking. Sara made this excellent infographic, and George created a number of detailed graphs of his experiences here. Sara spent $3500 for her hike, and George (along with his son Ian) was closer to $9,000. I hope to fall closer to Sara’s end of the spectrum. $3,000-$5,000 seems to consistently come up as what hikers can expect to spend, so my goal was to have $4,000 in cash saved ahead of my hike. This has nearly been accomplished, which will be a huge weight off my shoulders.
There are two bills I must continue paying while I hike: student loan ($163/month or $815 for five months) and credit card payments. The remaining $3185 cash savings will go toward the credit card, as I don’t intend to actually carry a balance on the card if at all possible. I plan to pay it off in full each month using this cash reserve until I start working again in the fall. The goal is zero debt from the hike.
Whenever possible, I intend to use a credit card on-trail for every single expense. This is going to be a little controversial but hear me out. Many new-wave financial advisors treat credit like pure evil, but with a little research and responsible usage, it can actually save you money. Here’s why:
-Last spring I acquired the Citi Double Cash MasterCard. It provides a 2% rewards cash-back rate; 1% on every purchase and another 1% when you pay off those purchases. I end up earning between $15 and $20 each month by putting every single thing I purchase on this card. That money goes right back into the card as a statement credit. Think of it as a 2% discount on your hike. For example, I bought a tent and a quilt so far and paid $491. By putting those on my card I got $9.82 cash back.
-As a new card holder, I have 15 months of ZERO interest. I am still in this zero interest period and will be until July of 2016, or about halfway into my thru-hike. That is why I’m not concerned about my current $6500 balance, however, I am aiming to pay it off before the interest kicks in in July.
-Using a credit card means I have to carry less cash. Not only do I feel safer this way, but in not withdrawing cash as frequently, I can save on ATM fees during my hike.
-Finally, using a credit card means I will have a complete record of every single purchase I make through Mint. Tracking my finances is very important to me, as not only does it make me less likely to overspend, but I will have an accurate picture of the expenses of my thru-hike to share afterward.
Note: this is the system that works for me and I encourage you to do your own research and take an honest look at your finances. Credit cards are only helpful if you DO NOT PAY INTEREST on your balance. Interest rates are often 15-25%. This completely negates any advantage to using them if you spend beyond what you are able to pay back. Know your credit score and never spend more than you can afford, ever. BE RESPONSIBLE!!
Stay tuned for Part 2, in which I share how I cut my expenses in the 15 months leading up to the trail.
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Sounds like a reasonable plan. It was sad to see many hikers fretting about money (or lack thereof) on the AT. Plan what you think you’ll spend. And save more than that by 20%. Also, use your ATM card to buy some groceries & you’re running low on cash. You can take out extra cash (varies w/ the establishment… often around $50) when you buy your food. No ATM fees.
A ‘faster hike’ (fewer days) is cheaper than a ‘slower hike’ (more days). Be leery of the ‘Party Scene’ in the beginning. If you’re on a tight budget, it can be a budget killer.
Good luck on your hike.
I am assuming that the $4000 you plan to save before you hike is independent of your gear expenses? Or does that $4000 include your gear expenses? Thanks for the clarification. I am trying to figure out if I can financially do a thru-hike in the next few years. Good luck on your thru!