How to Be a World Traveler

When asked to describe The Good Life, many of us include a desire to travel and see the world, often in our top three or four goals. Yet, often we find reasons why it seems impractical or impossible to do so today. My college roommate, Marty Regan, travels more than anyone I know, and I have always found it fascinating to talk with Marty about how he does it. Here’s my interview with Marty.

SS: We met up in Taos in May and now you are in Tokyo for the summer. Give us a rundown of where you’ve been in the last 12 months.

MR: Last year I was conducting research in Cambridge, UK, and during the summer I traveled to Ireland, Italy, and Iceland. I returned to the USA in late August and have since taken domestic trips to Maine, New York, California, and New Mexico. Over Christmas and New Year’s I traveled in New Zealand for five weeks.

To be a world traveler, a lot of people think you have to be very wealthy. Did you win the lottery or inherit a family fortune? This is all from your college professor salary?

Yes, it is. However, I am single with no children, have no debt and lead a simple lifestyle in an area with a relatively low cost of living, so I have dispensable income to spend as I wish.

What do you enjoy most about travel? What have you learned from other cultures? 

As a composer, I have always been fascinated with the relationship between life experiences (including travel!) and artistic expression. If a writer, artist, or composer experiences a cathartic moment when doing something significant like cycling through the Netherlands when the tulips are in full bloom or witnessing an architectural masterpiece like the Pantheon in Rome, how are those experiences manifested when they begin their next work? For writers and visual artists, it seems to me that the relationship is often quite direct. For example, a writer could attempt in prose to capture the details of a particular scene or space, while an artist could be inspired to render the scene realistically or perhaps more abstractly in a painting. In either case, one could argue that the resultant work was directly inspired by the experience. For a composer however, this relationship is a bit more slippery. For me, musical “inspiration” often involves finding myself in a new and unfamiliar environments and allowing myself to be stimulated by the experiences that await me.

I strongly suggest reading Pico Iyer’s article Why We Travel.

I think many people – myselfincluded – could work from anywhere in the world, as long as we have internet. How has travel impacted your work?

As long as I have my computer or iPad with me, I can conduct most of my work remotely. Travel has not negatively impacted my work in anyway.

You’ve obviously figured out how to travel on a budget, because you spend weeks or months in some of the most expensive cities in the world. I imagine that hotels in these cities can cost $500 a night and up. How do you make this work?

Well, I am very lucky in that I have a network friends and colleagues all over the world. I sometimes plan trips where friends of mine reside, not for the promise of free accommodation, but because of the companionship and benefit of having a local teach you about their city. If I travel to a place where I do no know anyone, then I find other ways to keep costs low by living like a local. I rarely stay in hotels.

Let’s talk more about lodging. Where do you stay? How do you find places? 

When I stay in a place for a long period of time, Airbnb is my preferred accommodation option. VRBO is also dependable. Some cities I have used Airbnb for extended visits include London, Rome, Paris, Prague, Helsinki, Shanghai, and Seoul, among others.

Outside of lodging, any advice for saving money on transportation, food, and entertainment while you are travelling?

I don’t purchase plane tickets until I have spent time exploring the market for a while and I am confident that I am getting a fair price. I try to stick to the Star Alliance network and pay with my United Chase Plus credit card because purchases add up really quickly that can redeemed for free flights. I always try to stay somewhere with access to a basic kitchen so that I can buy food at local groceries to save on meal expenses. As far as entertainment is concerned, I rarely book in advance but rather show up the day of the performance (symphony orchestra concerts, ballet, theater, etc.) and inquire about last minute rush tickets. Often I am given tickets for free by patrons who can’t use them and have left them at the box office. This happened recently for a performance of Götterdämmerung at the Houston Grand Opera. I was prepared to pay $150+ for a good seat!

You rent your house in College Station through Airbnb. How has that helped you with your travel?

I started renting my house on Airbnb in 2011. Basically, I use the rental income that I receive from Airbnb to pay for expenses that I incur when I travel. At the moment, I am currently residing in Tokyo for 2+ months, but rental income from my home covers my rental expenses here. Here is a link to my home.

Who is a good candidate for Airbnb? If someone is thinking of making their house available, what should they know? 

A good candidate for Airbnb would include a person who can appreciate the unique quirks that you might encounter when living in someone’s home. If you are hoping for a cookie-cutter Hyatt or Hilton experience, then Airbnb is not for you. If you are thinking of making your house available, be aware that fielding questions from guests can sometimes take a lot of time! Create a profile in which answers to the most commonly-asked questions are available. Have a system in which guests can check in and check out without you being there, such as having a lock box on the door or installing a keyless entry system. Consider providing amenities that will make their stay memorable. In my case, I usually leave a snack and fruit basket along with fresh-squeezed orange juice. I also leave a hand-written welcome letter as well as a guest book where I request that guests leave their comments.

Do you set a daily or weekly budget for when you travel?

I have never planned daily or weekly budgets!

Favorite travel memory?

Taking a snowmobile tour in Iceland to the top of a glacier in August for my birthday to view a filming location for the Secret Life of Walter Mitty.

Best place to visit that has a surprising value?

Czech Republic.

Many thanks, Marty, and safe travels! See you in Texas in the Fall.

Originally from Long Island, New York, Marty Regan is an Associate Professor at Texas A&M University and lives in Bryan-College Station. He is a composer who specializes in composing music for traditional Japanese instruments. Marty graduated from Oberlin College, lived in Tokyo for 6+ years, and received a Ph.D. from the University of Hawaii, Manoa.

Rethink Your Car Expenses

Toy Car

“Don’t be penny wise and pound foolish.”

This old nugget of wisdom remains relevant today with many people feeling frustrated that even with a decent income, it seems so difficult to save as much as we’d like for retirement and our other financial goals. Rather than worrying about the pennies, I think investors who want to increase their saving are best served by focusing on their two biggest expenses: their home and cars.

Although not a great investment, a home is generally an appreciating asset and offers some valuable tax deductions. It is possible to have too much home and be house rich and cash poor, but our focus is better first directed on car expenses. I love cars, as do most Americans. A car represents freedom, and as a kid, I couldn’t wait to learn to drive. I took my drivers permit test right on the day of my 16th birthday. We view our cars as a representation of our self, our status, and our importance. Yes, even Financial Advisors are guilty of this irrational vanity! (Or is it insecurity?)

Unfortunately, a car is a depreciating asset and often our biggest expense outside of our home. New car prices seem to have outpaced wage growth, and everyone always wants the latest and greatest. We have to set priorities for how we use our income, and any money we spend on a car is gone. You won’t get it back, it’s just flushed away. That’s money we can’t invest and can’t use to create our future independence and income. If you want to have more of your money working for you, it pays to be smart about your cars. Here are five ways to keep your automotive expenses down.

1) Keep what you have. Cars greatest depreciation is in their first 3-5 years, so if you can keep your car longer, your annual costs will be lower. The more frequently you replace your cars, the more expensive it will be. That’s the number one thing you can do: keep your vehicles 7-12 years. The more often you sell one car and buy another, the higher your costs over time.

2) Don’t fear the occasional repair. Today’s cars are more dependable and long-lasting than ever. Psychologically, people hate repairs, since they seem to always occur at the most inopportune moments. Many people would rather spend $500 a month on a new car payment rather than risk having $1,000 to $2,000 a year in maintenance and unplanned repairs. Does it make sense to spend $6,000 a year to avoid spending $2,000? Probably not, but this is what you are doing if you think that you must sell a car as soon as it is past its warranty.

It’s true, it feels much worse to spend $2,000 on an unplanned repair than to spend the same amount in scheduled car payments. In behavioral finance, this is called “prospect theory”, where people feel the impact of a loss much more severely than the benefit of an equivalent gain. Unfortunately, this can lead to less than ideal decisions, such as buying a $40,000 car because we’re upset over a $400 repair.

If a car is in relatively good shape, it will most likely be cheaper to keep a car with 100,000 miles on the road, rather than replacing it with a new car.

3) Pay cash for your cars. Most people don’t want to spend $60,000 on a new car, even though we all want that $60,000 car. I’d like to first point out the opportunity cost here. At a hypothetical 8% rate of return, spending $60,000 today on a car means not having $120,000 in 9 years, $240,00 in 18 years, or $480,000 in 27 years. That’s a steep price for a car. Which would you rather have, a new car today or potentially an additional $480,000 at retirement?

The strategy of paying cash for cars isn’t just about saving on interest payments; it’s about changing your behavior. Paying cash will force you to spend less, to look at used cars, and to keep your current car longer. Too often, I hear people brag that they got a new car and kept their payment the same. So what! Your current payment was going to end – all you’ve done is keep yourself in debt for another 5 or more years.

If you currently have a car payment, once your payments end, set aside that monthly amount in a savings account for your next car. Paying cash forces you to delay buying a new car. Otherwise, it’s very easy to take a loan for a new vehicle and then rationalize why you “needed” a new car.

4)  Save money on maintenance. If you’re handy with tools, you can save a lot of money by doing some routine maintenance yourself. My dealership wanted $499 for a 30,000 mile service consisting of an oil change, tire rotation, brake fluid change, and replacement of two air filters. I did the work myself and spent less than $70 on materials. Oil changes are cheap, so you can’t save much there, but you can save a lot if you learn to replace your brakes.

Don’t try to save money by skipping preventative maintenance. Make sure you change all fluids on the factory recommended schedule. Even if you do some work yourself, I’d also suggest developing a good relationship with an independent mechanic who you trust to give you honest advice.

5) Know when to buy new, buy used, or lease. The price of used cars has skyrocketed in recent years. It used to be that a 1-year old car had lost 20% or more of its value. Today, that can be under 10% for some popular makes and models. This increased residual value has changed some of the old rules about car buying. A gently used 2-3 year old car is, in many cases, not the bargain that it was 10 years ago. In those situations where resale value is very high, you might actually consider buying new. This will improve your future resale value, keep you under warranty longer, and possibly offer better terms on any financing. If you’re planning to keep the car for a long time (7-12 years), starting with a new car can be a good decision.

Buying used cars used to be an easy way to save 30% or more. There are still some good deals on used cars, but consider dependability, any remaining factory warranty, and the cost of maintenance on used vehicles. If you get bored with vehicles after a couple of years, used cars will have less depreciation than buying new.

Leasing is more expensive than keeping your cars for as long as I’d suggest. However, it is still a good alternative to buying a new car every three years, provided you drive fewer miles than stipulated in your lease agreement (often 10,000 or 12,000 miles per year). For models with high residual values, lease rates have stayed low.

Manage your car depreciation like you would any other liability. At the end of the day, a car is just a way to get from point A to point B. It doesn’t define us, who we are, or what our value is to our family or society. If you have other priorities like retiring early, buying a vacation home, or making your first million (or your second or third million), recognize when your car buying is not helping you get closer to achieving your more important goals.

Introducing Good Life Wealth Management

 After working on two terrific teams over the past 10 years, I have made the leap to start a new Registered Investment Advisor firm, Good Life Wealth Management.  I’m sure a lot of things have changed for you in the last two years, as they have for me, but I’d welcome the opportunity to catch up with you and learn what is new with you and your family.
Over the past couple of years, I’ve learned about running a top-notch Wealth Management practice and thought about how to design a firm specifically for you, the investor, and how to best address your needs.  Now, I have the chance to build a client-centered practice from the ground up.  I’ve got some interesting and timely topics planned for upcoming newsletters, as well as information on our unique Good Life Wealth Management Process, so please stay tuned!