8 Travel Hacks for Any Budget

Topics and your questions answered on the show

  • Is Groupon safe?
  • Warning on investment roll overs.
  • C. (Honolulu, HA) asks how to save taxes on a home sale.
  • Justin (Chippewa Falls, WI) asks about putting emergency savings in a money market fund.
  • Jeff (Tokyo, Japan) asks what is the best asset allocation.
  • Teena (Oklahoma City, OK) has waning motivation after a medical situation.
  • The invisible energy of dollar flow.

Links mentioned in the show

8 Travel Hacks for Any Budget

Scott A. T.: Broadcasting from One Dallas Tower in the great country of Texas, welcome to the financial rock star show. I’m your host Scott Alan Turner, ready to help you get out of debt, save more money and retire early. In this studio with me is producer Katie who had another chicken eye recently. They’re dropping like flies.

On the show today … No, that’s not right, we did that last time. On the show today, travel hacks for any budget, and I’ll be answering your questions about money, business, and life. If you have a question you’d like answered on the show, visit goaskscott.com.

I am not a professional travel hacker but Katie and I love to travel. There are many ways you can save when you travel that don’t require you to take a part-time job for yourself trying to save some bucks. Now, you can save huge amounts of money if you want to spend a lot of time doing it, kind of like extreme couponing. That’s not me.

Here are eight travel hacks for any budget that you don’t have to spend a bunch of time doing. First one, staying with friends. We are a very mobile society and people move all around. Good idea to keep in touch with people as they move throughout the country or throughout the world, you never know when you might be travelling that place or you may want to choose to that place, stay in a couch, stay in a spare bedroom.

Along with that, making friends when you travel is super important. We met a couple in Greece … I guess, we’re in Greece seven years ago on a tour and we ended up staying in the same hotel with them over several, several nights. We would eat dinner with them every night. Glad to know them, great couple. They’re from Australia and they have since come to Dallas and stayed with us a couple of times. When they’re doing their world travels and flying back to Australia, they’ll pop into Dallas, stay with us for a few days and then go about their merry way back home. Do you think when I’m going to Australia I’m going to have a free place to stay? Oh, yeah, whenever we get there, whenever we got time to make the trip, the door is open.

Just got back from Atlanta trip, hadn’t been there in eight years, stayed with friends, same deal. Next, Airbnb, we’re heading to Massachusetts in a couple of months, $150 a night for a three-bedroom house. The fleabag motel near my hometown, that’s about $100 a night for one bed and one bathroom. Not very comfortable when you’ve got twin toddlers plus you have to eat out every meal. Airbnb, I can buy a box of cereals and some milk for breakfast, eggs, whatever. If you have not checked out Airbnb in your travel plans, you got to do it. It’s so cool.

Next, always rent the sub-compact car if it’s one, two, three adults. They’re just cheaper. They get the best gas mileage and one of my favorite things about small cars is they fit into any parking space. Next, snacks, bring them. Water bottles, bring them even if they’re empty. Empty water bottles can go through the airport. When I go to Europe, I’m usually travelling with 7 to 8 pounds of power bars. I eat two a day in between meals.

Number one, it saves me time because I don’t have to go to a restaurant in Europe where it takes an hour to get in and out because they’re very slow. It’s very laid back. But if you’re on sightseeing tour and you want to see a bunch of stuff, you don’t want to spend an hour at a restaurant a couple of times a day for snacks. Even when I go to a trade show or a convention here domestically in the States, I’ll load up on the Trail Mix that they sell down the street in bulk, way cheaper than buying it at the airport.

Next, flexible travel dates. It doesn’t work of me. It doesn’t work for a lot of people because we normally have fixed vacation schedules that you have to schedule way out months in advance. It might work for you. Recently, again, that Massachusetts trip if I went from Tuesday to Tuesday, it would save us a $150 per person on air fare. If you have that flexibility, easy way to save.

Piggybacking on a company trip or conference, what about being a small business owner? If you’re somebody who travels for your job, let the company pay for your air fare. One less ticket to buy for you. I’m going to Chicago this year, San Diego this year. I went to San Diego last year. I get to see the sights, eat out, tax right off for the business. The magical mystery RV book tour, some year whenever that happens, whenever the kids are older, when we drive around the country so I get to meet all of you. I’m hoping that’s a tax right off. I’m really not quite sure yet. I haven’t checked with the CPA on that one.

Going somewhere cheap, Disneyland is going to bleed you dry. It’s expensive but any city with six flags unless you go to the amusement park for a day and explore everything else in the city that they have to offer as well. You can still have a good time. Finally, one of my favorites, going in the off season. The highest price for an Alaskan cruise is summer because it’s hot in the States, cool up in the Alaska area plus it’s when the whales are migrating. I really want to see the whales.

One of the cheapest times to go is right before the summer rush. I think in May is when went several years ago if I have $500 to a $1,000 or less per person. Best time to go to Napa Valley, wine country, right after the fall rush in November. When we were there last, I believe it’s the first or second week in November. It’s beautiful, not too hot, not too cold. Yeah, you missed the grape picking season but would I rather save a $1,000 and avoid the hours of on the highway in the wine tastings at the restaurants if that means I’m going to miss watching a great press run for 10 minutes? Oh, yeah, I’ll take the savings. I can watch a great press on YouTube if I want. I’d rather avoid the lines just by missing the rush a couple of weeks.

Going skiing the first week of December when everyone is in school, not during Christmas break. Head to the beach after Memorial Day weekend, after July 4th weekend, after Labor Day weekend. No lines, no crowds, cheaper prices. Off season save big bucks. Now, onto your questions. Next question is from anonymous, “Do you Groupon? Is it safe? There is a $395 class for $5 that a girl I work with mentioned. She has never done Groupon.”

When it comes to Groupon, you have to read the fine print and read everything. Let me give an example. You might be restricted with your Groupon after you purchase to a specific day of the week, that you got to use it at specific time of day, specific time period. You may only have 30, 60, 90 days to use the coupon. Before you hit the “Buy” button, see what the restrictions are on it. There might be new client only restrictions so if it’s some place that you’re already a member of, already paying for, you want to be able to take advantage of that.

Sometimes, as this happened in the past, redeeming the coupon can be a challenge especially if the place has limited capacity, limited seating coupled with an expiration date on your Groupon. You may not even be able to redeem it. Producer Katie, she bought a Groupon a while back a couple of years ago for a massage services near our neighborhood. While they oversold that Groupon, thousands of people went and bought it and you couldn’t get an appointment for three months. She didn’t get a good deal because she wasn’t able to use the coupon. It was a waste of money.

Groupons, they might not always be the best deal going either. Groupon, when the company sign up to do them, Groupon gets a big cut of that money. If you go directly to the company themselves, you might be able to negotiate a better deal on your own working directly with the business. I know many people have gotten great deals with Groupon. It is legit and you can save money using it but you gotta read that fine print.

For your particular deal, $395 and they’re offering that for $5, that business have either totally inflated the retail price, meaning that it’s made up $395 or they’re going to be so overbooked, you’re never going to be able to redeem the offer. That kind of sounds like the case because most people are going to say, “Oh, it’s only $5. I’m not going to go worry about it. I’m going to go buy it,” and then the offer expires and you’re out $5. I mean, it’s just $5 but still.

Is it legit, Groupon? Yeah, it’s legit. Does it save you money? Sometimes, it can. Is it the best thing for your wallet? It depends, it depends. You got to do your research before you buy it and see if you’re really saving money, see what the expiration dates are, the limitations, the fine print and then see if you might be able to get a better deal somewhere else. Thanks to the question.

Hey, listener, “Great episode on the A plan costs. I’m looking into financial advisers in my area in Minnesota. I just started a Roth IRA with a small amount of money each month that I deposit. I noticed the exact 5.75% fee that you discussed on the show. I then went to Betterment which I learned from you as well and noticed their fees are much less. I planned to move away from this financial adviser. What are good fee charges as I look for a new adviser? We also rolled over my wife’s 401k and got hit with that fee,” and then there’s a sad face emoticon. “Is it too late to do anything differently? The cost of the rollover was the 5.73% sales charge, $365. I’m not happy. I know I could have rolled it into an account at Betterment for way less. I feel stupid I have listened to your show since December. I really enjoyed it. Please share this message so others don’t make the same mistake.”

First, I would just check them in the contract to see what it says. I’m not sure if there’s any three-day refund policy that you could get with some products. It’s possible, probably unlikely. If it’s a local, you can march into their office and demand you get your money back again, probably not likely. If not, you can call them a good salesperson, they’re professionals. They’re going to destroy all your arguments.

Even if you listen to the show, they do this stuff day out and they are salespeople. They will be able to convince you of anything. There’s a recent transaction? Maybe you can cancel the rollover at the 401k company at the source but before you do any of these type of things, use feex.com. FeeX, that’s a free service. You can check if someone is putting you in a higher cost of investment where there is a less costly equivalent. You got to remember FeeX, they don’t include those front-loads in their calculations, just the management fees, the yearly expensive fees they’re comparing.

I don’t think that will include the front-loads, anyway, just that yearly fee but when you look at the yearly fee comparison, usually FeeX sometimes they’ll find you a cheaper alternative. Then you add the front-load on top of that which they do not compute, then your savings are even more over the long term. Warning to everybody when you’re doing any type of investment or transfer, make sure you know what you’re getting into, what you’re paying for. People need to eat, people deserve to make money, salespeople deserve to make commissions but not at your expense.

C from Honolulu, Hawaii wants to remain anonymous, so I’ll call you C but you know who you are and I appreciate you listening in Honolulu, another pin on the map.

C: “I’m looking to sell my parent’s mortgage-free home that I inherited when they passed away to avoid capital gains tax I’m looking at a 1031 exchange in my home for my daughter and son-in-law in their state which I can then later gift to them. But these exchanges are complicated and I was wondering if you or a real estate expert would have some advice in how to pull it off. Aloha from Oahu.”

Scott A. T.: People in Hawaii are happier than any other state as based on a study. That’s a fact. That’s nice. If you travel to Hawaii, let me tell you. Forget the volcanoes, the scuba. Ignore the snorkeling. The beaches, yeah, they’re kind of nice. Forget all that stuff. You need to visit Lanai. It’s one of the smaller islands and you can visit the Lanai Cat Sanctuary. If you’re already cat lover, you can pet hundreds of cats and brush them. You’ll feel like a movie star when you walk into the sanctuary, and dozens of cats run up to you begging to be pet. They just love having visitors. Katie and I spent a week on Lanai a few years ago, fabulous, fabulous time. Loved the Lanai Cat Sanctuary.

I guess, we have to get back to personal finance. A tax-deferred 1031 exchange based on the IRS code, it falls under, as you sell your property and if you have appreciation on the property, you can reinvest it in a new property to put off paying the capital gains tax on the appreciation. If you don’t put the money back into real estate, yes, you’re going to have to pay the tax made on it. If you do a 1031 exchange, you put the money into an escrow account, then you have 45 days to find a new property that you plan on buying and 180 days, 6 months, to close on the deal.

Now, keep in mind, you can’t do a 1031 exchange if the home is your primary residence. It’s only for investment properties to delay capital gains taxes. But since you have your parent’s home, that would be considered an investment property since you don’t live there are as your primary residence. These primary residence, home, you don’t pay those gains up to … It’s just a different situation if you have a primary home and you’re selling it, you don’t pay capital gains up to $250,000. If you’re filing singly or up to $500,000 if you’re married and finally juggling your taxes and you have that much appreciation on your home.

You can leave your real estate holdings to your children and what’s going to happen is they’re going to inherit that property in what’s called a step-up basis that’s going to eliminate some of the taxes on that. You can also gift portions of the real estate to your daughter-in-law and son-in-law $14,000 each year a piece to each of them, so that’s $20,000 total per year so you want to start doing that earlier rather than later to give them all of that.

It’s going to be a complex strategy to minimize the taxes and transfer. There’s going to be a lot of nitpicky things. I would pay for a couple of hours’ time so the CPA or a fee-only certified financial planner who has worked on those things before and run the situation by them. They will look at your whole situation. They’re going to look at your family situation and their tax situation as well, make sure you guys are paying the least amount of taxes as allowed by law.

When you get into the gifting portion of that, the devil is in the details, so you got to have the right documentation in the right order and right time-frames and the right dates. Getting one of those professionals on your side to walk you through that process step-by-step, that is going to be your best bet. Thanks, C, for the question and aloha.

Justin asks about putting emergency savings in a money market fund.

Justin: When you open up an account at a brokerage like Fidelity, Schwab, Vanguard, your money first gets deposited into what’s called a money market account. It’s a glorified savings account. The brokerage is going to take your cash and invest in some short-term securities so you can make a little more interest. Banks have money market accounts as well. It’s low risk. You won’t lose the money you put in, so if you put in $1,000, it’s never going to go below $1,000.

Scott A. T.: Even though it might be in a brokerage, the brokerage is just holding it for you. Why would you do it? Higher interest rates is really the only reason. Some are higher or lower than what you can find with an online bank, say after comparison shop and some come with a debit card or a bulk of checks, if you want that option. Money markets, they’re just fine for emergency funds.

Downside? It might take a little longer to get the cash from a brokerage to a regular bank and wait for that money to clear if you need it quickly. But if you have one with a debit or checks, that might not be an issue for you. I would base the decision purely on the interest rate that you can get. Thanks, Justin, for the question.

Quick break and we’ll be right back. You’re listening to Scott Alan Turner. Hey, nation, Scott Alan Turner here. Now, for those of you that are my long-time listeners, you know I’m not one of those guys on the radio who promotes every product that shows up on their desk. You’ll never going to hear me trying to get you to buy wine from Texas, or recommending to buy air-conditioning service from some company in the city I’ve never lived in. No. I have a name to uphold to you, my valued and awesome listeners. But if I were to recommend something to you, I would tell you about Public Bread.

If you need to make a sandwich, bread pudding, stuffing for a turkey, breadcrumbs for your Parmesan chicken, what else do you use bread for? Toast, feeding the ducks. You can’t go wrong with Public Bread, twice the yeast and half the sugar of normal bread. You can taste difference. Public Bread is made by the Brotherhood of Millers and the brotherhood uses only the finest flour, true Roman bread for true Romans. Available in the bread section of select grocery stores. Tell them Scott Alan Turner sent you.

Jeff asks what is the best asset allocation.

Jeff: “Is that 30% in Canadian stock indexes, 20% in US stock indexes, 20% in international stock indexes and 30% in real estate? We bought a condo and have it rented out. We don’t have any money invested in bonds, however. Can our real estate investment act as a substitute for a bond investment since it is in a city where it will be easily rented or should we buy some bonds within this portfolio to keep it better and balanced?”

Scott A. T.: Now, you’ll find as many opinions on asset allocation as there are different scents of Yankee candles of which there are thousands. Me, I like the Macintosh smell and the Christmas wreath myself. Some people are going to say, “No stocks.” Some people are going to say, “No, you don’t get any bonds at all. Just 100% stocks.” Some people are going to say, “Yeah, you do some stocks and you do some bonds.” But what about if you’re thinking about something like a 529 plan? If you’re 100% in stocks and you need that money for a little bit of Susie’s freshman year in college … They still call it freshman? Not fresh-person? The PC crowd hasn’t picked up on that one yet. Make a note, someone needs to start a movement on that.

Now, what Jeff is asking about is asset allocation balancing risks and rewards across different types of assets because each one behaves differently over time. There is no simple formula that can find the right asset allocation for every individual but people agree, it’s one of the most important decisions you can make. What do you do? Well, one example, I can give you for sure is 100% cash is a terrible idea because you lose that to inflation over time. What about 100% in stocks? Well, people who held some bonds in 2008, 2009 whom they didn’t get killed is bad. Well, killed is bad. It doesn’t even make sense because dead is dead. They didn’t lose so much money on the downturn.

Now, Nobel Prize winning research on modern portfolio’s theory, MPT, fancy word, says you’re better off holding both stocks and bonds rather than just one or the other. If you start looking at target date funds even if you don’t invest in one, that’s a good place to start. It lets you know how the professionals and the robo advisors think. You can go look and see those thinking about when you want a retirement, what your current age is now and see how they would divide it up. The general rule of thumb is to hold the number 125, take that number. You subtract your age from it and that’s how much you should put into stocks.

Let’s say you were 50 years old; 125 minus 50 is 75. You’d have 75% of your money in stocks. The old rule of thumb used to be 100 minus your age but with the interest rates where they are, if you start looking at the three largest target date fund providers, those being Fidelity, Vanguard, T. Rowe Price, they all showed that they’re much closer to the 125 minus your age. Now, you’re going to find people who go 100% real estate as well and they live off the monthly excess rent.

What is best? In most diversified portfolios, the rule of bonds is to reduce the risk of stocks. You could then say if you invested in REITs, Real Estate Investment Trust, you’d be trying to do the same thing. REITs don’t have a high correlation to what the stock market is doing. Stock market goes down, REIT which is a real estate investment usually doesn’t go down along with it.

Now I would carve out your real estate percent diff, that means 30%, just take that off the table. Then, I would look at how a target date fund would have your money allocated in the different categories. Bonds are not a bad thing. For myself, I’ve got roughly 20% of my assets in the properties I owned but I’m still in bonds. It does not mean you should copy me, absolutely not. We’re in different life stages, different incomes, different risk tolerance but still in bonds because it’s a good hedge against inflation.

Teena’s motivation is waning after a medical situation.

Teena: “My personal challenge right now is saving for a full blown emergency fund after building up a partial emergency fund. We have a lot of family illnesses and death that really knocked us off track. We’re trying to get back on track to saving but I feel we are both really tired from the years of paying debt, seven years, and our motivation has waned. So far this year, we seemed to be doing better but we are having to work to keep the motivation up.”

Scott A. T.: I’m very sorry to hear about the death in your family and the illnesses. That’s certainly a blow to anyone trying to get out of debt and it’s often the cause of people that are in debt as well, those medical bills that pile up. Seven years is a long time to pay off debt and have to rebound back into your life with that, that’s tough.

Let’s talk motivation. Here’s what studies have shown, that people prefer big rewards over small ones. If I said to you, drink this disgusting drink here and I’ll give you 10 cents, you would say, “No way. Forget it,” but if I offered you a $100, you might think twice. A $1,000, you might be asking me for a larger glass. Studies also show more than big rewards is people want present rewards more than future ones. If I offer someone $200 next year or $100 right now, most people would take the $100 right now.

The farther away the reward, in this case you want to be debt-free or you want to have financial freedom, the less motivation there is to achieve it because it’s far away. Now, there’s a fancy term for this, it’s called hyperbolic discounting which is defined as the tendency for people to increasingly choose a smaller and sooner reward over a larger later reward as the delay occurs sooner rather than later in time. I’m not pulling out my big brain on you, I had to go look that up. I was reading it in a book recently.

How do you sacrifice now to get the big rewards later? You have to drill down. What is your goal 12 months from now? What is the one thing that you can do this month to get there? What is the one thing you can do this week to get there? What is the one thing you can do today to get there? There’s always something you can do today even if it’s packing your lunch and it’s the small things that they build momentum towards that one big thing even though it’s much farther into the future. It’s the big thing that you keep in front of you for your motivation.

Discipline is hard. No one is going to argue that but we have to keep at it until it becomes a habit. Studies also show it takes about 66 days to build a habit into our lives and then it becomes a value, part of your core being and then it becomes a part of your life. Zig Ziglar had this great quote. I really like it. It says, “People often say that motivation doesn’t last. Well, neither does bathing that’s why we recommend it daily.”

If you’re lacking some motivation, Teena, you’re just going to surround yourself with motivation constantly whether that is reading a book in the morning, spending a few minutes with yourself in thought, thinking about your day, listening to some inspiring music, reading Instagram quotes. People have lots of Instagram quotes for inspiration. Listening to inspirational podcasts, whatever that might be for you, whatever that works with you but you get to immerse yourself in it every single day and stay going. You do that, that’s going to help you get there. That will help you get your big rewards no matter how far down the line they might be. Thanks, Teena, for the question.

I always enjoyed chemistry class in high school. I found the experiments fascinating like making goop, burning chemicals, seeing the different colors in the flames. And there was that time we got to make chlorine gas which if you breathe it, you die. Nobody died but it’s kind of scary. It’s probably why I like watching Discovery Channel when we had it and the stories of the solar system, galaxies, particles, protons, neutrons.

Remember this stuff from high school? Well, there are these little tiny particles shooting the earth right through it all the time. They are called neutrinos. They’re nature’s ghost particles. They shoot through us at the speed of light. You can’t stop them. You might be looking around you right now like you just had a bug land on you, they’re going through you.

Dollars do the same thing. It might be in your hand, your wallet, your purse or not. Whether you got paid today, last week, last month, dollars are flowing all around you in and out of your life, just like invisible energy like the neutrinos. You don’t have to be handling them to be directing them. Doing something or doing nothing, dollars are flowing. Where you spend your free time causes dollars to flow. If you read a book or go to bed impacts where the dollars are going to flow at some point.

Eating out, cooking at home, dieting, dollars are flowing. Ignoring your retirement, being active in your retirement planning, dollars flow. Controlling your money and letting your money control you, managing your money and letting someone else manage it for you. Dollars are flowing every day all day. You exercise or eat a bag of chips, dollars are flowing. You don’t see it most of the time but everything you do, everything I do, every decision, every second impacts dollar flow for the better or worst or not at all.

As you look around you right now thinking of those tiny neutrinos shooting through your body at all angles, think of that dollar flow that is around you too. But unlike the neutrinos which you have zero control over, you can’t stop them, you have complete control over dollar flow. Those are the words. Hey, I pulled that one out of nowhere. I’ve been watching too many episodes of Star Trek reruns lately.

That’s it for this episode. I’m your host, Scott Alan Turner. Rock star Katie is my producer. I guess it is time to wind up right now. All links mentioned in the show are available in the show notes at scottalanturner.com. If you have questions you’d like answered on this show, visit goaskscott.com. Thanks for listening.

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