Dollars and (Common) Sense

Remember the movie Office Space and Michael Bolton's grand plan to steal the rounding error from every transaction the company made? For each transaction, the amount stolen was a fraction of a penny, but aggregated over thousands or millions of transactions, those fractions added up to a whole lot of dough. Then there's the decimal place debacle and the devious plan falls to pieces.

Dealing with exchange rates on multiple currencies on a round-the-world trip is a bit of the same mess as Michael, the diabolical but mathematically impaired software engineer. Every time you change currency, little bits of your carefully crafted budget are shaved off. Some of that goes directly to the bank or money changer doing the exchange. Some of it is legitimate rounding error, which goes right back to the bank on top of their service fee or commission. And some of it, like when the U.S. Dollar was tanking worldwide this time last year, is just bad luck.

In America it's easy to dismiss all of the Chicken Littles on Wall St, screaming that the Mighty Dollar is falling. But when you've based your whole trip budget on a fixed amount of cold, hard American cash, how the dollar is faring against the pound, yen, or baht becomes much more important. So I wanted to see just what the impact of last year's currency market crisis was on our trip.

When we were researching the trip, we used almost exclusively Lonely Planet guides. They're ubiquitous, everyone uses them, and, generally speaking, they're reliable. So even though we understood that the copyright date was only a couple of years old, we assumed that the exchange rate information was good. Not once did we think to double-check the exchange rate on a site like xe.com. So we planned our trip around a $50 USD per day budget.

What should have been common sense is that exchange rates fluctuate, particularly in developing nations like the ones we were going to be travelling in. While we were on the trip, I had the distinct feeling that our money wasn't going as far as I thought it should. It could be that I'm a bad haggler, and that after one bad experience in a shitty hostel, we were going for top-of-the-line budget accommodations, but look at the data. Our money wasn't going very far at all in most of Southeast Asia (where we were before Feb 2, 2008), especially Thailand. Then we went to Sri Lanka, where the LKR was running much stronger against the dollar than it had in years. Finally, in India, Nepal, and Hong Kong, we were right on budget.

So our money wasn't going that far, but just how far was it getting us. In Thailand, on average, we were short $2.76 from our daily budget (valued on Sep. 19, 2007), which equates to about one small meal for the two of us, not including alcohol. What's worse is if you look at our value of our Lonely Planet-based budget in Nepal, a difference of $7.48, or two midday meals at the Hut including beer.

According strictly to the data, the total loss due currency fluctuations was $100.33, or just under 2% of our total budget. However, consider that that's 2 whole days worth of food, lodging and activities lost due to "market forces".

So what's the bottom line? First, before setting your budget in stone, use some common sense and double-check the current exchange rates. Second, it might not be a bad idea to add a couple of days of cushion to your overall budget. In the end, exchange rates are annoying but a fact of life. As long as you use some common sense (ahead of time), you'll be able to ride out any nastiness the market can throw at you.

A Note About Receipts

Written in India

This post is long overdue. It's a bit geeky, but it's still worthwhile. More importantly, it's short. Asia does not appear to have the same powerful privacy lobby that we have in the States. How do I know that? Because when we got our first ATM receipt, I looked down and noticed my credit card number. The whole thing. No X's politely obfuscating the digits of the account number. Then we noticed it again when we paid for Starbucks with a credit card in the airport -- our whole credit card number right there, for anyone to copy down. Clearly, we can't just throw them away. We spent about 20 minutes one day tearing them into tiny and tinier shreds. And then we just started saving them to throw away or shred when we get to Lizzi's Dad's house in Philadelphia. A moment of brilliance came when Chris and Amanda suggested that we burn them. Um, DUH. Except that we never stay in smoking rooms, so for the time being at least, they're still cluttering up the bottoms of our packs, waiting for the day when they meet their fateful end in a shredder. The point behind all of this is to say that even though identity theft in the US is on the rise, it's really easy to do from India. Let us know if you need some quick cash and we'll hang out by an ATM and send you some receipts!

Things to Think About

There was a fabulous post today over at lost girls world, all about budgeting for a trip like this. Their $17K+ price-tag seems steep on the one hand, but totally reasonable on the other. When you think about the fact that Matt and I pay WAY more than that in rent each year, it feels a little bit better. And my god, they stayed in Peru for $8/night! Plus, their trip was for an entire year, rather than four months, and they travelled to many more places than Matt and I intend to.

Their post gave me some really good ideas and things to think about. In no particular order:

Plane Tickets: The lost girls did end up getting a RTW ticket, but in their post they said that tacking South America onto a RTW ticket can really drive up the cost. So maybe Matt and I should consider coming home after the wedding in Argentina, and flying to Thailand from there? Or maybe we should head home and then go for our brief stint in Europe, finishing the trip with Thailand instead of nearly starting with it? Of course, I will be checking the ever-helpful airtreks to see what I can come up with over there.

Vaccines: When I was talking to my trekker-sister-in-law this past weekend, she suggested that I check out the CDCs website for a list of vaccines we'd need for the countries we'll be visiting. She then suggested that I go to the County or to a Clinic to get the vaccines for WAY cheaper than they'd be if I just called my doctor. Great idea! And the LGs seem to agree. They also suggested that we check our insurance policy to see what the plan might actually cover. Since we're currently getting our insurance through Matt's school, then there's a chance that some of those vaccines might be cheaper for us.

Visas: Right, visas. Totally forgot about those. It looks like Matt and I will need visas for India, Thailand, Laos, Vietnam, and Cambodia. But I bet we'll need one for Sri Lanka, too. The LGs suggest getting the visas while we're on the road. I wonder, though, if we have a general sense of when we're going to be somewhere, if we should try to get them ahead of time?

Right now, the biggest trip-related thing on our minds has to do with future employment. Matt is currently in the process of interviewing for jobs next year. I'm convinced he's going to get an offer somewhere, sometime soon. And he's kind of worried that once he gets said offer and comes back to them with, "awesome, I'd love to work here, can I start in May?" the offer is going to magically disappear. I'm not so sure. I think that any employer that Matt would want to work for is going to really dig the fact that we're planning to take this trip. I think that if we/he can manage to present it in such a way that we're talking about a once-in-a-lifetime opportunity (which it is) as well as a chance to see parts of the world that most people don't even think about visiting (also true), employers could see it as a positive thing.

This is one of those times when I wish that this blog was public already, so that I could get your feedback on this. How DO you convince a future employer that your "vacation" is more "experience" than vacation? How do you tell your boss-to-be that you're committed to your job, but that you need to stop the train and get off for a little bit? Should we be willing to limit our trip, based on a job?

Like I said, things to think about.