Managing debt as a digital nomad: strategies for staying financially healthy
As a digital nomad, you're probably used to living by your wits and keeping a tight budget. But when it comes to managing debt as a digital nomad, most people find themselves in over their heads because they don't know how to handle their finances without a steady paycheck coming in each month. Luckily for you though, I've come up with some strategies for staying out of debt while still enjoying the freedom of traveling around the world!
1. Be flexible.
In order for you to be able to manage your finances as a digital nomad, you need to be flexible. You will have to have a budget that allows for unexpected expenses and be willing to change it accordingly. This means that if something comes up (like getting sick or having car trouble) and it costs more than what was in your budget, then there will be no choice but for you adjust what's left over in order to cover those unexpected costs.
If this sounds like too much work, don't worry--we'll talk about how exactly one goes about creating such a flexible budget later on!
2. Make sure to pay yourself first.
You should also make sure that you have enough money set aside to cover emergencies. If something unexpected happens while you're on the road, like getting sick or needing a new computer because yours has broken down, then it's important to have extra money in your emergency fund so that these things won't cause problems for your budget.
A good rule of thumb for an emergency fund is three months' worth of living expenses--that means if your rent or mortgage payment is $1,000 per month and all other essential costs are $2,000 per month (food/clothing/utilities), then having six months' worth in savings will mean that if something goes wrong with finances while abroad (like losing your job), then there will still be enough cash flow coming from savings instead of dipping into credit cards or loans from friends/family members who can't afford them either!
3. Take advantage of free financial help.
You might not think of yourself as a financial expert, but you can still get help. If you're not sure where to start, consider talking to an advisor or credit counselor. They'll be able to provide advice on how to manage your debt and take control of your finances.
If the idea of talking to someone about money makes you uncomfortable, there are plenty of other options available online:
Use free financial management tools like Mint or Personal Capital (both excellent) that will help track spending and show where your money goes each month so that it's easier for you to see where savings opportunities may exist within your budget--and make adjustments accordingly!
Download an app like Digit or Acorns (which automatically rounds up purchases made with a debit card) so that every little bit helps build up savings over time without even having any cash coming out from under the mattress in order more than usual!
4. Beware of credit card offers while traveling abroad or during your digital nomad stints at home.
Beware of credit card offers while traveling abroad or during your digital nomad stints at home.
Credit card companies are always looking for new customers, especially when they know that you're on the road and might be tempted by an enticing offer. If you're traveling a lot and not spending much time in one place, it's easy to accept an invitation to apply for a new card or open an account with them--but this can be risky if you don't pay off your balance every month! Credit cards can also be expensive if they aren't used wisely; many people end up paying interest on their purchases because they don't pay off their balances right away (or ever).
5. Create a budget and stick to it.
In order to manage your debt, you need to create a budget. A budget is simply a plan of how much money will be coming into your account and how much money is going out each month. It helps you make financial decisions with confidence and stick to them by showing the consequences of those decisions before they're made.
The first step in creating a budget is figuring out where all of your money comes from and goes every month by taking stock of all of your income sources (such as salary) and expenses (like rent). The next step is deciding on an amount that works for you--a goal that's realistic but challenging enough so that it motivates you rather than being too easy or impossible. That could mean saving 20% or more each month; for example: $2,000/mo in savings = $24k savings per year x 5 years = 120k!
6. Save money before you go nomading by reducing your spending on essentials like food, clothing and housing costs before you go out on the road for months at a time without regular income coming in from a job or business.
Save money before you go nomading by reducing your spending on essentials like food, clothing and housing costs before you go out on the road for months at a time without regular income coming in from a job or business.
Reduce your food costs by:
Cooking at home instead of eating out every night (this will save money and also help with weight loss!)
Eating in bulk so that there's always something on hand when hunger strikes; this strategy also saves money because buying items in bulk is cheaper than buying them individually.
Reduce your clothing costs by: * Shopping at thrift stores instead of department stores or boutiques; the clothes are often identical quality but half as expensive! You can even find designer brands at thrift stores sometimes!
7. Consider debt consolidation if you have high-interest rate credit cards or loans that are difficult to manage from afar (or at home).
If you have high-interest rate credit cards or loans that are difficult to manage from afar (or at home), consider consolidating your debt into one low-interest loan.
Use a personal loan to consolidate your debts. This will allow you to pay off multiple accounts and save money on interest payments by receiving a lower interest rate.
Consider using an online lender like Lending Club or Prosper, where borrowers can apply for unsecured personal loans with competitive rates (as low as 6%) with no hidden fees or prepayment penalties if they'd like to pay off their balance sooner than expected.
If you plan ahead and apply these strategies, you can live life as a digital nomad without ruining your finances
As a digital nomad, your finances will be more complicated than usual. You might not be working a traditional job with a steady paycheck and benefits. Instead, you'll be making money from multiple sources: freelancing projects or selling products online; renting out rooms in your home when traveling abroad; even selling things on eBay or Craigslist.
To make things even more challenging for your budgeting efforts, it's easy for debt to pile up fast when living abroad because most banks charge higher interest rates for credit cards issued outside of their home country (and some don't offer them at all). Plus there are other factors like fluctuating exchange rates that can affect how much money goes into each paycheck--or comes out of it as expenses like rent payments go up or down depending on where you are at any given time.*
Your finances are one of the most important parts of your life as a digital nomad, and they should be treated as such. If you're planning to go on an extended trip or move abroad for work, make sure that you have a plan in place for managing your debt before leaving. It can be difficult to manage from afar but there are plenty of resources available online that can help improve your financial situation and keep costs down while traveling abroad
