Time for me to bow to the inevitable and finally mention the economic meltdown. In some respects, I’m quite pleased about it – I’ve never been able to afford to buy a decent house in London, so falling house prices mean there’s a good chance I will be able to buy when I return in 2010. Plus getting out of my job on my own terms during a recession means less worrying about job security. Best of all, I get to escape constant discussions of the situation in the news for a whole year.
But there has been one impact so far: on my savings. I originally calculated my savings budget based on needing $50 a day spending money (excluding travel costs, visas, insurance and so on). At the time, the exchange rate was $2 to the pound. Being sensible, I calculated my savings based on an exchange rate of $1.70 to the pound, meaning even with a 15% drop in the pound’s value I’d still be fine. Less than that, and I’d end up with more than I’d budgeted for. I figured I was being pretty cautious there – until now. Today the exchange rate is $1.73. Some people are forecasting it could drop significantly further over the next few months.
If it drops much further, I’ll need more money (which will then eat up some of the money I plan to have saved for when I get back). Around £800 for every $0.10 drop in the value of the pound. I could exchange money now, but then I’d be losing out on interest (as interest rates are better over here). Or I could do nothing and hope the pound stabilises around its current level. It’s the unpredictability that’s killing me.
And one final note: I know you’ve been waiting ages for this, but please no gloating from any US-based travellers in the comments box!