My $62 (gulp) single room in San Pedro de Atacama, Chile

Even seasoned travelers sometimes end up in a travel destination that stumps them when it comes to costs. “I can’t believe how expensive this place is”—that’s a statement you’re not happy about uttering.

It’s a painful realization when you thought a place would, at worst, be on par with what things cost at home. Then you get there and start wondering where all your money is going.

It happened to me in the Atacama Desert region of Chile last year, I heard backpackers who came from Ecuador or Panama muttering about it in Cartagena, Colombia a few weeks ago. I’m sure lots of travelers are cursing in Brazil right now. Some are shocked when they find out how crazy expensive Australia has become, or how pricey Singapore is compared to the rest of Southeast Asia.

This is why a bit of pre-trip research is necessary. As I pointed out in the book Make Your Travel Dollars Worth a Fortune, most vacationers decide where they want to go and then try to fit that trip into their existing budget. That only works though if you know most of the costs up front, like on an organized tour, a cruise, or an all-inclusive vacation. Otherwise it’s backwards: the cost of the destination should match the budget you’ve got. Otherwise you’re scrimping and sweating over the restaurant tabs.

Keep one eye on (print or web) international news because these factors all play a part.

What makes a travel destination expensive?

1) The population is wealthy.
This is the main one. It’s not an exact correlation, but the higher the per capita GDP of a country, the higher prices are going to be. Think Japan, Luxembourg, Switzerland, and Denmark. When a country’s wealth rises quickly, as it has in Turkey, Thailand, and Brazil, prices are going to rise.

2) Taxes are high.

The price of gasoline in Germany – per liter in euros

The United States is a rather inexpensive place to travel compared to Europe, not because we’re less wealthy, but because taxes are much lower. (We get less from our government too, but that’s another story.) If citizens pay a high percentage of their income in taxes or more than 10% on everything they purchase, that affects the price of everything, from food to fuel to hotel rates.

3) Labor laws are inflexible.
This is another good/bad factor: if all workers make a good salary, prices for taxis, restaurants, and goods in stores are higher. If those workers can’t be fired without an act of God, that means a very inefficient labor system too, which adds costs at every step of the transaction chain.

4) Distribution systems are inefficient.
Another reason retail prices in the U.S. are cheaper than in many developing countries is that we have a very lean distribution system. In Japan or Mexico there may be six people taking their cut between manufacturer and consumer—and a monopoly or duopoly on top of that. In efficient countries there’s less waste in the system and fewer middlemen. There’s also healthy competition: five wireless carriers instead of one, ten grocery story chains instead of two. Five hundred beer brewers instead of one.

5) The currency is out of balance.
The reason Brazil and Chile are expensive for travelers (besides the reciprocal visa fees) is the strength of their currencies. Both countries have been on an economic tear the past few years and lots of outside investment money has poured in. As commodity prices rise, countries that put out lots of commodities from under the ground (such as these, Canada, oil countries) see their currency vault up in a hurry.

6) Supply and demand.
Basic economics still applies. If every room in a destination is sold out for three months straight, good luck finding a deal on a hotel. Thus despite Italy’s economic clusterf&%k, you’re not going to find any bargains in Florence.

7) Everyone is out to rip you off.
Every time I read something about traveling in French-speaking West Africa, this is the main complaint. If you could pay the real price, it may actually be cheap to travel around. Since every person you come in contact is trying to charge you double what a local would pay, however, it’s a daily struggle that drives up costs. No fun.

Want to figure out where your money will really stretch instead, in places that are cheaper than where you live now? Pick up a copy of The World’s Cheapest Destinations at Amazon, B&N, Apple’s iBookstore, or the link top right for my publisher.

Last week I was in Bolivia and it was dirt cheap. (See this post with prices.) This week I’ve been in Chile and I’m paying more than I would at home. As soon as I crossed the border, most prices went up by a factor of four.

It’s kind of hard to get your head around this fact sometimes, but countries that are right next to each other can charge drastically different prices for travelers. Right now I’m talking about southern Bolivia and San Pedro de Atacama in Chile. But you can see this strange effect play out in the U.S and Mexico, Austria and Hungary, Singapore and Malaysia, Jordan and Israel, Belize and Guatemala. Step across a line and you go from poor to rich in a hurry. Or vice-versa.

I’ll go on record as saying there’s no such thing as doing “Atacama on the cheap.” San Pedro de Atacama is a cool little tourist town in the middle of a whole bunch of interesting things to see. It’s a great place to come on vacation, especially if you can stay in one of the fantastic all-inclusive places I did for a while (on a writing assignment) where everything is bundled together and you don’t have to think about it. If you’re on a long-term backpacking trip, however, and are watching the budget, look out!

This is an area where it makes no sense to come here if you can’t go on adventure excursions. Those cost $15 to $50 per person, so even doing two or three is going to cost you bigtime. On top of that you’ll pay as much for a coffee as you would at a Starbucks at home, you’ll pay as much for a fruit shake as you would at Smoothie King, and you’ll pay more for a beer than you would in your local pub.

Even at happy hour, a cocktail is more than 9 dollars.

When I went from Bolivia to Chile, ice cream went up by a factor of five, meals by a factor of four, taxi rides by a factor or four, drinks by a factor of four, and hostel/hotels by a factor of three. Same with souvenirs. You could plausiby argue that the food is much better, but the other things are the same—they just cost more. One country is poor, the other is not. Prices reflect this—even the public toilet prices.

Here are the very few pieces of advice I could conjure for saving a few bucks in the Atacama Desert:

1) Rent a bike.
You can rent a bicycle here, with lock and helmet, for around $6.50 for a half day, $12 a full day. There are a few attractions you can reach by bike on your own if you get good directions, including the Cejar salt lagoon. Plus if you follow the main Caracoles street a few blocks to the west you’ll find an awesome area for mountain biking.

2) Take a local bus to Calama.
Lots of agencies sell expensive transfers to the airport in Calama. But the local bus is a shade over $5 and is comfortable. You’ll have to catch a cab on the other end though, which will cost more than the bus.

3) Bring a water purifier.
Bottled water is more expensive than in your home country and you’ll go through gallons of it in this dry, high-altitude weather. Locals drink the tap water and though that’s probably not a great idea for you, a UV filter will render it fine for even the most sensitive stomachs.

4) Pick your excursions carefully.
It costs $15 to $40 per person to do most any excursion from San Pedro, so obviously you can’t do everything on the long list of menu items. If you’ve been to geysers elsewhere, the ones here probably won’t give you much of a thrill, especially when sharing them with 200 other tourists. Same for the flamingos. If you live in Arizona, a cactus hike is probably a huge waste of money. If you live in Utah or Israel, salt lagoons are probably not a big thrill. Decide which options truly get you excited and sign up for those.

5) Go see the stars.
It’s free to see more constellations that you may have ever seen in your life. And from a different southern viewpoint. The middle of town won’t cut it though, so head out to a darker place, then look up to see a thousand twinkling suns.

It’s easy and oh-so-fun to bash the government and say they can’t do anything right. But I sent off my United States passport on December 8 for it to be renewed. I just got the new one today: December 16.

Granted, I sent the application by Priority Mail and paid the extra money to have it expedited and overnighted back. I did all this because the application info said it would take three weeks or less this way, compared to six weeks or so otherwise. For a travel writer to be without his passport for six weeks is an unsettling prospect, so I ponied up the extra.

They gave me the version with extra pages I requested too. Good thing since you have to pay a fortune to add more now.

In the end, it was just eight days—six business days—for me to get a new passport from Philadelphia sent to Tampa. And it arrived via the postal service some “privatize everything” pundits say is an unnecessary government program.

I’m not thrilled with how ridiculously gung-ho “Go USA!” the patriotic imagery is inside this thing (it looks like a set from the Colbert Report), but I’m now set until 2021. Nice.