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finding the budget sweet spot for traveling

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In planning for future trips to Europe I'm coming round to the idea of the "budget sweet spot" which implies getting good travel value for one's spending, but avoiding diminishing marginal returns. My idea is to not skimp on special unique things to see, such as interesting castles, gardens, villas, museums etc, nor forgoing extra transportation costs to get there. On the other hand, at home my wife and I live frugally and are content with that lifestyle. We don't enjoy extra luxuries, being pampered etc in the US and I don't think we'd get that much enjoyment out of it in Europe either.
For that reason, I think it would make sense for us to go for lower cost accommodations, such as a week long apartment rental with kitchen facilities in some places, and focus on eating at cheaper, but still authentic places, when we don't cook at "home". We also don't drink alcohol at home and I have no interest in drinking it abroad.
The other big budget question is where to go. I like the idea of subbing Austria for Switzerland, and spending time in Croatia and Hungary. I still have fond memories of my last trip to Hungary in 1989, where travel costs were basically close to nothing. I realize things are different now, but prices still look pretty attractive. Wandering around the old Hapsburg empire seems like a good budget travel decision with lots to see and experience.
So, my overall idea is as follows. Don't skimp on seeing the attractions of an area, do skimp on the extras that won't enhance (for my wife and I at any rate) the overall experience. Would like to hear from others on this budget travel philosophy.

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