You Need A Vacation (even if you have debt)

How to budget for vacation

You need a vacation, even if you still have debt. You will find countless articles and books that will tell you that you should not spend any money on non-essentials while you still have debt, however, I strongly disagree. If 2020 has taught us nothing else, it has shown us that life is fragile and time is fleeting. If we live in a box and deny ourselves any pleasures, are we really living? I am not suggesting that you YOLO your way through life racking up debt and being irresponsible. What I am saying is that it is possible to pay down debt and enjoy your life.

Prioritize your values

We were not put on this earth to simply work, pay bills and die. Money is a tool that we can use to make our lives more comfortable and enjoyable. The best part about being an adult is that you get to decide how you live your life. If travel is important to you then you get to add that to your budget and debt repayment strategy. In order to fully enjoy your life you have to prioritize your spending.

Most people accumulate debt due to poor money management habits. The first step to setting financial goals is to first create a budget. Until you have a clear understanding of how your money flows in and out of your bank account(s), you will always have issues. (I have an article that gives you the tips you need to start, or refine, your budget here.)

Now that you have a clear plan for paying your essential bills and necessities the fun begins. The money that you have leftover is what you can use for fun. If you find that you don’t have much money left over then you get to take a closer look at your spending. Where can you cut expenses to make travel a higher priority? Things like little-used gym memberships, online subscriptions you don’t use much, reducing/cutting cable can help free up money in your budget to put towards travel.

Create a travel budget

There is no one size fits all dollar amount that you should set aside for travel. The amount you will need will be based on several factors:

  • What type of vacation you want to take (domestic, international, staycation, etc.)
  • How you plan to travel (plane, car, train, etc.)
  • How long you plan to be gone
  • The number of people traveling with you
  • Time of year (holiday, summer, winter, etc.)

A solo vacation to visit a friend across the state for a few days may cost significantly less than an international trip for a family of 4. Think about the type of experience you want to have and plan your trips that way.

With your debt repayment plan in place, you may be limited in how extravagant your vacations can be, but they can still happen. A great course of action is to plan your vacations for the year. Look at the calendar for the year and gather your work holidays, your kid’s school breaks, traditional family events (reunions, birthdays, etc.) and special events (festivals, concerts, etc.). With the calendar and your budget in hand think about what types of trips you would like to take. For my family of two I typically plan one big family trip, one adult, only trip, and several smaller staycations annually I then set a spending goal for all those trips/events and then divide that number by 12. This gives allows you the opportunity to save smaller amounts of money over a long period of time.

Maximizing your travel budget

Driving to your destination is often much cheaper than flying but it may not always be the best use of your time. The benefit of planning your vacations in advance is that you can get great deals on airfare. There are lots of travel sites like Expedia or Travelocity that allow you to compare prices from various airlines. You can often save a lot of money by booking directly by going to their booth at the airport, in person, or by contacting them by phone to order your tickets. Depending on how close you are to the airport, that is a fantastic way to get the most bang for your travel buck.

Another way to maximize your budget is by staying with friends or family instead of renting a hotel. By staying with your loved ones, you can save hundreds of dollars a day in hotel rental fees. That money can be used for helping with groceries and cooking at home or for dining out and other activities while there. Staying local also gives you the chance to really immerse yourself in the town which doesn’t always happen when you are staying in a hotel.

How to know when you shouldn’t travel

Travel is not something you should be contemplating if you are past due on any bills. In this situation, your main priority needs to be getting your spending totally under control. This means cutting expenses and reducing fun to the occasional latte until you are current on all bills. You shouldn’t be planning to travel if you do not have a minimum of $1000 saved for your emergency fund. Once you have met a minimum of one thousand dollars you can plan a small trip.

If you are not able to pay for the trip with cash then this is another sign that you should not be traveling. The key to frugal travel is that you save the money for the trip prior to leaving. This gives you the freedom to relax and enjoy your vacation without the stress of a looming bill coming your way. If you do use credit for the trip for travel protection or rewards points, still follow the same rules and have the cash ready to transfer. I find it extremely satisfying to pay for my hotel the day after returning from vacation. It has now become a part of my vacation decompression routine.

Life is meant to be lived

We have but one life to live. It is important that we find joy while doing the work of paying down debt and building wealth. What is the point of being debt-free but missing years of your life that you will never get back? Money can not give you time with your children. You will be unable to purchase the memories your $100 vacation will give you. Yes, it is important to reduce debt and live abundantly but it is better to extend your repayment schedule an additional year if it provides you the opportunity to bond with your children and create opportunities for you to disconnect and refuel your soul. Make sure that you are planning for fun while budgeting for the future.

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