Paying Off Vacation Debt

2015-09-21

Laura Ryback

It’s the middle of winter and the weather has been miserable for what seems like forever. Sandy beaches and warm coastal waters are beckoning.  Better yet, there are deals galore available for sunny destinations. “Why not?”, you say to yourself. After all, a break is certainly what you deserve! Out comes the credit card and all that’s left to do is pack the bathing suit and tooth brush and you are ready to go!

The bill for that vacation may not arrive until after your trip, however the stress of how to pay for it may completely overshadow the feeling of relaxation the trip provided.

""

How do you best deal with what could end up being post vacation remorse?

If you have already booked the trip and don’t have the money saved to pay for it outright, decide how quickly you want to pay off the vacation, divide the cost by the number of months you’ve decided on, make sure that you fit this amount into your monthly budget and stick to the repayment plan.

Remember that if you charged this on a credit card, chances are pretty good the interest rate is somewhere between 20% and 29% on unpaid balances, so the cost of that vacation just went up substantially! If you have to finance the trip, use a lower interest line of credit to pay for the vacation. Either way, commit to paying it off as quickly as possible by building a vacation payment into your monthly budget.

What about future vacations?

Plan, plan, plan! First, decide when you ideally would like to be able to get away. Set the destination and price it out. Don’t forget to include transportation, accommodation, food, drink, activities, souvenirs and gratuities. Add 10% to 20% to allow for future potential cost increases, just to be on the safe side.  Now, start saving: divide the cost by the number of months until you plan to book the vacation and build that into your budget. Be diligent about setting the money aside monthly in a vacation savings account, and restrict access to that account in order to resist the temptation of dipping into it.  Commit to not taking the vacation until you have the money saved.  Not only will the vacation mean that much more, it will be stress-free knowing that there won’t be any looming vacation bills waiting for you when you return home.

What about vacations in the meantime?

Try taking “staycations” while you are saving for that special holiday! Take the opportunity to be a tourist in your own town.  Check out all the activities offered throughout the year and build your summer and winter time off around them. Many cities offer ballet and symphony in the park, walking tours and local culinary tours in the summer and winter festivals during the winter. You’ll be surprised at all the things you can see and do right in your own backyard for free or very little cost.  Make a point of planning something for each day of your “staycation”, keep a journal and take pictures, just as you would if you ventured to faraway lands! You will likely be surprised at how much fun you can have close to home at a fraction of the cost.

If vacation spending or other costs have gotten you into a situation where you feel that your debt is no longer manageable, contacting a Trustee will help you assess your options and choose the debt solution that is right for you.