3096: Should You Go On Vacation If You Have Debt by Michelle Schroeder-Gardner of Making Sense of Cents

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[00:00:50] Managing your money and paying off debt can feel like a never-ending process. And if you have a long-term debt repayment plan, you may find yourself wondering if you can realistically take a vacation without feeling guilty and or potentially wrecking your financial progress.

[00:01:07] Whether or not you travel while having debt is a personal decision. Personally, I did travel when I had student loan debt. They were usually short trips, and I always made sure to budget for them while keeping them as affordable as possible.

[00:01:21] And we still had a great time. We went to Puerto Rico, Kauai, and many other places. And each trip was done affordably. Plus, it was a great way to feel refreshed so that I could enjoy life while working towards my financial goals. See, I believe the key is finding a healthy balance. Luckily, I didn't have any super high interest rate debt. So going on vacation didn't stress me out as bad or derail my financial progress.

[00:01:49] I also didn't add to my debt by going on vacation. And I knew not to splurge on travel either. I know others who have debt but still spend thousands of dollars on each of their vacations. And they also believe that this is the only way to travel. That is not correct at all. You can still enjoy life on a budget, but it's all about having a good balance and seeking out what will work best for your situation.

[00:02:15] For example, if you have high interest rate debt that is building up each month and becoming more and more unmanageable, then I don't recommend going on an expensive vacation. Instead, enjoy the area that you live in for free, which is still very possible to do. In my opinion, spending money on a vacation would just add to the stress, while money would be better used towards paying off your debt. This will make sure that you don't put yourself into a deeper hole.

[00:02:45] In a moment, I'll tell you my opinion for traveling while having debt. And I'd love to hear your opinions in the comments as I know that opinions will vary. How to travel if you have debt? Find a way to travel affordably. Travel is great. However, it doesn't have to cost an arm and a leg to enjoy your vacation. If you still have debt, especially a lot of high interest rate debt that's causing you to live paycheck to paycheck,

[00:03:11] then you'll want to find a way to enjoy yourself affordably while on the trip. This may mean taking a staycation and exploring the town you currently live in, instead of splurging on an expensive vacation across the globe. Here are tips for traveling affordably. Number one, take a staycation. Like I discussed before, if you have a lot of debt and you need to put as much money as you can towards your debt, then a staycation is probably your best bet.

[00:03:38] I recommend finding free events and other free things to do in your area so that you're spending as little as possible. Number two, budget for the whole trip. Budgets are always a good idea. Number three, don't slow down your debt repayment plan. If you don't have the money to travel, then you may just want to skip the travel or find a way to make or save extra money in order to do so.

[00:04:05] And number four, if you have the gear to camp, then camp. Camping can be expensive, so I wouldn't recommend that everyone go out and buy new gear to do it. However, if you already have camping gear, then it can be a great way to travel somewhere affordably and see the beautiful outdoors. Related tip. My preferred way to travel affordably is to stay in short-term rental vacation homes such as Airbnb.

[00:04:32] Airbnb vacation home rates are usually comparable or cheaper than a hotel. Plus, you usually have more room and there's usually a kitchen as well. Also, if you have a lot of people going on vacation with you, you can split a house for a much cheaper price than it would be for everyone to get a hotel room. Whatever you do, don't take on more debt. I've heard countless stories of people taking on more debt in order to go on vacation and to travel more.

[00:04:58] In fact, one story I often share here on Making Sense of Sense is one of the worst stories I've heard about this. This person would take out thousands of dollars in extra student loans to pay for timeshares and cruise vacations. And they would actually brag about this. To take a vacation, you should never take on debt. Using credit card travel hacking is a different story and can be done wisely. Taking on debt to travel will just dig your debt hole even deeper,

[00:05:28] which will cause a lot of stress and probably make you regret taking a vacation in the first place. You want good memories to come from the trip that you take, not stress, regret, and other negative feelings when you think about your vacation. Vacations are great and all, but taking on debt to go on them is 99.99% of the time not worth it. You just listened to the post titled, Should You Go on Vacation If You Have Debt?

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[00:06:57] Performance not guaranteed. When I was getting out of debt, I chose not to spend money on vacations or anything I deemed a want versus a need. But it only took me 11 months to get out of 30 grand of debt, and I recognized the sacrifice was only going to be for a short period of time. If it was going to take me 5 or 10 years to get out of debt, I'm not sure I would have made the same decision. After I got out of debt, I still wanted to travel on the cheap,

[00:07:26] and one of the best ways I do this is through utilizing credit card rewards points. I really can't remember the last time I paid for a flight in cash, because I almost always use credit card rewards points. While some criticize rewards points because they can lead people to overspend on credit cards, when used strategically, they are game-changing. My discretionary spending is very low,

[00:07:51] so it's not really possible for me to accumulate any meaningful amount of points through my regular spending. The key for me has been to open new credit cards that offer large signing bonuses at a time when I'm about to make a large purchase. Many cards will offer bonus points if you spend a certain amount in the first few months. Since my regular spending won't allow me to hit the spending threshold to get the signing bonus, I only open cards when I have a big purchase I need to make.

[00:08:21] So for example, one of the most popular cards for travel rewards points is the Chase Sapphire Preferred. Right now, they're offering 60,000 bonus points after you spend $4,000 in the first three months from account opening. It would take me forever to earn 60,000 points from my regular spending, and I also would struggle to spend $4,000 in discretionary spending over three months.

[00:08:47] But a few times each year, I will have some kind of a larger expense, which prompts me to do research on the best credit card signing bonus offers. Next thing you know, I've got thousands of points at my disposal without much time or effort on my part. And that will do it for today. Have a great day and start to your weekend. Thank you for listening. And I'll be back here reading to you tomorrow where your optimal life awaits.