I recently read an article by Sadie Morris talking about this subject on her A Life Without Debt blog. No, she’s not talking about taking a “vacation” from your debt free plan, but about how many people do incur debt just to go on vacation.
My wife and I love to travel. We love seeing new places and certainly getting away from life’s normal schedule. To be honest, we haven’t taken a “qualified” vacation since 2003. By “qualified” I mean a vacation that costs more than $500 and lasts more than a weekend. We have been working hard over the last number of years to overcome past financial disasters decisions, and allocating funds to vacations just hasn’t been a priority.
Now… I know the common argument, “you’ll burn yourself out if you don’t take a vacation.” While I’m sure there are studies out there to prove this point, should a person that is working to payoff debt decide to incur debt to take a vacation? That certainly depends on the individual and how committed they can make themselves to paying off any debt incurred. I would assert that if you are truly inspired to be debt-free, it might be hard decision to incur debt for a vacation.
So where is the balance? How can I make a vacation happen and still feel good about my financial plan and not sacrifice my promises to myself?
Decide how you will allocate vacation funds. In my house, we haven’t allocated any funds to this category since 2003 because we haven’t been able to get past other priorities with any funds left to allocate. Next year is shaping up to be our first year that we will plan a vacation that costs more than $500 and lasts longer than a weekend! As we plan, we will use the following guidelines to make our 2010 vacation successful and not compromise our promises to ourselves:
We have to decide to pay cash, and not incur debt. I can assure you right now, if we wanted to go to the Bahamas’ next year, there is no way to do it unless we incur debt. So, making a decision based upon priorities, we have decided that any vacation must be paid in full with cash. Sorry Bahamas!
Picking a destination is also important. Many people will select the destination, then decide how they will pay for it, or in a lot of cases, finance it. Set a dollar figure that you know you can attain, then select destinations that will fit the bill so to speak. We have a short list of places we would like to go, but we won’t make a decision until we know we will hit our vacation savings goal. This keeps us from over extending ourselves!
We also must decide if we will take several smaller trips through the year, or use all our funds on one nice vacation. Don’t get caught in the trap of finding that you have spent your vacation dollars throughout the year and end of “having” to put the planned trip on a credit card. Traveling debt free can be done, but not without proper planning and discipline.
Speaking of planning… I use BudgetSketch to help me plan for vacation. (there’s my shameless plug!) I have a goal entered into the system called, “2010 Vacation Fund”. I have set the goal amount and I track each month how much money I am allocating to it. I simply allocate a portion of each month’s surplus to the fund… but I do have funding priorities. I have other goals that are higher priority than my vacation goal. Things like emergency fund, car maintenance fund, medical deductible, etc. I fund all of my goals as a list of priorities. Given this, my wife and I have forecasted we should be able to fund all of these goals and still meet our vacation goal.
Since we are committed to not incurring debt, should one of our other goals have a higher priority need and require additional funding, i.e., an unforeseen car repair that exceeds our allocation to that fund, then in our case, the vacation fund will suffer a bit, unless we can make up some ground somehow. In years past, we would have told ourselves, “We know the transmission was unforeseen and it cost more than we expected, but we owe it to ourselves to take this vacation anyway because we have worked hard!” “We’ll make it a priority to payoff the credit card we use!” Famous last words…
If you can manage your credit balances well, and I have friends that are excellent at this, then it’s always an individual choice to finance your vacation with debt or go debt free. However, no matter your choice, I can assure you, paying cash is much cheaper and whole lot more rewarding.
We would love to hear about your experiences or good tips on how to have fun on your debt free vacation!
