Having fun while vacationing debt free
Your summer vacation should not increase your credit card balances. As a money coach, I support any client who wishes to take a vacation. We trade our time for money and want to reward ourselves with nice vacations. However, no one should get into debt for a vacation.
I am writing this during the summer. It is likely you have already made plans or may have already returned from your vacation. Perhaps you have prepaid for some or all it. You might be wondering, why bother? All is not lost. You can still avoid increasing your credit card balances.
Enjoying your vacation while avoiding overspending
Here are 5 suggestions on vacationing debt free after you have already made your vacation plans. If you have planned with your budget in mind, kudos to you. Perhaps you will find some nuggets below or by reading top 3 budget friendly vacation tips.
1. Keep a log of all your spending including prepaid expenses.
Whether you charge everything to a credit card, debit card, cash or a combination, make the effort to know exactly how much you are spending on the vacation. This information is important for many reasons. The top two are: You can use in the future when you are budgeting for your next vacation. And knowing the amount being spent will likely change your behavior towards spending.
2. Budget using the envelope system.
An envelope system is where cash is placed into a separate envelope for each budget item. This forces someone to only spend the amount in the envelope.
It does not need to be for all of your expenses. Meals and admission fees are often where your budget can go off the rails.
Use the envelope system for these two expenses. Physically paying in cash and being able to count exactly what is remaining is one of the best ways to stick within a budget. If you are traveling as a family, this is one way to introduce budgeting to your children.
3. If you are less inclined to carry cash, then use a prepaid credit card.
Keep a running tab on how much you spending. The experience is not the same as cash and will require more diligence then you might want to do. After all you are on vacation.
The cash system works extremely well if you are traveling with friends. Everyone pitches in a certain amount and the cash is used for common expenses, i.e. gas, tolls, admission fees. It makes the math of figuring out who has paid for what and who owes for what later. I have done this and it works rather well.
4. Most people do not include vacation spending in their monthly or yearly budgets.
After your vacation, revise your budget to include a line item every month for this expense. Put the money into a separate bank account. Estimate how much you want to spend on your next vacation and approximately what month. Calculate the amount you will need to save monthly in order to reach your goal. Automate the deposit into your vacation account, if possible.
5. If you have or will be charging expenses to your credit card, then make a plan to pay off your vacation as soon as you return.
Cut back on variable expenses in order pay off the balance as quickly as possible. A likely places to look to save is your grocery bill. Avoid dining out. Be ruthless and reduce optional expenses wherever possible.
Clearly, vacations are important. Needing a break from our routine is good for our mental health, however, it shouldn’t jeopardize your financial health. Even if you have already paid for your vacation, there are steps you can take to make your vacation debt free.