April 19th, 2010
How To Go On Vacation & Keep Your Personal Finances Intact, Part 1
You’re itching to go on vacation but you don’t think it’s a financially smart move.
Right now, airfare and hotel prices are dipping, motivating Americans to start spending on travel again after a dead spell during the recession. With recession-friendly deals and smart money tips at your disposal, vacation time doesn’t have to damage all the hard work you’ve put into your budget, credit score, and financial health.
This 3 part travel series focuses on getting you from home to paradise and back again while maintaining your financial health. Topics include Staying Out of Debt, Protecting Your Credit, and Remaining Financially Fit while Traveling. Pack this guide to quench your wanderlust in an affordable and credit-savvy way.
PART 1: STAY OUT OF DEBT
The key to staying debt-free on vacation is PLANNING. Incurring debt over the course of a vacation happens when you don’t plan and budget early or research your cheapest alternatives. You don’t necessarily have to stick to hostels and fast food to make ends meet abroad or on the road; the following pre-vacation game plan help you plan a vacation within your means:
- Start saving NOW. Start a separate savings account for your vacation budget. It’s a smart money move to budget this outside of your regular savings account or your emergency fund. Remember, a vacation is a luxury, and should not cut into the money you set aside for other financial responsibilities like retirement, education, or emergencies. Check out online savings accounts like Ally or INGDirect. SmartyPig is a fun choice that lets friends and family contribute money to your vacation fund, and also has a high APY of 2.01%.
As you set your budget, ask yourself questions like, how long do you plan to stay? What is the cost of living where you are going? Did you factor in living accommodations, extra activities, food costs, souvenirs and shopping? If you don’t have the extra money now, hold off and let your savings build. - Set up a savings plan. Set up your account to automatically throw in a few hundred every month till you reach your savings goal. If you plan a $2,000 vacation, it’ll take $167 a month for the next 12 months till you’re on vacation without stressing about coming home to unpaid bills and expenses.
- Where, When, How. As your vacation budget builds, solidify where you want to go and at what time of year, and book the flight early. What time of year you go drastically changes cost: off-season versus busy travel seasons for flights can differ in the hundreds of dollars. Another tip: booking a flight and hotel stay is cheaper on weekdays than weekends.
Use travel sites like Kayak, which searches travel deals across popular travel sites, to find the lowest airfare. Also, sign up at your chosen airline or travel site to receive email news about special deals and worthwhile coupons or track them on Facebook or Twitter. JetBlue on Twitter will alert you about exclusive, limited-time offers. Bing has cool “Farecast Technology” that tells you whether you should book your flight now or wait for more affordable deals.
If your travel plans are flexible, check out Airfarewatchdog.com to receive alerts whenever any low deals pop up for your particular vacation destination. It basically does all the work for you for finding the best bets for your point A to point B. - Details, details, details – As it gets closer to your departure date, planning an itinerary that complements your budget will help avoid the kind of unexpected spending that leads to debt. If you’re a foodie, know if you’ll be indulging in gourmet meals and budget accordingly. Set a strict amount of money for shopping and souvenirs. If the expenses are adding up quickly, cancel a side-trip or two, find cheaper accommodations, or delay your trip till you save more money.
Remember, you reduce your risk of going into debt if you make sure your budget is reasonable for your finances, you account for ALL possible expenses, you have enough money to cover all predicted costs, and you STICK to your budget.
Now that you have your game plan, the next part of our series covers all necessary precautions you can take to protect your credit before you jet off and during your vacation. Stay tuned Credit Karma Blog for Part 2, Protecting Your Credit, of our travel blog series!
Related posts:
- Plan Your Vacation And Keep Your Personal Finances Intact, Part 2 Part 2 of 3: Protecting Your Credit Now that you’ve budgeted and built your piggybank for your trip to Disneyland...
- Vacation Trends That Help You Save If you’re thinking about traveling this summer, you should also plan out ways to save money while you travel. Instead...
- 5 Step Check-Up On Your Finances Today, new legislation regarding debit cards kicks in and customers now have to opt-in and agree to overdraft policies rather...
- April Is Financial Literacy Month! April kicks off national Financial Literacy Month, and what better way to celebrate than to increase your financial expertise with...
- Broke Gal in NYC, Part 3: Frugal Finds at Holiday Time November was another busy month filled with saving, consulting, budgeting, and in the final week of the month, a new...
Just wanna comment that you have a very decent internet site , I love the layout it really stands out.