How to take a vacation without falling into debt


RALEIGH, N.C. (WNCN) — Picture this: you’re on vacation. You’ve arrived in a place you’ve wanted to cross off the bucket list for years, you’re wearing that wild outfit you’d never been seen wearing in public back home, and you’re spending money without a care. But what if that’s money you don’t have?

Vacations are supposed to be a time when you take a break from the stresses of everyday life, but more and more of us are now finding vacations can actually create stress on your bank account. A new study says 75 percent of us go into debt to take a vacation — debt we hadn’t planned on.

It’s a statistic that sounds unbelievable, but Cary-based certified financial planner Hans Scheil of Cardinal Retirement Planning says, “It’s not unbelievable to me.”

In fact, Scheil sees it all the time with clients who accumulate massive debt over the years. A significant part of that debt can include vacations that were charged on credit cards.

Exotic vacation locations like the shores of Hawaii’s beaches, the heights of Colorado’s ski resorts, or the historical landmarks of Rome may look really pretty, but travel expenses, hotels, meals and vacation activities add up.

The average cost of a vacation is $1,100. That’s more than many people spend on monthly mortgage or rent, and they usually charge it.

“That’s just for one year, and the payments for that go on for years,” said Scheil.

He says using credit cards to fund your vacation is just a very bad idea. “It’s high interest rates. It just has minimum payments and if you make minimum payments the debt can go on for years,” he explains.

CBS North Carolina found a couple from Pittsburgh who were vacationing in Raleigh. Martin and Terry Karl said they try to avoid that kind of situation.

“We spend money but we don’t go into debt,” said Martin Karl. “We plan and we save.”

Here’s several ways you can take a trip on a budget:

  • Set money aside every month (treat a vacation like another monthly bill).
  • Create a separate account to stash your vacation fund.
  • Cut back on disposable spending (don’t eat out as much or don’t go to as many movies or concerts or cut back on shopping sprees).

And, once you’re on vacation, staying on a budget can help make every dollar count. “Don’t go out to the expensive dinner and then go to the expensive attraction,” says Scheil. “Choose between the two. Go to the cafeteria for dinner and use the money you save to then to go to the expensive attraction.”

The more you organize your vacation spending in advance, the better off you’ll be. “It’s about planning wisely,” said Scheil.

And remember, when you take a vacation without saving for it, financial planners say it’ll take six months or more to recover financially before you’re free of debt once again.

If you’d like to learn more about the study and get more tips on how to save for and on your vacation, check out this link.

Email CBS North Carolina’s Steve Sbraccia if you have a consumer issue.

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