Your summer vacation is supposed to be a time to relax and recharge. However, if you want to stay relaxed when you return home, make sure that you do more recharging and less charging – with your credit cards.
A new survey from LearnVest.com finds that most Americans will be paying off their summer vacations for an extended period. On average, Americans spend 10% of their annual income on their vacations, and it takes an average of six months to recover from vacation expenses. Among the 74% of respondents who reported going into debt to take their vacation, the vacation debt averaged $1,108. Almost two-thirds of survey respondents said their spending on a week's vacation surpassed their monthly rent or mortgage payment. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
You don't have to be so miserly that your vacation is not enjoyable, but you can minimize the chances of an extended financial hangover from your vacation by taking some pre-emptive actions.
Set a Budget – Impulse buys are great for racking up vacation debt. Limit impulse buys by setting up a realistic budget for your vacation, allocating a reasonable amount for souvenirs and for spur-of the-moment expenses. Leave a little discretionary money in the budget; otherwise, you may have a hard time sticking to your budget and decide to give up on the concept entirely.
Fund Your Vacation Upfront – Start months in advance and allocate a bit each week or month toward your vacation fund. Try placing the funds in a separate account so you are less tempted to spend them on day-to-day expenses. If it looks like you may not hit your goals, reassess your plans and your budget. Consider scaling back your plans a bit – or delaying your vacation, if that's feasible.
Look for Deals – If you can afford to travel in the off-season, you are likely to find significant discounts. Even in the busy season, you can find special deals by scouring travel-related websites in advance of your trip. If you are flying to your destination, buy your airline tickets far enough in advance and monitor the fares regularly for the best deal. Look for attractive cross-promotion deals between hotels, theme parks, and other attractions at your destination.
Keep It Simple – Do you really need to spend large sums of money at a theme park to have fun? Look for less expensive vacation destinations that the whole family can enjoy, such as trips to state parks. Picnic lunches and snacks from the grocery store can reduce your dining expenses significantly. Check the tourism bureau at your preferred destination for free or reduced price entertainment options or promotional deals that may not be widely advertised.
Consider Credit Card Rewards – If you are going into debt on vacation, at least get something back in the process. If your existing credit card has a specific rewards program with certain hotels or airlines, try to use those vendors whenever possible – but don't overspend on the front end just to get rewards on the back end. Check competing credit card offers for useful introductory offers that may make switching cards worthwhile. If you want more credit, check out MoneyTips' list of credit card offers.
In essence, planning is the key to a successful vacation with minimal expense and limited stress. Find the balance of planning that allows you to keep expenses under control but still gives you the freedom you expect out of a vacation.
You can certainly spend money on your vacation however you choose – but eventually, you will need to fund your permanent vacation, otherwise known as retirement. Keep that in mind as you decide whether to upgrade your vacation accommodations, dine at an expensive restaurant, or load up on overpriced souvenirs. You do want to retire eventually, don't you?