How to Pay Off Debt and Still Take Your Dream Vacation
When I had my student loan and credit card debt, I knew the smartest thing to do was pay it off. But I also wanted to travel. This is a tricky moment: you want to keep paying off your debts, but you don’t want to give up your travel dreams while you still have time for them. Or heck, maybe you just want to rest.
Most experts recommend paying off the debt before you travel, and it makes sense. You don’t want to get into more debt, and it’s much more fun to enjoy your vacation when you know you are financially secure. However, there are ways to balance both goals.
Two Rules of Traveling in Debt
Travel and money site Nomad Wallet offers two golden rules for traveling in debt:
- Don’t borrow money for travel.
- Stick to your debt repayment plan.
Solid advice. Your travels shouldn’t throw you back, and they shouldn’t override how far you’ve come in debt repayment. And remember this caveat: Nomad Wallet offers to make sure your debt is interest-free when you travel:
Some banks offer balance transfers on loan products with 0% interest accrued over a specified period of time. For example, the bank may allow you to transfer the loan balance to your credit card without charging interest for an 18-month introductory period. If you choose this option, keep in mind that the interest will start at the end of the introductory period. Double check your debt repayment schedule to make sure you can pay off the balance before then, especially if the non-promotional interest rate is higher than your current interest rate.
You may or may not get zero interest. But this advice brings up an important point: interest matters. And since different types of debt are associated with different interest rates, this also means that the type of debt matters when it comes to planning your debt bypass trip.
Make your debts a priority
If you are already paying off debt, you probably already know how to prioritize your debts in general. But if you plan to travel, you also need to prioritize, keeping your goals in mind.
For example, if you have a $ 5,000 credit card debt bearing 15 percent interest, you definitely need to get rid of that before you travel.
But what if you have $ 30,000 in student loan debt at just one percent? While some advise you to pay all debts in full before you travel, not everyone agrees. Here’s how one personal finance blogger explains his decision to travel while in debt :
I have student debt, but this is my only debt … Yeah, I could react to my wanderlust and put every penny into my debt to pay it off as quickly as possible. But is zero debt my top priority? Nope! It also doesn’t mean that I ignore it. I manage my money to live the way I want to, AND make regular monthly payments to pay off my debt. It’s a balance between my responsibilities and what I enjoy in life.
She says she will bear the student loan debt for a while and argues that it is unwise to put off her travel dreams for so long. Some agree with her excuse; others won’t. In any case, revealing that student loan debt is her only debt, she underlines an important point: before the vacation of her dreams , it is imperative to pay off some debts.
Find your priority debt
In the full article, she advises that bad debt should be prioritized over travel. Generally speaking, bad debt is debt that is not considered an investment . But good or bad may not matter as much as the interest rate on these debts. Good or bad, you want to pay off the debts that are eating away at your finances the most, but those debts are usually bad anyway.
But you must also consider the duration of your payout. For example, I only had $ 10,000 in debt on my student loan, so I decided to pay it off before going on my trip. Both my credit card debt (bad) and student loan debt (good, depending on who you ask) were priorities because I knew they wouldn’t be long in coming.
Everyone’s situation is different, so how you decide to plan your debt while traveling may be somewhat different. Make a list of your debts and then make a plan for which you should pay first. When you’re planning, just make sure to prioritize any high-interest consumer debt. Also, consider how long you will be paying off your debts, how much interest you will be paying, and above all else, you want to follow these two golden rules mentioned above.
Plan all your vacation expenses in advance
Writer April Dyckman on Get Rich Slowly offers some comprehensive tips for planning your dream vacation without debt . It all boils down to this:
- Decide how many days you will have vacation and where you will go
- Estimate transportation, accommodation and attractions costs.
- Food and souvenir budget
- Add it all up and then calculate how much you need to save each month for that to happen.
Again, you should go about your priority duty before putting this plan into action. But once you’re ready, you can start saving money for your dream vacation since you already have a plan. And that also gives you a reason to look forward to it.
Take “debt cationic”
If your dream vacation is too expensive, it might be time to compromise. Maybe you can afford a more modest vacation for less. Let’s take a look at what the Debt Roundup review calls “cationic debt” :
By debt cation, I mean when you create a vacation away from your regular life and don’t spend a lot on it. My debt obligations usually consisted of hikes or trips to the beach with relatives. It usually only costs me $ 100 (gas and food) for a three-day trip and you will have a hard time finding something that cheap, even on the Internet.
Alternatively, plan a road trip . Even outdoor activities can be very interesting . But most importantly, they are cheaper. And when you’re in debt, you may have to find a cheap way to get rid of your travel cravings. Until then, you can keep an eye on the prize by coming up with your dream vacation plan .
Travel and work at the same time
There is another option if you intend to travel while you are still in debt: find a job abroad . This may not make sense for a short trip, but for longer excursions, you might consider looking for work in other cities. As Nomad Wallet adds, you need to make sure the job is paid enough to cover your living expenses, including paying off your debts. If you are fortunate enough to have a job that allows you to work anywhere, this could be an option too. Instead of taking vacation, you could work on vacation – but that might not be all that dreamy.
You can also travel cheap if you volunteer . You won’t be making a living, and you probably still have to pay a lot of travel expenses. But this is a budget option if you are still tackling your low priority debt. Consider becoming a volunteer with the National Park Service . Or study English abroad . You can also help with scientific research .
In some cases, you may be able to apply for a travel subsidy . The Telegraph reports:
Believe it or not, some organizations exist for the sole purpose of funding travel. To capitalize on this bounty, you need to present a clear and thoughtful plan and convince the board that your trip is worth it. Many organizations value travel that promotes personal or cultural development, but each has its own characteristics and criteria. The SPRET Education Trust serves students living in specific areas, while UNESCO and the United Nations offer more general funding for travelers.
While most are geared towards tourists, there are other options that you can read about in their full post.
Debt can seem really stifling. While there are certainly more important and better priorities in life than paying off debt, the goal is financial security. It sounds boring, but the question of financial security is actually quite fascinating. When it comes to this, we are talking about freedom, not allowing so much to worry about money. Traveling is so much more fun when you are not worried. However, there are ways to balance both goals, and these tips should help you do just that.