Should You Travel with Debt? What You Need to Know FirstJun 27, 2018
When you’re in debt, making the decision to travel or not travel can be stressful.
On the one hand, you don’t want to deprive yourself or your family of the break and relaxation you want. But, if debt is a big stressor on your finances, adding more expenses to your summer might not be right for you.
In this podcast episode, we take a closer look at how to travel when you’re paying off debt. First we consider how to decide if travelling while in debt is right for you, how to plan a vacation that reflects and respects your financial situation, why staying on budget is critical, and how to avoid returning home with more debt.
So, what are some of the questions you should ask yourself in order to determine if travel is right for your financial situation?
First thing to do: take stock of your debt
Here are some important things to consider:
How much total debt do you have? What is your debt load?
What kind of debt do you have? Consumer debt on credit cards? Bank loans? Mortgages or HELOC? Student loans?
What’s the interest rate on each debt?
How comfortable are you meeting your payment requirements now?
Why your answers to these questions matter
Each person’s debt load is different. While you may have a large mortgage, it might be unrealistic to expect to have your entire mortgage paid off before you travel. That could be a 25 or 30 year wait.
On the other hand, a seemingly smaller consumer debt (a line of credit or a credit card) might be more challenging to manage.
Interest rates on credit cards are high. Even a debt of a few thousand dollars could take you years to repay if you have trouble making more than your minimum payments.
If that’s your situation, consider whether you have the wiggle room to travel, and incur more expenses.
If your honest answer is “no” then turn your attention to putting some vacation savings aside. That way, you could save enough money while paying down your debt for a winter getaway — or a vacation next summer.
This article on the website How To Save Money — 31 Money Apps, Products, and Tools You Should Be Using — can help you get to your goal more quickly. And they give tips on how to travel smart and cheaply. So when the time is (financially) right, you’ll be ready to travel frugally.
This summer, be true to your personal finances. Make repaying debt and staying financially secure your first priority. If travel isn’t in your budget this season, put your saving strategies to the test and get ready for the next opportunity.