Vacation Budgeting Guide: How to Avoid Vacation Debt

Narrator: Don’t let vacation plans turn into vacation debt. Learn to be Penny Wise with your next vacation budget

[On-screen text] Be Penny Wise Not Pound Foolish: Vacation Budgeting

Narrator: If the biggest memento you bring home from vacation is a pile of bills, it’s hardly going to be a relaxing escape that you wanted. But Penny Wise vacationers plan ahead, so they end every vacation with good memories instead of debt. Here’s how Penny Wise avoid the debt that Pound Foolish vacationers usually bring home.

[On-screen text] Plan for the Trip You Want

Narrator: A debt free vacation starts with a solid vacation plan. When you’re Pound Foolish you don’t plan ahead to decide what kind trip you want. So, you end up paying for a ton of activities in a package when all you want to do is relax. OR you pay a-la-carte when a package would’ve been cheaper. Penny Wise talks about the trip in advance with everyone who’s going, so everyone gets at least a little bit of what they want.

[On-screen text] Establish Spending Expectations

Narrator: And because Penny Wise vacationers plan ahead for the perfect trip, they also have time to plan out how much they’ll spend. They research the destination and set target goals for daily spending. So, they can balance more expensive activities with cheaper or free events to keep the cost down daily and overall.

[On-screen text] Save Up, Even If You Will Use Credit.

Narrator: Vacation expenses often end up on credit cards, which makes it easy for these costs to turn into debt. If you’re Pound Foolish, you don’t bother saving for a vacation, because it’s just easier to use credit cards. As a result, you charge everything from reservations to incidentals on high interest rate credit cards. Penny Wise saves in advance. Even if they use plastic for reservations on the trip, they pay off vacation debts as soon as possible. So, they don’t come home to bills.

[On-screen text] Create a Vacation Fund

Narrator: That means Penny Wise creates a vacation fund. They set aside a little money out of every paycheck to cover expenses.

[On-screen text] Pound Foolish Travels at Peak Times.

Narrator: Pound Foolish vacationers take vacations at the same time as everyone else every year. So, they end up traveling at peak times, even when everything from air travel to accommodations and activities is much more expensive. And, they have to fight crowds and don’t get the best service, because the staff is usually overworked. Penny Wise travels at off-peak times, because they’re not only cheaper, but they’re less crowded and you get better service.

When it comes to accommodations, you have to be Pound Foolish to take the first offer you find online. When Penny Wise finds a hotel they like on a comparison website, they take the extra step of calling the hotel directly to ask about additional discounts or deals. And, while they may search high and low for the best deal, they know only to enter credit card information on a secure website to prevent identity theft.

Pound Foolish vacationers only pick full-service resorts or expensive hotel chains, unlike Penny Wise who’s willing to get creative in order to save big on accommodations. They consider all the options, from hostels to campsites at National Parks, to suites and condos with kitchenettes that help you cut your vacation food budget.

And, they even consider options like home swaps, where you stay in someone else’s home in exchange for opening up yours. Sites like homeexchange.org and intervac.com have established reputations as exchange networks. And while home swaps aren’t for everyone, only Pound Foolish rules it out before looking into it or looking at other options that can help them vacation for less.

Penny Wise even looks into things like volunteer vacations, where you get a trip of a lifetime opportunity, like a rainforest expedition to Costa Rica or elephant sanctuaries in Namibia.  You’ll have to work and you may stay in less luxurious accommodations, but you’ll travel for less and you can make a difference.

Finally, when Pound Foolish gets to a destination, they just check in and head straight for their room. But Penny Wise spends a few extra minutes at the desk to ask some additional questions, like if it’s possible to earn frequent flier miles or travel rewards for the stay since most hotel chains and independent establishments participate in at least one rewards program.

And speaking of rewards, Penny Wise is smart about getting it right and getting the right travel credit cards, since some allow you to use miles or points to stay places free.