How to Keep Your Vacation Affordable When You’re In DebtJun 27, 2018
Many Canadians will be traveling this summer, and the majority of them will be carrying debt with them. That’s why this podcast episode is dedicated to keeping your vacation as affordable as possible. Here’s a preview of some of the advice our LITs offer:
Consider these 3 strategies when planning your vacation
- Work travel into your budget all year round. Instead of adding more debt onto your credit cards to book that summer getaway, deduct travel expenses from your monthly budget all year long so you can pay cash.
Check out how finance blogger, Christine Drummond works travel into her budget.
- Don’t skip your financial responsibilities. Debt relief is just one piece of the puzzle. Since interest rates, gas and living costs are all increasing, take a good look at how your budget has changed to accommodate these costs. Ask yourself whether you can manage these additional expenses and still afford to take a vacation.
- Adjust your travel plans to stay on budget. Finding ways to keep your vacation affordable will help you stay on budget and avoid adding to existing debt. This might mean booking a cheaper destination, renting a home or cottage for a week to avoid pricey hotels, or staying within Canada to avoid expensive exchange rates.
Follow the 50/20/30 rule
This is often referred to as a minimalist budgeting strategy, but really it’s about common sense. Here’s what it looks like:
- 50 per cent of your income toward essentials — Yep, that means housing, transportation, groceries and utilities — everything you need to survive.
- 20 per cent of your income toward savings — Whether you’re flushing out your emergency fund, saving for a down payment or planning ahead for retirement, you need to have a savings safety net. This category also includes debt repayment.
- 30 per cent of your income toward personal interests — This means things like vacations, hobbies or anything that enhances your lifestyle. It also includes those little extras such as your Netflix subscription, coffee shop runs, cell phone bill and gym memberships.
Your debt load is a good predictor of your financial health. If you’re managing your financial responsibilities and paying down your debt, it’s still worthwhile to find cost-effective ways to travel. And, if a vacation is out of reach, it’s ok to delay it until you’re able to afford it.