Summer may be over, but your debt from summer travels might not be. There’s nothing wrong with treating yourself and your family to a relaxing vacation, but you might have spent more than you planned for initially.
“It can be especially hard to pay off debt for something like travel, where you’ve already ‘used up’ what you have purchased,” said Gerri Detweiler, Director of Credit Education at Credit.com. “But paying if off quickly means you’ll free up money toward other financial goals.”
In order to do that, here are several tips for getting rid of summer travel debt and preventing it in the future:
To get rid of summer travel debt:
Have a specific goal: Debt, even a relatively small amount from summer vacation, won’t go away on its own. The first key is to create a goal and stick with it to keep yourself accountable. “Find out how much you’ll have to pay to get your debt paid off in a certain period of time,” Detweiler said. “Be realistic here. You want to stretch, but you also want to make sure you have room in your budget for surprise expenses that will come up. Otherwise you’ll run up more debt!”
Start now: The longer you put off decreasing your debt, the harder it will be to start. And that could cause you to accumulate more debt. Starting right away will help you stay focused and will help to free up your financial life sooner rather than later. This will also help you be able to plan for your next travels more carefully.
Pay a low interest rate: When formulating a plan to pay off summer debt, do your research so you can pay the lowest interest rate possible. “Call your card issuer to negotiate, transfer the balance to a lower rate card or consolidate with a personal loan,” Detweiler said. “The lower your rate, the more money will be going to pay off the debt rather than to pay interest.”
Take out a personal loan: Sticking with the previous theme of low interest rates, taking out a personal loan could benefit you and your credit. According to an article from Credit.com, consolidating your debts from multiple credit cards to a personal loan could lower your interest rates and make your debt more manageable.
Give up one expensive but unnecessary habit: Saying goodbye temporarily to your morning latte habit or your Netflix subscription might not be ideal, but something as simple as that can speed up the road to being debt-free after the summer. Any small purchases that are not mandatory for your well-being can be cut for the time being in order to get rid of that debt from summer vacation.
Set up automatic deductions: If you struggle with remembering to pay off a certain amount of debt every so often, make it so that you don’t have to remember. “Set up auto deductions for the amount you want to pay each month,” Detweiler said. A similar system will help you achieve your goal.
To prevent future travel debt:
Know when to travel: Certain days are cheaper for traveling than others, and knowing the different could save you a good deal of money when planning a vacation as well as prevent subsequent debt. “Traveling midweek can definitely reduce your expenses,” said Andrew Schrage, co-owner of Money Crashers Personal Finance. “Furthermore, you may be able to get the best airfares and cheapest hotel accommodations by booking on a Tuesday or Wednesday.”
Create a travel budget: Writing out a budget for all your foreseen vacation expenses will go a long way in helping you not to spend extra money. Whether meals, cab fares, souvenirs, museum fees or larger expenses, nothing is too insignificant to plan for.
Consolidate baggage: These days, checking extra suitcases can run up flying expenses quickly and needlessly. “If you are traveling with kids, consolidate their luggage into a single bag to reduce baggage fees,” Schrage said.
Don’t pay cash: In some cases, credit cards can be better than cash. “If you’re someone who is good with their money and always pays off your credit card bills in full each month, make sure you take full advantage of travel rewards credit cards,” Schrage said. “Essentially, these cards provide you with ‘free money’ that you’re giving up if you pay with cash or check or a non-rewards credit card. Not only can you get cash back immediately, but you can also gain points and miles that can be used toward future vacations.”
Use discounts: Never scoff at a discount, especially for airfare or hotels. Discounts can give you great benefits as well as keep you from being in post-vacation debt. “As soon as your travel dates are in place, check travel aggregation websites such as TripAdvisor for excellent discounts of up to 50% off on airfare,” Schrage said.
Photo courtesy of kansasphoto