Several years ago, I charged a one-week trip to Oregon on my credit card. I pulled out plastic for the airfare, ocean view room, car rental and every meal, snack and glass of wine.
I charged an overpriced fleece pullover with the name of the seaside town stitched on the front. I spent another $200 on gifts for my friends. When you’re blissed-out on salty air and sunsets, it’s easy to be generous when all you do is swipe.
When my plane landed at home, I skidded into a bumpy dose of reality. My credit card balance was $2,000. My hotel room was so reasonably priced that I’d reasoned there was room to splurge on whatever else I wanted. Now I had to pay for it. But I didn’t have $2,000.
That’s when my vacation turned from an oceanside adventure to a hard-learned lesson. I transferred that $2,000 balance from one 0 percent card to another for five years until credit card issuers noticed and offers stopped arriving.
Then I had to finally pay off the balance with interest. That was my last credit-financed holiday. Now, I always save enough money to ensure that buyer’s remorse doesn’t taint vacation memories.
Are you thinking about charging your next vacation to a credit card? Here are 5 reasons why paying cash for your next vacation is a better idea.
1. A savings goal makes you a careful spender
Saving for vacation gives you something to look forward to while the money piles up. When I’m saving for a trip, I don’t swing by the convenience store for a bottle of water when I can buy a case of it at my neighborhood Big Lots for around the same price. I’ll rent a Redbox DVD for a couple of bucks instead of spending $20 at the cinema. Then I stash all the money I didn’t spend in a coffee can. You’ll be amazed at how fast your vacation fund grows.
2. Spending “real” money leads to better planning
It’s harder to book a hotel room without shopping for the best deal when you’re handing over money saved from months of sacrifice. The same goes for rental cars and airfare. If you must pay with a debit or credit card for a better rate or because you don’t want to carry a big wad of cash on vacation, transfer funds from your savings into your checking account and then make the purchase. If you pay with your credit card for rewards, don’t revert to your old ways. Pay off the balance the following day.
3. You’ll spend less during the vacation
There’s no shortage of ways to spend money on vacation. Depending on your destination, you’ll be tempted by hiking treks, fishing charters, sailboat tours, sightseeing flights or maybe even dangling 12,000 feet in the air on sightseeing gondolas. Even if you’re not adventurous, who can resist dining at the multitude of unexplored restaurants you’ll encounter? When you’re paying cash saved over several months, you’ll be more discerning about how you spend it.
4. You’ll come home debt-free
Why take a vacation and then spend months or years being anxious and stressed over debt you created because you wanted to relax? If you have no choice but to charge your vacation on a credit card, you can’t afford the trip. Be patient and save your money so you can dine out as you please, lounge on the beach at a fancy hotel or splurge on pricey sightseeing excursions next time you travel.
5. You’ll learn a new skill
It’s called saving your money for something you want. That’s how you keep your dream vacation from turning into a nightmare because you have to pay for it after the fact. After you save enough to fund your vacation one time, you’ll know you can do it again.
So, next time you’re tempted to charge a vacation, deposit money into a savings account or carefully stashed coffee can instead. You’ll be glad you waited when you can kick back and enjoy your next vacation without debt looming on the scenic horizon.
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