Should You Travel When You Have Credit Card Debt?
Travel has so many benefits—you get to have new experiences that expand your horizons, create lifelong memories, and take a break from the stressors of your day-to-day life. But traveling when you have debt can feel…complicated—you want to get away and enjoy life but returning home to an even bigger credit card balance might leave you even more stressed than before. The good news is that you don’t need to put your life on hold when you have debt. With planning, you can have your travel cake and eat it too.
Should you travel when you have credit card debt?
Pros of Traveling When You Have Debt
It requires you to exercise your financial planning muscles: To take a trip without adding to your debt, you will need to examine your spending, plan ahead, and save in advance. These are great skills that will help you in your financial journey overall, including paying off debt.
It can renew your motivation to work toward your goals: Depriving yourself while paying off debt can backfire. Reminding yourself what you are working for (like being able to take great trips), may actually increase your motivation to pay off debt so that you can have that life you want even sooner.
Cons of Traveling When You Have Debt
It will take you longer to pay off your debt: Even if you aren’t adding to your debt by traveling, you are making a tradeoff. If you put the money you saved for a trip toward your debt instead, you’ll pay it off faster—that’s just the math of it.
Unforeseen expenses could add to your debt: Even when you plan well, unexpected expenses can still happen. Your travel partner might flake leaving you to shoulder higher costs, you might miss a flight, or your Airbnb host might cancel last minute. If you don’t have the cash to cover these expenses, they’ll end up on your credit card.
How to Travel Without Adding to Your Debt
Assess your current spending
Financially prepping for travel starts with figuring out how much you can set aside for it monthly. If you are currently saving money for something else or paying above the minimums on your debt, can you reallocate those funds toward savings for travel until your trip? Are there other expenses you could pause for the time being? Add up how much you could save each month based on these changes.
Plan your trip around how much you can save
Once you know how much you can save per month, it’s time to plan for the trip itself. If your dates and destination are fixed (i.e. you are traveling for a certain event or already have the outline of a trip in mind), add up how much you’ll have saved in total before the planned dates. That’s the amount you have to work with. If you are in the earlier stages of planning for a trip, you can choose the budget amount first, and decide when to plan the trip based on how long it will take you to save up for it.
Add a cushion for unexpected expenses
When it comes to travel, expect the unexpected. This means that when you’re planning your budget, you should reserve 15%-25% for unforeseen (or forgotten costs). This will help keep you within budget and decrease the likelihood that you’ll overrun your estimates and need to put expenses on your credit card.
Stick to paying with cash
Leave your willpower out of it by paying for your travel expenses with cash or debit. Don’t get caught up in chasing rewards points if there is a chance you won’t pay off those charges in full. If you need to use a credit card for something like a car rental, pay off the specific amount with your travel savings ASAP.
Ready to take your finances to the next level?
To get started, schedule a free 20-minute consultation call to speak to a member of our team. We will ask you a few basic questions to get to know you more, walk you through our financial training program steps, and answer any questions you may have. No pressure to join! Need advice quickly? Talk to one of our Trainers on Demand.