According to a survey, 36% of Americans are considering going into debt for their summer vacation!
Many people may still be dealing with summer travel expenses long after Labor Day. According to a Bankrate survey from March, 36% of Americans plan to go into debt for summer vacation. They plan to use various methods, including personal loans (5%), buy now, pay later services (8%), and borrowing from family and friends (6%). Additionally, 26% of summer travelers plan to use a credit card and spread their payments over multiple billing cycles.
“The reason that’s worrisome is because the average credit card charges more than 20%, which is close to a record high. I don’t want to tell people they can’t have any fun. But this represents a lot of people taking on expensive debt, and this is the kind of thing that can linger”, said Ted Rossman, a senior credit card industry analyst at Bankrate.
“There are so many compelling reasons why people choose to take on debt to have these vacations. If your kids are dreaming of going to Disney World and there’s no way the family could ever really swing it without going into debt, it could be a memory the family will have forever. And parents often can rationalize spending in these terms for their children, especially when the trip feels like such an important, seminal part of childhood”, said Sabrina Romanoff, a clinical psychologist.
How to Enjoy Vacations on a Budget
Financial experts suggest that careful planning and budgeting are essential for affordable vacations. “Money on trips can feel like Monopoly money. For some reason, we’re much more willing to just say yes to the experience because we’re just in this, like, luxurious mindset”, Romanoff said.
To manage this, Romanoff advises setting a budget for different spending categories such as food, activities, and transportation. She also recommends choosing areas to splurge and areas to save. For example, one of her clients chose to stay in an Airbnb and cook their meals to save on food, allowing them to splurge on a boat trip they were excited about.
After budgeting, the next step is to save. Romanoff suggests starting small by setting aside a little money from each paycheck. People can also use creative ways to save and maximize their trips. Rossman recommends using frequent flier miles or other credit card rewards. Travelers can save money by visiting locations during off-peak times. Lower demand usually means lower prices.
“Zig when others zag. Maybe travel in the offseason or the shoulder season, or drive instead of fly, or travel midweek instead of on the weekend. If you can let the deal dictate the destination, that can really help you out. Flexibility is key”, Rossman said.