How to avoid getting into debt while traveling, budget travel tips, and strategies for budgeting for travel and paying for a vacation with cash.
After a few years sans travel, a lot of people are re-prioritizing travel again and subsequently getting into debt over it. Maybe you’re one in five people who are paying off credit card debt for last year’s travels.
According to studies, Americans spend on average $2,830 per household on summer vacations, an all time high. As inflation continues to negatively impact travel, and airfare costs soar, vacation budgets are increasingly causing some to give up travel completely, while others take on debt to fund these experiences.
Life is short, carpe diem. You only live once, and of course, you work really hard. Quite frankly, you deserve a vacation, there’s no disputing that, but there are smarter ways to go about financing a vacation without racking up hundreds or thousands in credit card debt.
While we all want to travel, you have to decide for yourself if taking on debt to travel is worth it.
Polling my Twitter audience, 61.5% of people did not think travel was worth getting into debt over with some saying “guilty as charged”, while others would give a pass for a honeymoon, baby-moon, or special occasion. Some were open to taking on debt, but up to a certain point.
If you’re hoping to travel this year, there are plenty of ways to save money and avoid going into debt. So how can you plan a vacation without going into debt? Keep reading to uncover 10 practical strategies to vacation debt-free.
This podcast episode is made in partnership with Medjet. While travel medical insurance reimburses you for the costs associated with medical emergencies while traveling, most medevac benefits will only get you to the nearest “acceptable” hospital capable of stabilizing and treating you. To get moved home, you need an air-medical transport membership like Medjet.
Whether you are hospitalized while traveling or feel threatened, you can call them. There are never any claims, out-of-pocket expenses (outside your membership), or surprise bills afterward.
Click here for the full write-up about Medjet to learn why standard travel and medical insurance sometimes isn’t enough and scenarios where having a Medjet membership would be beneficial.
Join thousands of travelers, including myself, who choose Medjet for peace of mind.
Debt Free Travel: How To Avoid Getting Into Debt
1. Build travel savings.
Saving cash for vacations improves the likeliness of affording one. However, more than half of people forget to consider vacations when laying out their budget for the year.
If travel is a priority, treat it like one. Add travel as a line item in your budget and open a new bank account dedicated to your travel goals.
Save for travel throughout the year and spend those earmarked funds guilt-free later.
Having a travel fund makes it easier to track how much you’ve saved, so when you’re ready to finally take that vacation, the money you’ve worked so hard to squirrel away is there waiting for you.
Even if all you can save is $25 every pay period, do it.
Whatever you can afford, add it towards your travel savings. Get into the habit of saving for travel regularly, no matter how big or small; it adds up quickly.
2. Set a travel budget and stick to it.
Once you’ve identified where you want to go, determine a travel budget for your trip. Use sites like Numbeo, an open source database detailing costs for travelers (budget, mid, and luxury) and the cost of living.
You can also read blog posts by creators like myself who openly share travel cost breakdowns, detailing exactly how much vacations cost around the world.
Read some of mine here:
Some general travel costs to estimate include:
- Nightly hotel rate
- Car rental per day
- Meals per day
- Activities per day
3. Reduce expenses by redeeming points and miles.
Redeeming points and miles is one of my favorite ways to reduce travel expenses and alleviate the pressure of having to fund an entire trip.
Whether you plan on earning points and miles by leverage credit card sign-up offers, maximizing every day spending categories, or accumulating loyalty points and frequent flyer miles the good old fashioned way, by being a loyal customer, use what you have to partially or fully pay for flights and hotel stays.
Here are some of the travel hacking strategies I regularly use to book free travel every year:
- We get (1) free Marriott hotel night a year with our Marriott Bonvoy Boundless® Credit Card; redemption level at or under 35,000 Marriott Bonvoy points
- Annually receive a complimentary domestic companion flight with our Delta SkyMiles® Gold American Express Card.
- Save 25% on travel purchases (hotels, flights and lodging) booked through Chase Ultimate Rewards with our Chase Sapphire Preferred® Card.
- Erase travel purchases with the Capital One Venture Card.
4. Pre-pay high-ticket travel expenses.
After you have a handle on your vacation budget and know how much you should save, consider paying for high-ticket items first.
Flights, cruises, and hotels not only sell out, but typically the later you wait, the higher the costs.
I like booking flights, accommodation, and car rentals first so I know our vacation is definitely happening, and can take full advantage of saving opportunities by booking early, anywhere from 6-11 months in advance.
With larger expenses out of the way, next focus your efforts on saving for and booking less urgent expenses like tours, food and drink, fun activities, and more.
5. Use one credit card.
To keep things simple and streamlined, use one credit card for all travel purchases.
Visa and Mastercard are widely accepted worldwide, while American Express can be more difficult to use abroad.
Don’t forget when traveling overseas, use a no foreign transaction fee credit card that offers maximum points and miles for categories you’ll likely be spending on including dining, transportation, gas, and ideally even everyday purchases.
As a rule of thumb, treat your credit card like a debit card or cash. Only make purchases you have available in your travel fund right now. Nothing more.
Another option: consider using a debt card directly linked to your travel fund so your designated travel monies are withdrawn immediately with each swipe.
Picking the right credit card to bring with you on your vacation is one of the recommended financial tasks to complete on our pre-trip checklist. For more details, listen to the podcast episode below.
6. Use cash.
Carrying the majority of your travel budget in cash is an alternative to using plastic and accidentally accumulating credit card debt.
There’s something about seeing your money physically dwindle that reels you in and forces you to take a critical look at every spending decision.
On a recent trip to Paris, I withdrew 400 Euros for spending money. I used a credit card only when I had to make reservations online or when cash wasn’t accepted, like when purchasing metro tickets. To my surprise after a week, I had nearly half of my spending allowance remaining!
7. Stay with friends and family.
Do you have loved ones based where you plan on visiting?
Give them a heads up you’re planning to be in town and ask them if you can stay with them for a few days or your entire stay.
While some loved ones may have a dedicated guest bedroom for you, be mindful others may have a couch or air mattress to spare.
As a gesture of gratitude, consider bringing a small thank you gift, whether a bottle of wine, a cigar, or something memorable from your hometown.
Looking for inspiration on what to get your favorite traveler? Checkout this list of travel gifts for couples.
8. Use your annual bonus or tax refund.
If you are eligible for an annual bonus, save any windfalls for upcoming trips. This also applies to tax refunds. Save these monies in a vacation fund and reach your travel goals sooner.
9. Shorten trip.
I first discovered this tip when planning a trip to Iceland. Iceland is a pricey travel destination and while I couldn’t afford an entire week on the island, I had enough money to last 3-4 days.
When funds are limited sometimes you have to make sacrifices and cut corners, shortening a trip is one easy way to do it.
10. Travel off-season.
When traveling off-peak, avoid large crowds in the warmer months, holidays like Christmas, Easter or New Year, or big events such as festivals, conferences, and concerts.
Every destination will have its own off-peak travel season or shoulder season, so consider visiting when the crowds are thiner.
Be mindful some destinations like Las Vegas are popular all year round.
Note some off-peak seasons are due to in-climate weather like hurricanes in the Fall, such as the Caribbean.
I share this to say, do you research to know what you’re getting yourself into.
Is it worth it going into debt for travel?
Is it smart to finance a vacation? It all depends on your personal preference and what you’re willing to bear.
In summary, staying out of debt comes down to planning ahead, knowing your numbers, spending wisely, and having discipline.
For those who struggle with peer pressure, your family and friends will understand your commitment to your finances (and yourself), and if they don’t, consider setting those internal boundaries for yourself. Tune out the noise, and do you, boo!
Should you go into debt to travel?
For someone who has taken on debt to travel, I don’t believe in wreaking havoc or compromising our finances in the name of vacationing. I also do not believe in buy now and pay later programs, or pay installments on vacation.
While I love traveling, being financially responsible is more important. Debt free living is also very important to me, but I won’t pretend it’s easy.
I’ve delayed trips so I can be in a better position to afford to travel and those decisions don’t make me less of a world traveler.
Also, when you get into debt because of a vacation, you end up spending way more than the original cost of the trip due to accrued interest.
Depending on how large of a credit card balance you carry month-to-month can negatively impact your credit score due to the high utilization rate.
I believe you can travel without going into debt, and I hope this article shed light on ways you can have a debt-free vacation.
Knowing it takes about six months to financially recover from a vacation, you decide. I’m not here to shame or judge if you feel differently.
How do you prioritize debt free travel? Leave your thoughts below in the comments.
Read Next: 12 Ways To Maximize Travel Savings
Danielle Desir Corbett paid off $63,000 of student loan debt in 4 years, bought a house at 27, and has traveled to 27 countries, including her favorites, Iceland, China, and Bermuda. Go here to learn Danielle’s incredible story, from struggling financially and in debt to finding creative ways to earn more and live on her terms. Listen to The Thought Card Podcast, where Danielle shares how you can creatively travel more and build wealth regardless of your current financial situation. Reach out to Danielle by contacting: thethoughtcard (at) gmail (dot) com.