Travel debt

My reaction to reading about traveling while having outstanding debt was to feel guilty about my very small mortgage payment and reasonable car paymnet (together they don't equal most mortgage or rent payments).

Maybe we shouldn't go at all until we don't have a mortgage, no car payment (which has happened through most but not all of our adult lives). But then I just don't know. I guess I would not go if I had cc debt, or other debt.

I'm curious if others with mortgage/rent payments and a car payment travel. We bought a two year old car, put down a large amount and financed the remaining. It is a very average, smallish car, with high performance and safety ratings. Am I just justifying travel while I'm paying for a car?

Anyone else want to comment?

I don't believe in owing money with an exception made, perhaps, for a house and college (as Christina recently said on another thread.) I love nothing more than travel, but I make a modest income. So to pay for it, I live in a small condo, drive an economy car, and shop at discount stores (it helps that I'm childless). And although my trips are becoming increasingly luxurious, I have stayed in some dives and and survived on street food on many trips.

I can't enjoy myself knowing that I am spending money I don't have.

Debt is not in my dictionary. We do have friends who take money out for travel - I cannot imagine. We have never owed money for vehicles or anything but of course on houses. That is the only thing I personally would be in debt on. We do not use credit cards except for booking things where we need a number.

One thing that bothers me more than almost anything is living beyond peoples' means. For example, we heard of a poor family we hadn't met so took over groceries anonymously, feeling for them. Well, immediately after that we heard that these people somehow purchased a 5th wheel and are now in the process of building a 4,000 square foot house! No longer feel sorry for them. I know how much they make - one makes minimum wage and the other an average wage. And they will be in debt until the day they die. And not just a little debt, either.

While in university I was dirt poor. Did dirt poor things, bought dirt poor food, had a dirt poor apartment, walked 38 blocks to university (was in great shape!), just because I refused to do it any other way. Like many others, I'm sure, I worked two jobs while in university to avoid student loans.

I personally would not feel right about taking out loans to travel but that is my opinion. My husband is a Chartered Accountant so our minds think alike!!

rogerdodger, I know of one instance in which a close friend (a woman) went through a divorce and took a month off that she really couldn't afford but came back with a new perspective and got it all back together very quickly.

But that is rare. More often, people do it for other sorts of reasons. Sometimes it is because some people have an insatiable desire to appear cool; or because they constantly crave attention and one way of getting it by talking about things others don't do on an everyday basis; or because they don't understand the basics of financial discipline or planning. It is for the same reasons as why some people drive cars that are more than their annual salary (I am referring to instances where they don't have trust funds)! May be something to do with parents not hugging them enough times? I don't know.

Frankly, it is really kind of sad specially when you are close to someone who is otherwise sweet and gentle but with an incessant desire to impress you, and you really want to gently shake it out of'em! One can be cool (heck, ice-cold) without the constant need to always live in the moment by consuming one's future.

I don't think I can enjoy my vacation if I had a lot of bills to pay. I didn't travel until I was 28 because I was saving money to buy a house.
My husband is the same way, no traveling or extras if there are bills to pay.

Like the OP I am not saying my way is the right way, it just works for me, then I can justify ordering that lobster for dinner or buying that beautiful purse and 4" high heels.

We have credit card debt and we still travel. We don't increase our debt to travel though - we have a travel savings account that we put money into throughout the year.

Our credit card debt is not outrageous and we have a very low interest rate. Most of it was incurred fixing up our house, which we plan to sell in a couple years, using the equity to pay off the debt and as a downpayment on the next house. In the mean time we pay down the debt each month.

To some, this may not seem prudent, esspecially to those who are esspecially debt adverse. It works for us though, and I am not about to let life pass me by because our finances are not absolutely perfect.

Few can ever go without debt at least not when they want to go, the memories and pleasure from travel after a year's worth of work, far outways the debt. Why wait until retirement, and even then who knows if a person will be able to go - I adjust my staying & eating to a reasonable budget. Also, there's plenty of free sights and things new in another country without going hay-wire.

I have no debts and am one of the unpleasant people who talked about not traveling when in debt on the other recent thread.

However, being in debt and being behind and/or unable to make your debt payments are two different things. If you are still diligently paying off your debts, you should be totally free to do whatever you want with the rest of your money (or credit).

I have been too reasonable all my life and missed out on those exceptional occasions when one can pursue a passion or live a dream. I have always admired people who have told me why they dropped everything and went halfway around the world without a second thought.

But I make a distinction between falling in love and needing to immediately go to Buenos Aires or the Maldives to seal the deal, or a lingering and constant desire to see Rome or Paris, which will still be there next year, in 5 years, in 10 years or even later.

I think if you do not have much invested and/or your net worth is very small and on top of that you have debt, travel is probably something you should think twice about.

HOWEVER , when you have lots of wise investments and your net worth is very high, but you some some reasonable debt and have a good solid plan for paying it down ( much more than just minimum payments on credit cards), I would not put off travel. Life is just too short for that.

But with that said all of the vacations are paid in cash.

We are in the camp of always paying yourself first; this is why we have alot of very wise investments and high net worth.( we also do happen to make alot of money as well) I know alot people pay off all the their debt; a good idea, yes indeed, but still have very little to show for it.

In the long run, plan to have enough money so you don't outlive it.
The small amount of debt we owe ( mostly houses and 1 car and some cc debt) is peanuts compared to the amount we have saved and invested and our total net worth. That's why we travel so much.

I went on my last trip though I had about $2000 in credit card debt. I charged the whole darned thing, and I now owe $5000. I wish I'd had enough self-control to pay off my debt before I traveled again, but I'm still glad I went.

I just transferred that balance to a card with a $75 transaction fee and a 1.9% interest rate, so interest rates aren't going to break me. I'll have it paid off within a few months anyway.

I don't have other debts than my mortgage, though I do have expenses that are as unavoidable as debt--insurance, utilities, etc. So I don't feel guilty about traveling while still owing money.

I am creeping up relentlessly on 72 years of age. Time is getting away from me. In a little over three years I will no longer be able to rent a car in Europe. I'm in good health and pretty good shape now, but who knows what lies in store for me, ready to spring out and bite.

The other problem is that having a debt makes me reasonable about how I spend money. When I have no debt, I get carried away, and I tend to spend too much on the house and the yard, and I get OVERLY generous about giving money away.

There are worse things to be in debt over but I don't like paying interest.
So, no debt for us but I think it could be worse. Imagine owing money on clothes you no longer wear or are out of style, or Christmas gifts you gave people that they sold at their last garage sale.
At least with travel you have good memories.

I have a completely cavalier attitude about travel debt. I do what I want and then figure out how to pay for it and erase any debt I might incur in the short run. But I'm not on a fixed salary and have almost limitless opportunities to earn extra money if I want to and am willing to work very hard, which I am. The down side to that, of course, is that I very rarely get to do an all-out "vacation," where I'm unplugged from my work and obligations. Suits me fine, though. I'm also not extravagant and don't need fancy hotels or Michelin meals, except for the very occasional splurge.

Travel is a privilege and a luxury. I pay cash. I have no debt. In order to go more often, I've been known to stay in hostels and eat picnics. I've also had a few luxurious experiences but mostly they are the frugal kind and it makes for a wonderful trip.

While putting children through college and paying off a mortgage I didn't travel much or far. I'm making up for that now. I also pay cash for cars so no SUV's or luxury vehicles either.

I can happily say that I've never paid a penny in interest charges on credit cards, but if I did, I guess I don't see any real difference in adding a worthwhile trip to that debt any more than buying clothes, Christmas presents, a new computer, going out to dinner, or about a thousand other things. I agree that the travel memories will last a lot longer than must "stuff" you can put on a credit card.

Ditto St. Cirq!

We've always traveled, even when we were younger and probably could have used the money for more practical purposes. One thing we have never done, though, was to go into debt for our trips. We saved throughout the year for our travels, and did not stay in high end areas until later in life. Even now, we try to be as economical as we can - i.e. renting apartments rather than expensive hotels, eating in much of the time, searching for the best fares, etc. We can take a month-long trip for the same cost that many people pay for a week.

Other than our mortgage, I refuse to pay interest on anything.

Personally, I do have debts and as long as I can pay them, I will not stop traveling. What will stop me traveling is age and poor health and since time flies by so fast and poor health could surprise you at any moment...I will travel while I'm healthy and capable, then I'll worry aobut paying off my debts.

Too many people put things off until the "right time" and the right time may or may never come.

Somehow when I'm older and unable to travel, I'd rather have the memory of "when I was in Venice drinking a cappucino..." vs "when I had no debts and stayed at home stifling my traveling desires bored to death".

It realize it is not wise economics, but travel is one thing I will carry a small amount of debt from.

Of course 'debt' can mean different things to different people, ranging from putting clothes on the children and feeding them, or paying for that giant flat screen TV and new car. I suspect that most indebted Fodorites are in the second category.

True true, I am single with no dependents so my finances are my own and affect no one else.

People who can not "afford" to travel and people who travel while having debt(s) are obviously not created equally.

If one lives paycheck to paycheck & does not have an emergency savings, I agree they should not travel.

However, being in debt should not prevent some from traveling. In our state, one should always have a mortgage (debt) for the property tax deduction. Most Americans who own a home have a mortgage. That debt should not stop them from traveling.

Even when DH & I can afford to pay cash, we always borrow ALL we can at 0% & low interest. Then use our money for investment at a higher rate and/or tax advantage. That qualifies as "debt", but we travel a lot. On 0% interest, we bought our last 2 cars (3yrs 0%), our $4500 TV (1 yr), our furniture (1yr), and our last PC (1yr). That did not prevent us from traveling & should not have done so. Obviously, we pay off the loans before the interest begins.

To me, there is no one answer for everyone. If one's net worth & income is high enough, debt is not an issue in deciding to travel.

Age also matters. We are in our 60's, been retired since 55yo, & have a spend down plan for our investments/savings. So debt would not matter in deciding whether to travel.

No shoe fits everyone.

Julie

Agree no shoe fits everyone. A financial planner would likely tell me to stop traveling for a few years. So it's a good thing I don't have a financial planner.

When I'm on my death bed, my "net worth" will mean absolutely nothing to me. As my dearly departed grand-mother would say "I've never seen a hearse carry a U-Haul."

I'm the opposite. I pay for my vacations, never charge. As to the other debt for whatever... screw it.
It'll get paid when it gets paid.

Prefer to travel now when I can, then be sitting there in my 80s (if I live that long) in that rockin chair having the words "could've" "should've" "would've" pass my lips. Rather have the memories of the adventures and tales to tell, whomever wants to listen to a crotchedy old lady

Life's too short... eat dessert first!

I'm similar to Sandi. I always pay cash for my vacations. I charge little normally, but will occasionally buy something expensive, charge it, and pay it off on time.

If I don't have the cash to cover a trip, I don't go. The year before last, I bought a new (used) truck. I'm paying on time. That first year, it took a bit extra to start compensating for the car payments, so I didn't go on vacation that year. This year, I was back on track so I took my vacation.

I do think there is a difference between going into debt irresponsibly and having some debt while enjoying life.

I had resisted posting on this thread, but now that the OP on that other thread has answered, I must say that it was exactly what I feared. That OP was saved money for a trip at the neglect of her debts. That is just bad form.

Normally in those cases, the OP should really take that money, pay off her debts, then start saving for a trip. But since money had already been invested in the form of a plane ticket, it was best that OP go on with her trip. Why waste that debt?

I just hate paying unnecessary interest, home mortgages and car payments aside. Credit card interests are the pits!

That's not to say I don't use my credit cards. I like the cash backs and points! I just pay it all off at the end of the month. And after that and saving in 2 separate accounts with 2 separate purposes, I'm broke at the end of each month.

Yes, " 'debt' does mean different things to different people".

You are responsible to yourself both financially and emotionally, often one is at the expense of the other. Both are important.

Not everyone is debt free. Often debt arises from totally unforseen and uncontrollable circumstances. Sometimes the need for emotional survival is urgent and overwhelms a pragmatic and dutiful fiscal response. I once took a trip that was really not within my budget. I met an exceptional person who triggered the most profound shift in my thinking in the last 15 years. This cannot be measured in dollars/euros.

Outside of mortgage payments I have never made a car payment or any other interest payment in my life, including credit card interest, and I have never paid an annual fee for any credit card.

I do charge everything I can on one of my credit cards including utility bills, but I pay the balance in full each month. I receive FF miles for this credit card.

I haven't travelled as much as a lot of Fodorite's but I feel I have had some very wonderful trips. I always have the money available in my money market account to pay for all the charges on my credit card when the statement arrives.

I have always been conservation when it comes to financial matters. That has worked for me. As far as what others do I don't worry about it although I admit I have cringed regarding the way some people I know have handled their finances. But it is not my business of course. I am just glad that I am happy and relaxed with the financial decisions I have made.

Some persons reach the most ridiculous and contradictory conclusions when they try to manage other people's finances...much less, their own.

I can cite a personal experience.

About 30 years ago, when banks first introduced charge cards, some uptight bankers debated whether or not charge cards should or should not be used to pay for certain products or services.

One particular fellow, I recall, became very red in the face when it was proposed that groceries be charged on the card. He thought this practice would lead to all kinds of spendthrift spending. "Besides," he shouted, "how do you repossess food?"

The reply he received: "We are not proctologists...we are bankers. And so tell me, how do we 'repossess' an airplane trip?"

The banks accepted cards, thereafter, for anything legal.

USNR, ironically that banker wasn't so far off. Just a couple of days ago I saw (on Today?) a piece about how much more people charge when they use a credit card instead of cash. Of particular note were fast food restaurants and groceries. The main reason fast food restaurants started taking credit cards is because they quickly learned that people will buy more when using a CC than when using cash. They add the "super size" or a dessert for example. And those who use cash at supermarkets are far less likely to pick up the "big ticket items" or to "stock up" on things like wine than those who are going to use a credit card.

"And those who use cash at supermarkets are far less likely to pick up the "big ticket items" or to "stock up" on things like wine than those who are going to use a credit card."

We use our air-miles credit card for EVERYTHING we can - utilities, insurance, travel, and yes, even groceries. But we pay it off every month. We never pay a penny in interest; otherwise it would not be worth using the card. And I don't think I buy more with the card than I would with cash.

I know I don't charge more on my FF credit card than I can pay in full when my monthly CC statement is received. And yes I put utilities, groceries, insurance premiums, gasoline, travel expenses, shopping purchases, you name it on my credit card. But some people know what they can afford and some do not.

I feel very old fashioned. In high school we were taught that, with a few exceptions (travel not one of them), interest is something to be earned not paid. It was a lesson that has served me well.

Debt and Travel. The world's economy is based on debt. Some debt is the result of irrational decisions to borrow money using a credit card and then paying 36% interest! Today our banking system is writing off billions of dollars of owed debt because they lent money unwisely. Anyone without debt should also be aware that they are paying for this debt because of increased prices. Merchants add dollars to their prices to cover non-payers. Bankruptcy allows credit abusers to escape their financial folly. Guess who pays for that folly.

There are times in our lives when we have money, and times when we do not. For most people, it is when they reach late middle age that they have most money. Their house are paid for, or their mortgages are low, their earnings are highest, their children have left home, they may have inherited wealth.

Younger people with children are often the least well-off. However, that is a time when you have more energy and can tolerate less comfort. Taking your children to visit other countries can be very rewarding, and will give you all memories that will bring you together as a family. Borrowing money to do that, provided you are careful, can be worth doing. If you wait until you have the spare cash, you will wait forever. Your children will have grown up and left home.

<<If you are still diligently paying off your debts, you should be totally free to do whatever you want with the rest of your money (or credit).>>

Absolutely!

The main issue is how much debt the OP is referring to. I see no reason to wait until being "debt free." Having a manageable balance on credit cards shouldn't keep anyone from traveling, but it's a different story if the cc debt is large and traveling would put it beyond the person's ability to make timely payments.

I'm curious if any of the people who think nothing of traveling on credit and then paying their miminum or even just not paying their full balance monthly on credit cards are the same ones who post on the Europe board about which credit card or ATM card to use to avoid paying a 1, 2, or 3 percent conversion fee. Kind of seems silly to worry about the latter and not the former.

< < Younger people with children are often the least well-off. However, that is a time when you have more energy and can tolerate less comfort. Taking your children to visit other countries can be very rewarding, and will give you all memories that will bring you together as a family. Borrowing money to do that, provided you are careful, can be worth doing. If you wait until you have the spare cash, you will wait forever. Your children will have grown up and left home.> >
Chartley, you are entirely right, and that is why we travel now - although we are older parents, we are dipping into our savings so that we will have less for our golden age. But, the golden age is now! With the kids we have traveled around the States, we went to France, will be in Egypt this winter and Botswana next. The kids have had experiences that not many their age have had, and have had their minds broadened incredibly. We waited till the kids were old enough to remember the trips, and were somewhat settled financially and career-wise.
We are selling off a bad investment (a rental house) at a loss to get out of some debt and free up more income so as to travel more.

I do have a mortgage, and college loans, and credit card debt (all cars are paid in full). The credit card debt is all on 3% or less - even the house is less than 6%.

I do travel, because the credit card debt will be paid off when husband gets out of college and starts working. We traveled to Maine this summer, to visit his grandmother - at age 92, she probably won't be around when we're out of debt.

I am also planning on having a baby - something others say we shouldn't do when in debt. However, we are still planning on it. Can't wait forever (I'm 38).

I am fiscally responsible, and know all will be paid off eventually. In the meantime, I keep my cash flow going and the debt going down.

I used my bonus to pay my last trip to Paris. Waiting decades might work for someone else, but I don't come from long-lived people and no one can tell me how far I'm going make it. My mother is nearly blind and in her mid-50s. Should that be my fate, I'll have the sights of Paris etched in my memory. And also, the memory of the spring time air on my still young and smooth skin as opposed to whatever it might be like a few decades on.

No place is guaranteed to always be there. That's what I learned when WTC fell and when New Orleans was flooded. Those places will never be like they were *before*.

There are many ways to regard and deal with finances. One has to choose and live with the consequences as best one can.

Life is too short!

My mother is 72 and is still "talking the talk" about taking a trip to Europe.

My husband and I never travelled anywhere with our families growing up other than an occasional trip to a beach. When we married, we decided that travel would be important part of our marriage. Now we're dragging our 3 kids with us.

For our family, we have a vacation fund. This is how we manage travelling each year.

I'm enjoying the journey while I can still move and am not going to be travellin with a walker!

We opened a restaurant in our thirties and learned hard lessons about debt. We have borrowed for cars (modest ones except for the Prius) and the house but no credit card bill goes unpaid. We traveled but only when my parents took the family to celebrate one of their major birthdays. After 19 years of marriage we finally traveled by ourselves. In order to do that we saved for a year to have the wherewithal to pay the bills. Since then we save for a year and then travel. Though I will admit we didn't save all of the cash before we took our 25th anniversary trip in June. But the bills were paid when we returned.

To each his own, but I'm with the group that saves for the vacation. Oh, I still have some debt, but it has low interest and I have paid it down consistently and expect to be debt-free (except for my mortgage) in another 3 years. Of course, by then I made need a new car, so...

But, I saved for my upcoming trip to Italy/France. Oh, I could have put it on credit cards, but I just know I could not enjoy the trip worrying every minute about how much it would cost me afterward. I think it's much more fun, too, to "earn" the money toward something you really want, whether it is travel or a new Hummer. I like the pot of gold at the end of the rainbow. I know I will enjoy my trip much more, knowing that I've already earned and payed for it!

My logic in saving before I go is so I know how long and where I can afford to go...

If I save $2,000, I can budget my trip accordingly. If I save $5,000, it will be a longer trip or a more exotic trip.

If I use credit cards, then I don't have that budget worked out so how do I decide how long to go and where?

Two houses - Only one with a mortgage.
3 cars - no car payments.
CCards paid every month.
One salary.

Although this might sound good - the 2nd house is a fixer-upper (think along the lines of no electric, plumbing or occupancy permit and you'll get the idea ) there will be no travel for the next couple of years- well, perhaps a short trip to NY and DH has a business trip to Florida later this month. I think I'll go and look at using some FF miles

We prefer to pay as we go.

Pity since I could really do with lying on a beach in the Caribbean for a week or so might be enough time to get the Red Mahogany stain out from under my fingernails - the parlour is looking good though.

No money = no travel.

No debt = no worries.

One dinner in Rome > 10 dinners out at home.

One day in an amazing museum (Ufizzi, Louvre, Tate, etc.) > 10 nights at the movies at home.

One totally unique souvenir of a special place > 10 items of clothing.

Two admitted weaknesses: books and chocolate. OK, gelato too. So I guess it's a wash.

I have a mortgage, a car payment and one credit card. I never charge what I can not payoff in 90 days. I work hard and earn a salary that allows me to squeeze in a trip to europe every other year. After last months market fluctuations and seeing that I lost more than 18K in one day, why not withdraw 3K for a vacation. Life is way too short and precious to wait until...

Clea

I strive for balance.

My first trip to Europe was at 28. DH picked most of the bill as I was only beggining to earn a 'real' salary. Before that I was broke and did not travel.

We get a major vacation not more than once a year. It gets immediately paid for.

I owe a car I purchased for my mother. We keep completely separate finances so I owe DH some money that he loaned me to remodel a rental property. We dont carry CC debt at all.

Like Toedtoes, I use my budget to decide where/how long to go. Upcoming vacation might need to be cut down from 3 weeks to 2. Or shift from Italy to Argentina. Those are budget-based decisions.

I pray that I can celebrate my 90th birthday toasting with Bellinis in Venice. This means that I need to live financially responsibly NOW so that I can have a good time in the present as well as in the future. It might happen or it might not. I have hopes for my future so its not only about NOW.

I am 55 now. For most of my life I owed money: for house, for land, for car, for education of daughters, for mistakes, etc... And paid interest

About 5 years ago, daughters grown up, no more education expenses, I got completely out of debt and started to save money. Now I earn interest

What a joy! What a bliss! No more debt, no more unslept nights.

I retired a couple of years ago and last year finally went on that much longed for trip to Italy (three months stay).

My wife and I had great fun for those three months. To my astonishment, when we got back home, I found out the savings were virtually untouched.

This was due to lots of planning and cautious spending: renting an apartment off season for three months in a tourist location can be very cheap, and you do not depend on restaurants, which are damned expensive. Public transport, instead of hiring cars, etc...

Got enthusiasmed and more confident...

Just got back, a couple of days ago, from a two weeks trip to Argentina - obscenely cheap compared to Europe and therefore not much of a burden on personal economy.

I started paying (second installment now) for an 18 days cruise to Europe in April 2009 - unbelievably cheap if booked and paid for almost a year and half in advance. Etc...

Booked another two weeks trip to the Amazon a couple of months from now, again off season with great a promotion.

Found out that, when you retire, if you are cautious, careful with how you spend your money and plan way ahead in advance, you can almost "live out of a suitcase".

I can't wait to see India, Russia, Nepal, Egypt, etc... (I will, before I die - that's for sure).

No debts and sound planning are a must, though.

I am feeling 20 years younger.

And gee... IT FEELS GOOD.

The stages of my trips are paid at the time of booking. I pay the airfare usually 6-9 months in advance. So that charge on the credit card is paid the next month. Then some of the hotels charge the credit card for the first night and that is paid long before the trip. Next is the rail pass. I usually buy in about 5-6 weeks in advance, so that is also paid in full before I depart. So I really only need the money that I will be spending while I am there. The remainder of the hotels are charged on a credit card and paid off as they are billed. So, it's not like I have to come up with loads of money all at once.

Tuscan - we have two car payments and a mortgage.

We travel. If we are not in revolving unsecured debt and have a viable income... I will travel

My mother always told us to "spend money on memories, not things."

I'd much rather be paying CC debt remembering a trip to Venice or other great vacation, than paying CC debt for a remodeled kitchen or a TV or....

Chartley and Momliz, agree with you both! I've been lucky enough to do some traveling, but had three major (two were life-threatening) illnesses that restricted most travel in recent years when I finally had time and money. I wish I had traveled more with my children when they were teenagers and more myself, before the health issues. While I don't advocate being irresponsible, if you can make it work at all, just go and do, especially with your kids.

I am another one that does not believe in debt & learned that one early. It does not feel right living off money that you do not have. You can say it does not matter, but studies show that it adds tremendous stress to life to live under debt.

Live smart, live beneath your means!

It is interesting that I recently read that a study of people who retire early showed that all had this attitude about debt.( We retired early in our early 50's). None had EVER had any debt except a mortgage and all had always lived far below their means.

It made me smile, because that is how we always lived. We enjoy finding ways to live large on little and hate wasteful spending.

Travel really does not cost that much. Buying and Maintaining all the endless, useless STUFF is what eats away most peoples freedom.

We are traveling the world with a lot of luxury and living on much, much, much less than at home. We live a life of travel on 25K a year or less, while we continue to grow our nest egg with all the money we save.

So one certainly does not have to have debt to travel or live large. As I teach my daughter, it is not the one who buys the most stuff who wins, it is the one who saves and invests, so that their money works for them. Why be a slave to stuff that just soon clogs up basements and garages?

As we enter a US led serious global recession & severe credit crunch, it is an especially bad time to have debt and cash will be king. Most Americans are just a paycheck or two away from destitution with nothing saved or invested....even baby boomers.

Oh and for those that do not know we retired with our 7 year old child, so you do not have to wait to travel or retire until a child is grown. Our expenses include all her homeschool needs, including her own mac ( although she does go to school in her second language while we winter in Spain, primarily for the language/cultural immersion).

Since flights are one of the main costs of travel, if you stay longer, you save a lot more money and have a deeper experience with the culture.

Yes it is wonderful to travel as a family and with children, but I do not think it is worth debt. If one stays longer in the off season it is very cheap.

We have a beautiful, brand new 3 bd, 2ba ocean & mountain view village house in a gorgeous 15th century white village in Andalucia with cable TV and adsl that goes for a pretty penny in the summer high season by the week, but is only 650 dollars a month is the warm winter.

By staying longer, the kids also get a real experience about what the culture is like and my child will have lifetime friends from all over Europe.She is already emailing kids from around the world.

I am the original Poster and would like to mention that I am retired and will be leaving in 3 weeks for a winter trip in England. Paid for my rail pass, flight, and a couple of hundred pounds in cash. I will write a check for the remaining expenses when I receive the bill. I strongly believe that one should not go into credit card debt for pleasure. MY wife worked hard all of of our lives as did I. We have had a good life, seen a lot, met a lot of people. But the key, when young, we saved for a trip and went without movies and dinners out in order to have the funds. Today, of course, life is good. Enough money to basically do what ever, however, we enjoyed our trips when we had to do without something else. Trust me, don't just live for today, stay out of credit card debt.

Different methods seem to work for different folks.
For me personally (I am a CPA, married to a CPA, and the daughter of a CPA ), I couldn't sleep at night if we were to carry any debt other than our mortgage payment. We bought a house far less expensive than what we can afford, max out our retirement savings every year and stash excess funds away in other savings instruments, and reward ourselves for sticking to our plan by taking 1 or 2 trips to Europe a year.
This works well for us. Being able to take a couple trips a year really helps motivate us to be very disciplined throughout the remainder of the year, and hence we have beaten our financial goals every year since our marriage in 2004.

mjslacker, it's not a choice between debt for travel or debt for material things. It's a choice between debt or no debt. Credit card debt is not the standard, expected condition. I bet your mother didn't tell you to go into debt for your memories.

I wonder if perhaps the value of J_Correa's house has gone down and if it will still be worth enough to pay back debt and provide a down payment on his next house.

What gets me are people who say, because they work so hard or life have been difficult, they deserve a splurge, a splurge they can't afford. If you can't pay for it, it doesn't matter how deserving you are.

Credit card and consumer debt is such an interesting topic. It evokes all sorts of moralizing and tut-tutting, self-righteousness and accusations, defensive crouches and yes buts…

I guess my view is that people are different, and everybody makes poor choices from time to time. And of course one person's "poor choice" is another's "seize the moment." There's a matrix in us that arrays life experience, technical knowledge about finance and money topics, moral values, opportunities and drawbacks, urges and restraints.

How many little sayings can you dredge up about this? "A penny saved is a penny earned." "A borrower nor a lender be." "You can't take it with you." And one I'm very partial to, "The future is uncertain - eat dessert first."

I am certainly in no position to tell somebody that travel should be postponed until credit card debt is extinguished, any more than I can say that a new fridge is more important than a stack of photos from Venice. Multiply these varying personal values by around five billion and you have a global economy. Lots or room under the tent.

For us, we manage credit card debt the same way we manage real estate debt and other expenses - carefully, but not obsessively. Many millions of people don't have income that comes in regular monthly or weekly chunks, us among them. Instead, some months you make more than others, because that's the way it works. So sometimes credit card debt works best for relatively big-ticket items, like advance-purchase plane tickets or cruise fares, then paid off when the irregular income (which is statistically predictable, just not clockwork) hits. For us, we don't generally keep great liquidity in our savings, so credit facilities like credit cards or homeowner lines serve a purpose - an instant resource that doesn't require disposing of illiquid assets where the exit costs outweigh the benefit.

But that's us, and we're not you, or you, or you over there.

Although we have debt, we have what we refer to as the slush fund. It is primarily used for travel but it has been used in the past when the fridge and clothes dryer died.

Incidentally, when the dryer died, I was gung-ho to get a model with all the electronics gadgets & goodies. Faced with a price almost double that of a regular, garden-variety dryer, I opted for the cheaper model. I went the reverse for the fridge, as I had lusted after a bottom freezer for years. I still fondle my fridge as I pass it. But I digress.....

To sum up, we save up separately for our trips, enough we may have other debts. Life is too short to be all work & no play. We are responsible people but also want to enjoy ourselves while we can.

Very well said Gardyloo.

I prefer travel to car payments. It depends on your priorities.

After 20 years of owning a paying off a credit card each month - I am still at an absolute loss why anyone would leave a balance on the things - We use ours to pay for everything including business stock which is naughty and earn bonuses each month.

If you don't want to whimper about in a recession - debt should be used for two things - buying long term assets - cars/houses OR buying stable income assets.

Travel should be 999 on a list of 1000 things to buy with unsecured short term or secured long term debt. If you ain't go it don't spend it.

I save money here and there to help pay for my many, many trips abroad. For example, I drink Franzia Chianti-in-a-box instead of Chateau Angelus 1995 on Thursday afternoons. I am also drinking Veuve Cliquot instead of the much more expensive Krug. And I limit myself to one bag of Farmacia Santa Maria Novella pot-pourri per month.

I am tightening the Hermes belt, sweetie darling.

Thingorjus

We have very little credit card debt and what we have gets paid off quickly. I love to travel but wouldn't take a vacation I couldn't afford, as I wouldn't feel right or comfortable doing so. We do travel overseas several times a year, and we do this by putting money aside each month into a separate savings account for our vacations. When we get extra money (birthdays, holidays, tax rebates, etc.) it all goes into that fund. We use this account to determine our vacation plans. If what we want to do isn't in our budget we go elsewhere. We do live a relatively frugal lifestyle overall, having bought a house well under what we could comfortably afford and not traveling extravagantly.

Tracy

I am with you Markrosy, on being totally perplexed as to why anyone would leave a balance on a credit card.

But neither cars nor houses that are not paid for in full can be considered assets, unless someone is renting them from you and sending you monthly payments that are above and beyond their price.

Assets are things that bring income in. So homes are never assets until they are sold at a profit beyond all costs. Shillers 100 year study of home prices shows well that they are not assets in the long run and remain pretty steady except for inflation.

New cars loose value as soon as you drive them off the lot. Why anyone would buy a new car is beyond me as well.

We have a mortgage - no credit card debt as I refuse to pay them one penny in interest. They, on the other hand, our paying our way to Italy next month! We don't travel to Europe as often as I'd like but when we do we have the cash prior to our trip so I never come home and worry about how we're paying for it!

Life may be short! Some Americans are Christian minded - Most pleasure is sinful! Think, Original Sin. Americans are happy when they feel guilty about something...hence concern about a pleasurable vacation to be paid for later. Worst of all are the 'self righteous'. The ones criticizing others for, pleasure now - pay later. Today we are all within 20 minutes of nuclear annihilation. Our world is built on debt and its interest. When you travel on credit you are helping someone. They will you use the interest you pay on that debt to send a daughter to college. Travel!

Gardyloo: Well said.

An economist will tell you that all it means is one values consumption today more than consumption tomorrow. It is a completely morally neutral activity, and I've never understood the religious fervor of the anti-debt zealots.

TexasAggie and tcreath:

You have a lot in common with my husband and me...I wish I lived near you so we could hang out!

Mimar - since you are wondering The value of our house has taken a hit and it looks like we will hold it for longer than planned before trading up - the down market hasn't erased all our paper equity, but it has erased some. Fortunately, we didn't buy at the top of the market, so there was time to build equity before things started going down.

Our house was also below market value when we bought it because it needed work and the sellers were motivated, so we started from a good position in that regard - and doing the work ourselves and choosing materials wisely, we have built a decent amount of sweat equity. We have 1 major project left, which is the kitchen.

We had originally thought we would hold the house for 4-5 years (4 years is this year), but it will probably be more like 6 or 7 years. That is fine - when we were putting together our plan, we knew that we might be in the house longer than 5 years depending on market conditions. And this gives us longer to do the renovations. We planned to do the kitchen renovation this year, but since there isn't any rush, we have decided to pay off the debt we incured for some of the other renovations and save up for the kitchen to do next year.

I have no doubt that the market will rebound and I think we will be well positioned when it does. We are prepared to ride this out.

Personal debt isn't good when you already can't afford to retire yet and your job seems to be precariously balanced between layoffs and off-shoring (both have impacted my location in the past 6 months). So we have been doggedly paying ours down for a few years, even though we have been traveling. I see light at the end of the tunnel - by this summer I believe! Then - no mortgage, no loans, no car pmts, and c.c. usage I can pay each month and still SAVE$$. That is going to feel good.

I don't believe in debt, and don't believe in taking out car loans, either -- except at a very young age when starting out in life. There isn't any reason someone shouldn't be able to pay for a car without a loan, it's just that most people have it in reverse and save up for the car after buying it (all those monthly car loans) rather than before, and thus end up paying more because of the interest. I have paid cash for every car I've owned except for my first car at age 25.

Some people probably do believe debt is a moral or religious concept (I think I've heard of some religions like that, not sure), but I think that most people who advise people not to go into debt for consumer goods or travel are merely giving advice based on what they think leads to a stable and enjoyable life, that's all. Usually this comes when some people post questions asking whether it's a good idea to blow several thousand dollars when they are right out of school, don't have savings, whatever. I have said no to such questions, it's an opinion -- they asked for it.

PErsonally, I don't care if someone is in debt or not, it doesn't bother me, why should it. It's just advice based on how being in debt can be bad and how it can negatively affect one's life. This comes from experience, and from observing other people I know (friends or relatives ) -- lose their homes, have no credit, be literally sick to their stomach and sleepless for nights on end due to bills and literally being afraid of having no home, not being able to help their kid even modestly with a college education, etc.

I've seen elderly relatives forced to take strangers into their home to help pay the rent, when obviously did not want "roommates" at an old age.

I've seen people who charged modestly for vacations, etc., for most of their life and got by right on the edge, but in old age (after a divorce and with no high-paying job skills) had to move and live in a small, cheap, noisy apt. that they disliked because it was all available at their rent.

YOu may think having debts and being financially irresponsible has no consequences, and is harmless, but that is just not true. None of the things I'm relating are really that extraordinary. Some people don't worry about those things because they have some relatives they assume will bail them out if they are in trouble. I do not, so I don't know what that is like. If you do, I agree, there is not as much potential harm. Some of the things that have happened to close relatives of mine were completely unforeseen, but they were not that statistically unlikely (ie, loss of a husband unexpectedly at age 45).

WTnow

we buy new cars because next door do!

Gsteed

No - "They will you use the interest you pay on that debt to send a daughter to college"

They will use that interest to pay their CEO £40m a year in the case of HSBC (my bank) - HSBC have only ever made money out of me when I travel and use ATMs abroad - the rst of the time I dodge and dive charges - none of my business pay any bank charges.

BTW - was it Saddam's nuclear weapons you feared or indeed Syria's or Iran's?

Travelgourmet - my religious fervour revolves round the fact that I have to bail out the less financially aware out there. The interest I pay on justifiable debt is at a rate that covers the default of those who go out and travel all over the place then realise 18 months down the line that they can't repay the debt.

As I said before - if you can't afford it now then don't spend it.

I agree with the concept "if you can't afford, don't spend it", but I think there are different ways of "affording it".

For some, saving the money up in advance is the way they afford it. They may not go on a trip for a few years while they save up for the next one.

For others, they go on the trip using credit, then not go on a trip for a few more years until they pay it off.

I don't think either way is the "right" way to do it. It depends on the circumstances of the individual people.

Credit has always been a part of the system. The important thing is to not put more on credit than you are able to afford and to have a source of income. Where things go wrong is when people lose their income and/or buy on credit more than they can afford to owe.

If you charge on American Express, you are required to pay in full every month. At least you know the amount you will be paying. No putting it off til next month. And lots of points to convert to miles!

"The interest I pay on justifiable debt is at a rate that covers the default of those who go out and travel all over the place then realise 18 months down the line that they can't repay the debt."

I think you underestimate how lucrative high-risk revolving credit is. 20% interest rates quickly cover any excess risk associated with those that default. You are probably closer to the truth when you blame rapacious management and obscene bank profits.

And, with good credit, one assumes that you are not carrying much revolving debt, in which case you don't have to worry, or are capable of just flipping your credit cards from issuer to issuer. Between introductory rates, frequent flier miles and the like, your net cost should approach zero. At least in the US. I think that the system is less mature in Europe, and the game isn't so easily paid, but I keep hearing wonderful things about the BA Amex...

Sometimes I pay cash and sometimes I charge my travel. For me, travel is a high priority. I don't want to wait until I am old to enjoy myself - why should I, when I get into debt, I pay it off.
Different things work for different people. What is important to one is irrelevant to the next. It's all a matter of personal choice.

I know people who are still waiting until they can afford the "once in a lifetime" trip. The wife was recently diagnosed with terminal cancer that has already spread over most of her organs and lymph nodes. She's 62.

LOL lucygirl...we should all get together in Italy and toast to the non-debt vacation we are taking! I'm always game for meeting a fellow fodorite!

Tracy

Ohhhhh! I like Tracy's idea of meeting in Italy!

Hi lucygirl, I too am always up for meeting another Fodorite as the chances for having a lot in common are really high DH and I are based in Denver if you're ever headed this way!

Tracy... so sorry to have been a bad email correspondent of late. Our annual report filing date is February 22 so I've been really buried in work of late. I hope your German classes are still going well

Something to consider:

I just read a Los Angeles Times report that said the U.S. State Department will reject passport applications from parents who owe more than $2,500 in back child support. Yes, just $2,500, according to the story.

I don't know if there are exceptions for compassionate cases (say, to visit a dying family member back home).

Another good reason to do the right thing, moms and dads ...

Hello Jill! No worries! I assume this must be a busy time of year for you!

The German classes are going well, thank you! I quite enjoy it, although it's much different from the Spanish I took for four years in high school and I find myself occassionally throwing Spanish words into the mix by mistake!

I hope your travel plans to Austria and Italy are going quite well! Did you find an apartment in Rome that you are happy with?

Lucy, I'm in Charlotte so if you ever find yourself out here....

Tracy

To tcreath:

I like reading your trip reports but when you say

" We do travel overseas several times a year…..."

do you mean 3,4,5 times because I went back and I could find only 2 trips per year that you normally do??

I try hard to avoid jumping into a discussion where there are so many who seem so sure (and maybe a little self-righeous?) about a position that is so different from mine.

My parents (who lived through the Depression) were very middle class. And they were very careful about their debts. But they borrowed money every other year to do one thing: travel. From age 2 to age 18, my parents took my sister, brother and me on summer trips, mostly to Washington and Oregon, where my grandma, my uncle and my aunts lived.

Those trips had a fundamental influence on shaping the person I am today. They also allowed me to form life-long family relationships.

Am I glad that my parents borrowed money? What do you think?

Do I spend money I don't have in order to travel? I am a public school teacher in South Dakota. What do you think?

I have no problem with the hard-working, wealthy and/or frugal travelers on the forum who are able to pay cash for their cars, houses and the four or five times they travel every year. Can you pay cash for your $250 per night hotel rooms? Good for you!

I do have a problem with people who seem to imply (if not state outright) that there is something wrong with those who incur debt to travel. If I died today, I'd still owe about $1000 on the trip my wife and I took to Croatia last summer. But I'd be smiling because I've already been to heaven: it's somewhere along the Dalmatian coast.

Here endeth the rant. (I've got to go now. The hotel in Rome that I'm staying at wants my credit card number and if I don't let them have it, they may give the room away.)

My husband and I are still fairly young - I'm 26; he's 31. We bought our house 5 years ago and, being so young, it felt like a real accomplishment. When we bought it, we figured we would "upgrade" after 4 or 5 years, but I think we've decided to stay put. We've put a lot of love and energy into this house and I don't want to start all over again, with a higher mortgage payment. This house is so comfortably within our means that we're choosing to prioritize other things, like travel, over "upgrading" and we've probably built up 40k in home equity.

We've paid off his student loan entirely, although I still have one. It is at a fixed 2.75% rate for the life of the loan (thanks, federal gov't!), so it doesn't bother me to keep that one around for however long until it's paid off. We charge things to our credit cards, sure, even thousands of dollars at times, but I usually pay them off in full each month, or at the most, within 3 months if it's a very large charge. We invest 15% of my husband's pre-tax income into his 401k (I don't work) and have done since he started working at 23 (best decision we ever made, BTW). Our retirement nest egg is now bigger than my parents (who are in their 50s) because I came from a lower middle class family who never managed to save very much.

So overall I would say we're fairly responsible and in a pretty good position, financially speaking. That said, do I hesitate to go into debt in order to travel? Nope. Our first trip to Paris in 2006 was around $3000. We paid it off within a month of returning home and it was worth every penny. It gave us the travel bug that I'm so grateful we got while we are still young and child-free. Last year we spent a month in Europe, a trip which cost us about $11,000. We'd saved a little over half of that before leaving and paid off the rest 3 months after getting back. Absolutely worth it. We'll most likely do the same thing for our 2008 3-week trip.

My feeling is that as long as one can manage one's debts, debt isn't always a bad thing. I don't mind paying interest, as long as it is at a reasonable rate, if it is worth it to me to have what I want now instead of constantly waiting. Interest isn't evil. We're planning for the future but living for today. Life is too short to postpone travelling. Note that I'd be singing a different tune, however, if someone had little disposible income, revolving debts left unpaid, and then wanted to charge an expensive vacation on top of everything else.

Oh, and for all those who say "well what would you do if an emergency happened and you were in credit card debt from a trip?" Where there is a will, there's a way. DH and I were once nearly 10k in credit card debt when we essentially lived on our credit card after he got laid off following 9/11. He got a new job after a couple months, we paid it off, saved for a down payment and bought our house around a year later. We're in a much better position now than we were back then should another emergency happen.

As several people have mentioned, it all depends on how you see debt. I'm about to graduate from college- I have student loan debt that will realistically take me the next 10 years to pay off. I'm NOT sitting around and pinching pennies for the next decade before I let myself travel again. My credit card is paid off and I save specifically for my trips, so in all, it works out ok. Venice is sinking, pollution and environmental effects are destroying many historic sites, and as a previous poster said, life is too short. I don't want to get 30 years down the road and regret all the opportunities that I missed abroad.

Just my 2 cents.

Dionysius, that was more of a generalization, as we usually travel abroad twice between a stardard calendar year. But if you want technicalities...we went to Italy (Rome and Umbria) in March 06, Croatia and surrounding countries in November 06, and Ireland in February 07 (all of which I wrote trip reports for), so technically that was three times within 365 days. We then went to Japan this past October (again, I wrote a trip report on the Asia forum), will be going to Germany in April and are considering Guatemala for October, so again that will be three times within one 365 day period.

There you have it!
Tracy

Dionysius, I just reread my response above and I hope I didn't sound too harsh because if so it wasn't intended.

We average about one overseas trip every four to five months or so starting in 2003. We also take numerous weekend trips and smaller trips closer to home that I don't write trip reports on (such as a summer 07 trip to Montreal and Vermont, our Thanksgiving weekend in Savannah, etc.) and earlier trips abroad before I became a regular on this board. I do love to travel and we do travel as much as we can, but much of this is because we are planning on starting a family in the near future (I hope to get pregnant later on this year) and we want to get some of that "travel bug" out of our system before doing so.

Traveling abroad is definitely expensive, and I've responded to several posts in the past few months stating that I can no longer afford to travel to Europe as often because the airfare has gotten so much more expensive, hence our looking into Guatemala (or other Latin American countries) instead. We used ff miles for Japan and our upcoming trip to Germany, and we always travel during off-peak season because hotels and airfare are usually cheaper....and we don't like crowds so this works out well for us. I just don't like to go into debt to travel so in addition to traveling off season our trips are often shorter than many on this board (most being about a week or less), which allows us time to save up for the next vacation. Okay, that and I can't be away from my job for more than a week at a time or else apparently the office will fall apart...

Sorry if my previous post sounded defensive. I had a pounding headache (luckily it went away!) and posted it without reading it first.

Tracy

tcreath:

Oh my mistake..... I always thought when fodorites are talking about traveling the year, I thought they meant calendar year. I didn't realize some meant fiscal year!!! Oh well.....

< If I died today, I'd still owe

I think that is part of the problem as many of us know people who have died owing money and devastated their loved ones that they left behind. It was so devastating to my FIL that I will never forget that.

People do not think about dying, getting sick, run over by a car or losing their jobs or even the next generation, but as someone else has mentioned we have seen too many people get in way too much trouble because of debt. Most thought it would never happen to them.

Debt really affects all of us.

The debt level in the U.S. is the highest it has EVER been and the savings the lowest and there is a serious problem due to all this debt that will affect us all and generations to come.

Have you looked at the world stock markets lately? Or the foreclosure rates? Or the dollar ( about to weaken more today as rates must be continued to be cut to try and save the stock market from crashing.) The housing downslide has barely begun, nor has the credit crunch.

Growing domestic and international debt
has created the conditions for global economic and financial crises!

America has become less a family-based, frugal society of strong real savings and small government. It has become a more consumptive, more debt-dependent with nil private savings.

I find that very sad and dangerous for us all. People will do whatever they will do, but yeah, I worry when I hear about people going into more debt for travel. I just hope they stay lucky. I hope we all do.

Sorry for my surly post yesterday. I don't know what got into me.

I will say that if I had died last night, no one would have incurred any debt. My financial plan includes provisions for those who survive me.

As far as saving money being good or bad? I do remember Ronald Reagan saying that it was "un-American" to save too much money. He said we should spend. Our consumer economy is based on Americans consuming. And, I'm afraid to say, I do my fair share.

By the way, do you remember the "trickle down theory?" I'm guessing that some of the good people on this board are able to pay cash for cars and trips because they benefited from Reagonomics. Because of my income as a public school teacher, however, there wasn't much that trickled down to me.

I also know that Bush Jr.'s tax rebate plan is premised on the hope that we will all spend it quickly and that we spend it in the US. We should pay off our credit cards or put it in the bank. But neither of those give the economy the quick kick it needs.

I also know enough about the economy to realize that our nation's debt is one of the biggest threats to our future. Was that debt caused by my trip to Eastern Europe last summer? Perhaps a little.

And just for the fun of it, I'll throw out one more thought to see what people think:

If the US economy is threatened by overseas debt and if our trade deficit is potentially harmful to our economy, shouldn't those of us in the US stay home? Should we really be spending our money in Europe? Have you seen everything there is to see in the US? I know I haven't. Come to South Dakota! But don't come today - it's -15 F right now and we're heading for a high of -1.

Dionysius, no problem. Each year changes. Sometimes we travel overseas three times within one calendar year, sometimes two. Most of the time it depends on if we happen to stumble across an awesome airfare or not...as was the case with our $320 flight to Paris and our $300 flight to Ireland, as both of these were spontaneous purchases. So when I say several, I mean 2-3. Unfortunately I don't have the luxury of traveling to Europe more than that...never enough vacation time or money to go around!

Hmmm...not sure what any of this has to do with the original post and my response to it, but since you asked...

Tracy

One could save up money for a year, then use it to take a trip. Or one could take the trip right away, charge it on a credit card, then spend the next year+, paying off the debt plus 20%. Which makes more sense? (And cents?) What's wrong with waiting?

So many Americans carry huge credit card balances. I read about a soldier, about to be shipped to Iraq. He and his wife ran up huge amounts living life while he could. But he survived Iraq and now has these overpowering debts. But what if he had died? His wife would have been hardpressed to pay the debt. She probably would have gone bankrupt.

One could have taken a vacation a year ago, and then paid it off over a year at 3% interest (the typical rate we get) and it would have cost them less than if they saved all year and took it now - because of the drop in the dollar.

I think there is a difference in thought:

1. People incurring more debt than they can pay off.

2. People choosing to charge now and pay later.

3. People choosing to save now and go later.

and

4. People having enough income to be able to never buy anything on credt ever.

The first is bad for anyone. The fourth is a goal that is not realistically attainable by everyone.

The second and third are the choices that I think most of us on this board choose between. There are benefits and disadvantages to both and it's a personal preference on which one we choose.

I do use credit for things. I may not necessarily pay it off each month in full (although I normally do). However, if I died tonight, I would not leave any debt burden on my family. My assets will pay for all of my debt with some to spare.

I'm sort of like you ToedToes, in that I do have some debt, but I know that if I were to meet my maker somewhere traveling one day, my assets would more than cover my debt. I also pay double or triple the minimum each month, and have very low interest rates. I have a great FICA score, and have built an excellent credit profile over many years.

I adore traveling and will continue to do so. I have faith that I can figure out many ways to pay for my trips. I also don't spend money here at home on alot of very expensive things like clothes, cars or trinkets of any kind. So I've kind of pared it down to my traveling life, my art life and my work-to pay-for-it life. About ten years ago I figured out that if I just shuttled back and forth between a desk job and home to write out checks to pay the bills without following my dreams until the last dollar of the mortgage was paid off, I might be too burned out and bleary-eyed to enjoy anything, so I started to balance things out more with traveling, and now I go and owe, then pay the piper more happily.

I admire those who were taught early never to have any debt.

"One could have taken a vacation a year ago, and then paid it off over a year at 3% interest (the typical rate we get) and it would have cost them less than if they saved all year and took it now - because of the drop in the dollar."

And this is an important point. As long as one is disciplined about debt, then it can be a very good tool. A 3% interest rate is likely less than one would earn on even a low-yield investment like a CD. In a case like this, it makes more sense to charge your vacation, and to pay it off over time, even at the minimum level. As I noted earlier, someone with good credit could also contiually flip their accounts, earning whatever sign-on promos might be available, and lower the net rate to less than zero.

Similar arguments could be made for outstanding auto loans, depending upon the rate. Same with many student loans. And a mortgage is likely only a concern if you are underwater, have an abnormally high rate, or cannot realize the full deduction for your mortgage interest. Any debt where the net interest rate is less than what your investments earn is not a huge concern.

There are a lot of ways to use credit wisely, and I think the anti-debt crowd is often blind to those instances where it is the smart money move to not pay off every debt.

<There are a lot of ways to use credit wisely

Sadly, VERY few use credit wisely and many get caught with their pants down. Just look how much trouble banks , investment firms, bond insurers etc are in trouble ....and they are supposedly experts at juggling credit. LOL!

As far as underwater mortgages, more are under today than ever before and again we are only at the very beginning of this cycle, so tons more will soon be underwater. It is a trend that will continue for a long time. Japan's housing bust lasted over 15 years.

I had a friend who was underwater for eleven years, as home prices are sticky and move slowly. Not fun. Too many have used their homes as ATM machines and will have to pay the piper. People who have inherited million dollar homes have lost them out of stupidity with credit.

I can hardly think of a worse time to be credit happy, spending money that one does not have. Many "secure" jobs will disappear. I distinctly remember a friend telling me why it would never happen to her, two weeks before it did in the 2000 recession.

It does not mean that anyone who uses any credit is a fool, but neither does it mean that all those who travel under debt while owing much more debt are making a wise choice.

Most people who get into credit trouble, never think it will happen to them.

< I also don't spend money here at home on alot of very expensive things like clothes, cars or trinkets of any kind.

That is KEY. If one is not wasting money just spending on nonsense ( as so many do) one has plenty of money for travel as travel is not really very expensive.

If one must piddle away money on nonsense, at least sell it once it bores you on ebay or something and fund travel that way.

"Japan's housing bust lasted over 15 years."

Except that the Japanese bust was caused by too little spending and too much savings. I'm not sure you can extrapolate from this experience to predict what any US housing bust will look like, as long as you claim that the US bust is being caused by excessive credit.

<Except that the Japanese bust was caused by too little spending and too much savings.

Sorry, absolutely wrong! Busts always follow booms.

Japan home prices peaked between 1990 and 1991. Prices collapsed after this period, falling back to pre-boom levels. In Tokyo, prices fell by more than 80 percent. Some cities are still experiencing declines to this day and many say a similar pattern will happen here.

Low interest rates, easily obtainable credit and speculative mania helped to fuel the real estate boom in Japan, just like it did here. The fall was hard for Japan, and worse yet, it took a long time for prices to hit bottom.

Just look at other housing booms and busts like the one in Texas, where many affluent just walked away from their homes and you will see a similar pattern.

This one will be worse because there were so many people "buying" homes they could not afford with no money down & mortgage companies and banks selling bad debt in fraudulent packages around the world.

BUT, this is well off the traveling with debt topic...except in boom times, credit is easy and it is easier to have debt, when it becomes bust & recession times one should be even more cautious about debt.

We had planned to take only small, inexpensive long weekend trips this year (like to visit my cousin in Torrance) because of debt. But his family is taking the trip of a lifetime to Europe with his German-born (and speaking) mother for her birthday. Luckily I have an inheritance to fund the trip, which my grandparents would heartily approve, knowing it's been my life-long dream to go to Europe. Since his mother's 70 years old and still mobile, this opportunity may not come again. I don't feel a shred of guilt about this, but ordinarily wouldn't do it with significant debt.

WTnow

dead right - busts always follow booms because generaly people just do not know when to stop!

People have been buying investment property for 4 years now with absoluetly no prospect of getting a good income return from that investment. They have all been salivating at the prospect of more capital growth - sod the economics its going to go up 15% for the next 20 years. Clearly crap.

I just booked to go to the Caribbean and have looked at the set-up the owners of our rental property have - looks great why don't I do it - because they bought the properties 18 years ago when the income generated wasn't hugely different from that received now - except the cost of a similar investment is $3,500,000 the return around $75,000.

Property valuations just don't stack up now - all because we got too greedy.

ps if you lot over there are moaning over debts, exchange rates etc with interest rates at 3% and fuel at 10p a gallon (or what ever it is) - try living in the UK - interest rates are a misnomer, people are starting to run diesel cars off urine (don't try it at home kids)! because of the price of fuel and we have freezers full of bread because wheat is rising at such a rate.

I think a distinction needs to be made between onerous "debt" and big credit card bills. Every month, we receive huge credit card bills .... why? Because we put everything we can on the credit cards to accrue miles. That having been said, we keep our books to account for spending, i.e. we reconcile outgoing and incoming. Every month we pay off the new bill and the following month, we create new ones. If you can manage your debt, if you allow for travel expenses by either saving or earmarking, you have earned the right to enjoy one of life's most rewarding and enriching pleasures, travel.

It depends on the size and cost of your debt. I would not charge an around the world cruise while holding much debt, but life is for enjoying and can be fleeting.
I would not hesitate to travel if it did not add to your debt that you can afford. I would limit travel to economy and no more than once a year if you are charging it.

Since I worked 2 jobs in college, will still have student loans till I'm middle-aged. I'm not waiting around to travel.
I try not to increase my debt with any of the trips I take. I work overtime to make up the difference and pay those trips off in cash. But I figure if I don't pursue something I love and just slave away every day to pay off debt where's the enjoyment in life. I pay all my bills on time so pursuing a passion is my own choice.

uhhhhhh you might not be here on this earth in this life tomorrow....what the ______. Come on now! My sister died of lung cancer last year, never smoked a day in her life! Too many people I know since 2003 have passed...I say enjoy life even if you have debt. Do whatever you can and enjoy it to its fullest. Life is just to short

LAwoman, where do you borrow and pay only 3% interest? Most credit cards charge upwards of 20%.

We use credit cards a lot. But we pay it off monthly.

Mimar, we get many offers at 0 - 6%, from major banks. I expect a lot of US posters do, too.

I see offers of 0 to 6% (meaning 6%, not less than that) and my equity credit line is currently about 6%, but the reality of finding a one year loan at 3% has so far totally eluded me.

I have seen many, many credit card offers at 2.99% interest. Indeed, it seems to be one of the more common of the low-interst come-ons. Others are 0% or 5.99%.

This site lists 117 cards with rates at or below 6%, including 5 between 2.9 and 2.99%. So, I think we can safely say that the OP is likely accurately relating their experience.

http://www.cardtrak.com/cards/categories/low-intro.html

Yes these rates are introductory, but that is why one flips their credit cards. As several of these are mileage earning cards, it is possible to lower the net interest rates to below 0%, if you take advantage of the various bonus point promotions.

"Flipping" credit cards is not a good idea if you're interested in maintaining a high credit score.

Credit report inquiries (including credit card applications) can lower your credit score. Multiple or frequent applications for credit (including credit cards) can have an extremely negative effect on your score, especially around the time you are shopping for major credit for things like car and mortgage loans.

Closing old, paid-off accounts does not help your credit score, and often it can hurt.

If your ratio of credit used to credit available on any account is high, that indicates higher risk and will likely lower your credit score.

cnn.money.com
privacyrights.org

Not too long ago when I increased my Equity Credit Line, the bank officer gave me a copy of my credit report. While it is VERY high, there was a notation that it was lowered slightly due to "excessive" credit requests. I was dumbfounded as I haven't applied for anything in years that would require a credit check. Then it dawned on me. After doing an online survey couple years ago, I was hit with tons -- I'm talking hundreds -- of mortgage loan acceptance letters and emails. This was because the survey was about mortgages, something I didn't even know when I started it. When I got to the amount of my current mortgage, I tried to pass it, since I don't have a mortgage and don't want one, but there was nothing to click for ZERO. The survey blocked on me and I had to go back and randomly click an amount. Obviously due to that survey, dozens or perhaps hundreds of mortgage companies took it upon themselves to check me out and then offer me unwanted mortgages. I'm not worrying about what that did to my credit score since it is still so high, but for someone else, it could be a real issue, and something they didn't even cause.

I was appalled some time ago to discover that our credit score had been reduced (by not just a couple of points) due to two parking tickets that had remained unpaid until the reminder notices (with supplemental fines) had been sent. Oooh. Oh man, time for a pill.

I don't believe you have to go into debt to have a nice vacation. We plan way in advance and save for our trips. We are not rich so we do things to get the best value for our money at home. So we can save it for travel. It amazing how much you can save just by turning off lights in and around your house or by not buying sodas at fast food restaurants. We spend about $6,000 a year on vacation and half of it comes from just not wasting resourses around our house. the rest comes from bonuses we get from our employers. No debt, ever from vacations.

Patrick, I'd heard that was possible, but hadn't seen it myself.

I didn't catch anything on my report, but I know I get a ton of mortgage offers so I'll keep my eyes open.

Hi toedtoes, I do also but I believe (correct me if I am wrong Patrick) the reason the Patrick's credit rating went down a bit as it looked like was he was shopping around for a mortgage (when in fact that was not his intention).

I have been told time and time again that if one receives credit card and mortgage and line of credit offers it does NOT affect one's credit rating unless you are the one that instigated the offer by applying. And unbeknownest to Patrick that is what he was doing when he did that survey.