Travel debt
Jan 29th, 2008, 09:35 AM
#63
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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.
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.
Jan 29th, 2008, 09:55 AM
#64
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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
I am tightening the Hermes belt, sweetie darling.
Thingorjus
Jan 29th, 2008, 10:08 AM
#65
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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
Tracy
Jan 29th, 2008, 10:19 AM
#66
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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.
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.
Jan 29th, 2008, 10:31 AM
#67
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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!
Jan 29th, 2008, 10:48 AM
#68
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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!
Jan 29th, 2008, 11:02 AM
#69
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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.
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.
Jan 29th, 2008, 11:12 AM
#71
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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.
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.
Jan 29th, 2008, 11:29 AM
#72
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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.
Jan 29th, 2008, 11:32 AM
#73
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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).
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).
Jan 29th, 2008, 11:33 AM
#74
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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.
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.
Jan 29th, 2008, 12:12 PM
#75
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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.
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.
Jan 29th, 2008, 12:23 PM
#76
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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!
Jan 29th, 2008, 12:29 PM
#77
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"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...
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...
Jan 29th, 2008, 12:29 PM
#78
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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.
Different things work for different people. What is important to one is irrelevant to the next. It's all a matter of personal choice.
Jan 29th, 2008, 12:34 PM
#79
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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.
I'm always game for meeting a fellow fodorite! 
