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Do you save first, then travel, or travel and go into debt?

Do you save first, then travel, or travel and go into debt?

Mar 24th, 2004, 04:40 PM
Join Date: Jan 2003
Posts: 1,739
While we have a great respect for credit and have never been in debt over our heads, we will most definitely use SOME credit to facilitate a trip!

If all other systems are a go, meaning the time and opportunity are available, we go. We have reserves to draw upon if necessary but prefer getting FF points and paying off the balance within 1-2 months.

IMO, its more than worth it. We can't afford NOT to travel - children grow up, time passes quickly and life is short!
ellen_griswold is offline  
Mar 24th, 2004, 07:26 PM
Join Date: Jan 2003
Posts: 2,558
I'm with you, Ellen. My parents scrimped and saved all their lives, went hardly anywhere, and when they got ill, all their money, savings and house proceeds went toward the nursing home. When our boys were college age, we borrowed $10,000 against our IRA's and took them on a six week tour of Europe. (It's paid back now of course.) Foolish? Perhaps. But I wouldn't trade that time and those memories for anything.
Maggi is offline  
Mar 24th, 2004, 07:30 PM
Join Date: Aug 2003
Posts: 490

I also loved "The Millionaire Next Door!" That should be required high school reading!

I didn't think I gave the impression that I wasn't saving. We each (DW and I) pay ourselves first - fully funding Roth IRAs, then the 401(k), and have a money market account with checkwriting for the emergency fund. We budget each month. Church gets their share first, then the ONE ugly debt (mortgage), and everything else gets its own envelope. For example, say we budgeted $250 this month for restaurants/eating out. Once that money is gone, we don't eat out any more. It's a beautiful system, and works great for us. Right now, we're packing away for my truck - should only be a couple of months away from being a fully funded truck fund.

Anyway, off the soapbox. Speaking of travel that's paid for, our next trip is already paid! We're taking a hiking trip to the LeConte Lodge (Smoky Mountains) in late May...we can't wait to go, although the DW will be about 7 months pregnant by then. We might have to cancel, but so far, her doctor says we can go (we're pretty active and she's in good shape). If not this year, junior will just have to backpack it up there with us next year!
bmillersc is offline  
Mar 24th, 2004, 08:08 PM
Join Date: Jul 2003
Posts: 3,854
Gosh Tansy, I sure fantasize about
"yeah, let's just do it and CC it"
It's so fun to get more and more
specific on that Cook Island tour-and then.....
the TV gives up life,
we have a zillion dollar leak (and
drywall and paint ),
the frig is sounding better/worse/better/worse,
a cat needs an ultrasound,
a shopping cart screams downhill into
a car,
I dislike debt so....some of daily life
comes out of the vacation fund when daily life scrunches itself into
3 years worth.
Short story-cash or pass.
razzledazzle is offline  
Mar 25th, 2004, 02:36 AM
Join Date: Oct 2003
Posts: 57,890
I guess you could say a little of both. I always organize my tax deductions so I get a reasonable refund on my federal income taxes - $3,000/$4,000 or so that I use as a base for a major vacation (forced savings). The rest of the cost comes from current income - although I frequently spread payment of credit card bill over 2 months (I guess this counts as debt) rather than paying in one. Dining and daily expenses for the trip I don;t really count - after all if you're at home you have to eat anyway (we almost always eat out or order in) - and I'd rather spend walking around money on museums etc than on bridge tolls and dry cleaning for work. Funds for smaller trips just take come out of current income (walking around money one month and credit card payments the next).

The original poster's info on an average of $10,000 in debt is really interesting considering interest rates. (And I think a lot of these people are buying stuff they really need - the number of people I see using a credit card vs a debit card to pay for groceries is really alarming.) But what I find much more shocking is info that the average 50 year old only has about $40,000 saved towards retirement - whatever will these people live on?
nytraveler is offline  
Mar 25th, 2004, 10:10 AM
Join Date: Jun 2003
Posts: 93
I'm just so thankful that credit card companies hadn't started aggressively targeting college students when I was in school -- you can do SO much damage to your credit in a short amount of time! I hear about 20-somethings declaring bankruptcy and I need a cocktail like Mrs. Kal!
DebbieAllen is offline  
Mar 25th, 2004, 10:21 AM
Join Date: Jan 2003
Posts: 12,914
I use my credit card for grocery purchases. There's nothing alarming about it. I get double FF miles for it so why use cash/debit card?

My mortgage is the only debt I carry. I don't even like the idea of paying interest on a car and definitely not on travel. I do however put everything I can on credit/charge cards (even everyday expenses) so that I can earn miles for it, then pay it in full when I receive the statement. I don't charge anything that I don't have the cash to pay for. To me it's just more advantageous to use cc's. Aside from the convenience and mileage earning opportunities, you get some consumer protection that's not available with cash or debit cards.
Patty is offline  
Mar 25th, 2004, 10:27 AM
Join Date: Jan 2003
Posts: 508
I question the intelligence of anyone who travels themselves into debt. Not a good idea. So yes,I pay cash for travel. I think the only rerason I have a CC is that it seems you cant do much without one as far as renting a car,airline tickets online,etc.

Cash is king and debt is financial murder as far as I"m concerned. The only time I will borrow money or go into debt is if it is tax deductable.
doc_ is offline  
Mar 25th, 2004, 10:44 AM
Join Date: Jun 2003
Posts: 93
Patty, that's a good point about the protection you get from a CC as opposed to a debit card. A co-worker learned the hard way when unauthorized charges were made with his debit card number -- the bank does not cover those charges, he was liable. I checked my own debit card afterwards and found out that I had minimal protection on my debit card in case of fraud. Carrying CCs when I travel makes me feel more secure since that is a common time to have your # stolen. Always keep your receipts, don't throw them away when traveling!
DebbieAllen is offline  
Mar 25th, 2004, 11:10 AM
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That's the reason I don't carry a debit card anymore and opted for an ATM only card instead. I never used the Visa/Mastercard feature and it just seemed like an unnecessary risk since the funds come directly out of your bank account.
Patty is offline  
Mar 25th, 2004, 05:24 PM
Join Date: Feb 2003
Posts: 255
I know there has to be people on this forum who use the credit cards for trips. I know the temptation myself. I like using one of mine for the ff miles. Sometimes people look at the card as free money which it's not. I know some people who whip out the credit card in a minute for a vacation and say you only live once. Who knows what tomorrow may hold.
Janny is offline  
Mar 25th, 2004, 05:42 PM
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Janny: One thing we *know* tomorrow will hold is a credit card statement showing up in our mailbox. I don't know how anyone could enjoy a vacation knowing they'll be paying interest on every dollar spent on it.
fdecarlo is offline  
Mar 25th, 2004, 05:51 PM
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Like others, I use my credit card for almost everything. I get the ff miles and pay it off monthly. We no longer have a mortgage - here in Canada, you can't claim the interest on your income tax (which I think you can in the US), so for us a major goal was to pay off the mortgage. It took us just over 11 years and I was thrilled when it was over! Our car is paid for. We do have a small amount owing on our line of credit and it really bothers me. We do have a big trip planned - we're going to Australia to visit my mother-in-law, and it's lot more than our usual trips. I carefully figured out what we'd need and made sure that we'd have the money in the bank. However, just after we finalized those trip plans, we had a few problems in the house - several of our appliances all died at once. So much for the budget!

However, we can't do a lot about the trip- my mother-in-law is quite old now and we feel it's time to visit. I also remember what my father said - he and my mother worked and saved all their lives with the hope that they could enjoy their old age. My mother died 6 months ago - she had been ill for years and spend the last 8 years of her life in a nursing home. They both regretted that they weren't able to have the life they had always thought they'd have. I am very careful with my money, but I also don't want to have regrets.
SusanInToronto is offline  
Mar 25th, 2004, 06:59 PM
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Posts: 274
SusaninToronto, I like your last sentence! We are also very careful with our money but want NO regrets! Money is NOT our first priority!

Thankfully, we have very little debt. However we've used credit for *necessities* and will continue. Vacationing with our family is a necessity.

*** Ask yourself this: What price do YOU put on vacations with your family? The cost of living means we're constantly paying lots of people, businesses and organizations for lots of things less important than traveling. Paying the Bank to use a LITTLE of their money is a SMALL price to pay for vacation memories and closeness, especially when its payed back right away! ***

As another poster said, time waits for no man. I'll likely die with more memories than money but absoltely NO regrets!
audra is offline  
Mar 25th, 2004, 10:00 PM
Join Date: Mar 2004
Posts: 42
Sounds like some of you think credit card use and responsible spending are mutually exclusive...

I use my two credit cards because I get CASH back (based on annual usage), it is safer than carrying wads of class, you have merchant protections, I get a record of purchases, rental cars and reservations are difficult without CCs, and I find I don't waste money on small impulse purchases when I use a CC. I have an ATM card for times when I need some cash, but would hate to get on a trip and run out of money due to computer problems or a lost card.

The thing is, I'm not going "into debt" with my CC as I have the money in the bank to pay off the bill each month.

In 25+ years, I've never paid a finance charge, late fee or annual fee on a credit card. To me that would be stupid.
got2travel2 is offline  
Mar 25th, 2004, 11:37 PM
Join Date: Jun 2003
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It's quite silly to go into debt to travel, unless there is a compelling life reason (such as you want to take a last trip with a terminally ill family member).

If you just save for a little bit longer, you will avoid the huge interest charges that would otherwise arise, and you will be able to afford more and better trips than you would if you put them on credit.

Using a credit card and paying it off monthly is an easy and sensible way to manage and organize finances, in my opinion.
WillTravel is offline  
Mar 26th, 2004, 01:55 AM
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Patty -

Becasue the vast majority of people do not pay their entire CC bills each month - and therefore pay interest on every purchase from the day they make it. I'm sure most people paying with a CC in the supermarket (as everywhere else) are in this group - so they're paying 12 or 15 or up to 21% interest on their groceries - imagine the cost of that over a year!
nytraveler is offline  
Mar 26th, 2004, 06:29 AM
Join Date: Mar 2004
Posts: 102
I think it is a personal preference...I hate the idea of debt and with a house and cars...etc. it is enough for me..I don't let myself go into credit card dept...however, if it is something that works for you..go for it.
Baligirl is offline  
Mar 26th, 2004, 06:49 AM
Join Date: Jan 2003
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I am like DebbieAllen and some of the others - I use my credit cards to pay for things, but I always pay them off when they are due - whether it be travel expenses or other. So I guess that means I save up first.

Travel is the big "extra" I spend my money on. I "pay" myself first: I save the max allowed into my 401K, I have money sent directly to my brokerage account that is used for investing and from which I have never withdrawn money. Then I put extra money into my savings account each pay period. I have off-limits money in there - but any money above that $ amount is what I consider to be my "extra" money - for travel or other big purchases.

My parents are very debt-averse, and I learned from them. I have a mortgage that I pay by myself, and a car payment, but that's it.

kaudrey is offline  
Mar 26th, 2004, 06:54 AM
Join Date: Feb 2003
Posts: 184
We put money into a vacation account every month. We also put any "extra" money into it - bonus, tax refund, unexpected freelance work. I don't think I would enjoy myself as much on vacation if I thought I would spend months paying it off.

I also wanted to second Patty's warning. I always use a credit card, not debit, for hotels and airlines (and to order anything off the internet or catalogs). My debit card does not offer any way to dispute a charge if I have a problem.

One other comment about debit cards. If I use my card as a credit card (sign the slip instead of entering a pin number), I get a cash back bonus. If I use it as a debit, I do not. I would never have known this if I didn't have a friend who works as my bank. That's why I look like I'm charging groceries.
buttercup is offline  

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