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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 26th, 2004, 07:59 AM
Join Date: Feb 2004
Posts: 318
I can't understand going into debt for travel. Travel is a non-essential expense in my view. If you can't afford to pay it off now, you shouldn't be traveling. When I was younger and with much less money, vacation was a long weekend somewhere I could drive to.

As for credit cards, we use them every chance we can...travel, gasoline, groceries, dinners out, etc. I recently went so far as to change dry cleaners because the one I was using always had a broken credit card reader. If I could pay my rent (soon to be mortgage) with a credit card, I would. They are paid off in full each month because most everything we put on them, including the dry cleaning, is part of our budget. We carry only cards that award frequent flyer miles or hotel points with the exception of our AAA VISA card which is used exclusively for gas purchases yielding 5% back on every purchase.
MileKing is offline  
Mar 26th, 2004, 08:08 AM
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This is a honest reply from someone who is in extreme debt and planning to file bankruptcy. I am 27 years old and my credit rating is horrible. Now to answer the OP's question, I have in the past gone into further debt using credit cards. I started college when I was 17 and by the time I was 18, I had 14 credit cards and 4 gas cards. I took several road trips with friends and paid for everything with my credit cards.

By the time I was 23, my credit was so bad that I have not bothered to apply for any type of credit for the past 4 years. I was currently advised that I should file bankruptcy. I want to make everyone aware that these credit cards give huge limits to kids. When I was 18, I had a Citibank with a $7000 limit.

So my answer to your question is I think a lot of young people with credit, use credit cards to fund spring breaks and summer vacations.
mercedes355 is offline  
Mar 26th, 2004, 08:55 AM
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I would strongly recommend you seek further counsel before filing for bankruptcy. It will ride your credit report for seven years. I don't know your situation, but you probably could work it out on your own without having to file.

I agree with MileKing on one aspect...travel is certainly not a necessity for living (I know most of us would like to think it is, though), when compared to the REAL necessities of food, clothing, and shelter.
bmillersc is offline  
Mar 26th, 2004, 08:56 AM
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I forgot to mention. Go to www.daveramsey.com for some solid financial advice. Call him this afternoon on his show - 888-825-5225 from 2-5 p.m. EST. He can help you work through this!
bmillersc is offline  
Mar 26th, 2004, 05:43 PM
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Hi Tansy! I pretty much do what you do. Save some, charge some, pay off some before, pay some when I get home. I don't have any strict rules for myself. I'm on a mission (and between car payments and orthodontic payments!)to show my 12 year-old son as much of this world as I humanly possibly can. We both LOVE to travel, so it's a high priority for us! I spend a lot of time researching for possible trips, reading, surfing the web, you name it. While I'm researching, I get as financially poised as possible to buy airline tickets, and by that I mean jamming $$ onto the CC, so when I see a great deal I can jump on it. Then I do the lodging etc., also on a CC and pay it off usually before we go. Put a chunk of cash on the CC for spending,
and we're off! I don't let my debt get out of hand and I don't let owing some money get in my way of a potentially great experience. Just my MO
Morgansmom is offline  
Mar 26th, 2004, 06:45 PM
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If I'm sure of our plans, booking airfare and hotels rooms (on the prepaid sites such as Priceline) is fine with me. As we're both over 50, I generally buy trip insurance (Travelguard for the airline tickets, through Priceline while booking for the hotel room), though so far, thankfully, we've never needed it. Even so, it's cheap for the benefits.

Then, I pay both of those off as quickly as possible, usually before the departure date.

While traveling, the dining and shopping goes on the debit/credit cards. No way I want to pay interest on meals consumed previously, so I pay those charges immediately upon receiving the bill when we've returned home.

As for saving, I have my paycheck on direct deposit with 10% going to my savings account. Those funds get transferred, now and again, to the checking account to pay the credit card charges.

I always "clear up" one trip before the next.

And, I always consider what I can do without in favor of another trip, such as a new couch or new refrigerator.

The "once in a lifetime" trips, we do with either our income tax return or our annual bonuses from work. Or, pay it off as quickly as possible, before planning another endeavor.

The interest rates on credit card balance are ridiculous. If I had any substantial balances (which I don't), I'd go for a home equity line of credit/loan with a significantly more favorable rate that the credit cards.

There's really no point in taking a HUGE trip then "worry about it when we get home". You know, once you go, then you've been. And, if paying for it afterward significantly puts your finances out of balance, well, why would you want to do that?
djkbooks is offline  
Mar 26th, 2004, 06:50 PM
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There is another way. Travel and not go into debt.
dixon is offline  
Mar 28th, 2004, 04:04 PM
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I agree with Morgansmom. We have retirement savings and most of our kids through college and a manageable mortgage. We pay some of our travel through savings and some with CCs. Sometimes we pay them off every month and sometimes we don't. This country's economy would come to a screeching halt without debt. Companies could not start up, consumer spending would drop, etc. Some people are more comfortable than others with debt. To each his own. My father always says "I might get hit by a bus tomorrow". I would not want to miss a single second of my life to save for some possible future catastrophe.
shaz60 is offline  
Jun 1st, 2004, 03:43 PM
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We do
Janny is offline  
Jun 1st, 2004, 06:55 PM
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This is a very touchy subject because it is based not so much on money, but how you see life...

My parents raised my brother and I with the best they could afford. They worked hard and they enjoyed life as well. My father retired early due to an injury and my mother continued to work. While they took some vacations, they were looking forward to my mother retiring at 65 and they were going to go "everywhere". My dad passed away 3 years ago at 64. All his bills were paid, owned his home, had a ton of money in the bank waiting for retirement. My mother still works because she cannot think of what would have been. My fathers medical bills were over 1 million dollars (health insurance). A bed at sloan kettering costs more than a suite at the Four Seasons per night. Enjoy your life, be a good person, take in the beauty around you - you only live once.

I am not saying spend foolishly, but if you have it - enjoy it.

What we do is we have a travel account, which I add to weekly. I put everything on our Amex Plat card (points, baby!) and pay it off with travel account $$. We also carry a visa debit card, which comes right out of the checking account, not every place takes Amex either. I also pay off as much before hand as I can. Sometimes we carry lots of cash, sometimes not..depending on the destination. I guess we are lucky..we don't have any children (which saves a lot of $$) and our only debt is our car leases. We own our home, and have no CC debt.
Annabel is offline  
Jun 1st, 2004, 10:09 PM
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Never ever charge anything on your credit card which you don't already have money in your bank account to pay for. This is what we're teaching our kids. This is how we live.

Think of your credit card as a check-book, and don't bounce any checks!

There's nothing wrong with having a credit card. But it IS a mistake to ever buy anything which you can't afford.

If you're buying things with your credit card which you couldn't otherwise afford, and you have kids, they will pick up this habit as well. My parents didn't have much money, but they always paid off their credit card as soon as the bill came, 100 percent. The same for my husband's parents. We do the same, and are teaching our kids the same good habits.

Also, it is a good idea to have 2 credit cards...NOT 12 credit cards. 12 credit card bills are too hard to keep track of. 2 is plenty.

Jun 3rd, 2004, 01:22 PM
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I have to confess that I am in debt because of travel. I am ashamed. I never used to be like this. But for whatever reason (depression, stress, avoidance) I have used vacations as panaceas for deeper issues. I am now carrying about $15,000 in debt -- all because of trips. And it's because I had to stay top of the line. So many people on these boards try to outdo each other.
Credit is too easy sometimes. But I have to take responsibility.

Please, don't go into debt.
Jun 3rd, 2004, 03:30 PM
Join Date: Feb 2004
Posts: 35
I confess. Yes I've charged vacation before. We needed a quick fix. It's sooo easy. I'm sure 90% of the people on this board carry credit card debt due to vacations. I'm even including those 5 star restaurants, tours, shows, souvenirs, car rental, you name it. America isn't in debt for nothing. When I'm on vacation I constantly see people whipping out the charge card. At least I do earn frequent flyer miles on mine.
cupcake is offline  
Jun 3rd, 2004, 03:58 PM
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If you go into debt for vacations, ultimately you cannot take as many, because each vacation will end up costing a lot more than if it had been paid for at the time. Credit card usage is fine, but I avoid carrying a balance!
WillTravel is offline  
Jun 5th, 2004, 07:41 AM
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People whipping credit cards out on vacation means nothing. None of us are with others when they pay their bills. For a lot of people, the minute the credit card statement comes in the mail, the bill is paid. For others, a balance is carried. Only the individual doing the charging knows which is true for them.

My entire approach to spending money on anything is to first block out the Voices of Other People from your head. It's amazing to me the things other people insist at times you "must" do. I have this happen to me every year around vacation time. There's always someone telling me how I "must" add on an additional expense to my vacation. I've learned to block out these voices because they're not paying the bills (nor have they offered me cash up front to undertake these "must" dos). Alas, for some, these voices have them spending money they don't have.
Cats_Do_Dance is offline  
Jun 5th, 2004, 07:54 AM
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jacketwatch is online now  
Mar 3rd, 2005, 05:22 AM
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Interesting thread.
Inspiring thread.
Especially maggi's.
We have done a little of both depending on the time, opportunity and how quickly we can pay it back.
I agree with many others here.
Bottom line, I've learned that time is more valuable than money and no one knows about elusive tomorrow, which may never come.
So if we can go, we usually do.
Happy travels all.
wanderluster is offline  
Mar 3rd, 2005, 05:54 AM
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Whether you use a credit card or not, you realize that you're PAYING as though you are using a credit card. Credit card issuers charge a merchant between 1.5% and 3% of the sales total everytime someone uses their card. So, when a retailer is determining their product prices - one of the costs that gets factored in is the fee to credit card issuers on that product.

I rarely use cash. If I'm paying the cost of using a credit card, even when I'm not, I'm going to use my credit card and at least get something back from a rewards program.

The other benefit of using a card is that you continue to accrue the interest benefits from keeping your cash in YOUR money market fund, rather than the retailers account. Honestly, with the ease of moving money from interest bearing accounts at a brokerage firm or a bank to a regular checking account, paying my AMEX once a month is far easier, and more profitable, than hitting the ATM frequently.
Ryan is offline  
Jun 16th, 2005, 04:36 PM
Join Date: Jun 2005
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What if everything we bought had to be paid in cash at the time of purchase? I think that would actually bring down the price of things, because credit causes prices to rise. On the practical side, I use credit cards so I don't have to carry cash. But really, how much would a house cost if there weren't 30 year loans?
Montana44 is offline  
Jun 16th, 2005, 05:41 PM
Join Date: Jan 2003
Posts: 2,558
I'm surprised this old thread came up again, but since we're on the subject and since I wrote last I have something else to add. By using my frequent flyer credit card and charging everything I could, instead of using cash, we have flown free to Hawaii twice (once was even first class) and to St. John once. I estimate we have spent at least $11,500 if we would have purchased these tickets.
Maggi is offline  

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