Sunday, June 3, 2012

Budgeting for Travel Expenses

Now that school is out for the summer you may have a summer vacation planned. If you don’t and do not think you can afford to get away, you may consider a staycation. More people are taking time off and exploring destinations closer to home instead of traveling to other places.

If you are planning a winter vacation, now is the time to start making plans so you will know what it will cost and can budget for it.

On a recent airing of the Suze Orman Show one of the guests has $40,000 of student loan debt that she didn’t need to take out. Her parents had paid for the first 4 years of college costs. When she was going for her Masters degree, she took out $40,000 of student loans to travel and buy things she didn’t necessarily need. Many college students take out more in student loans than they really need, not realizing that it will cost them more in the future to pay off the debt.

The same night, on Princess, the subject was about a college student who had just returned from a 6 month trip to various countries which was paid by her parents. Her parents had paid for the trip, spending money and college costs, but in the process had jeopardized their future and the ability to help out their other children with college costs. Now after returning, she was only working a few hours a week, because she says she can’t handle the stress of working 40 hours a week. She was earning about $6,000 a year gross, but they figured the way she is spending money, she would need to earn $56,000 a year.

Many people think they need to take the opportunities to travel when they are younger. That is fine if you can afford it. But not, if you are spending money now that will jeopardize your way of life in the future.

I just returned from a week cruise to Alaska. By watching my expenses and spending throughout the year, I was able to have the trip paid for before I left. As Dave Ramsey says, “Don’t let your vacation follow you home”. When you charge your vacation costs that take months or years to pay off, you are reminded of the debt each month.

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