It is not uncommon for people to find themselves dealing with summer travel expenses long after the season has ended. According to a recent survey by Bankrate, 36% of Americans admitted that they plan to take on debt in order to fund their summer vacations. The survey revealed that the payment methods for summer travel varied, with some opting for personal loans, buy now pay later services, borrowing from family and friends, or simply using a credit card and paying over multiple billing cycles. This trend is concerning, especially considering that the average credit card interest rate is close to a record high at over 20%.
Millennials and Gen Zs are the demographic cohorts most likely to go into debt in order to finance their summer trips. This could be attributed to various reasons, including the desire to create lasting memories for themselves and their families. Clinical psychologist Sabrina Romanoff explains that many parents are willing to go into debt to fulfill their children’s dreams, such as visiting Disney World, as they see it as a valuable and irreplaceable experience. However, financial experts caution against this approach and emphasize the importance of planning ahead and budgeting for vacation expenses.
Romanoff recommends setting a budget for different categories of spending while traveling, such as food, activities, and transportation. By allocating funds to different areas and allowing for some splurging while being conservative in others, travelers can strike a balance between enjoying their vacation and being financially responsible. For example, opting to stay in an Airbnb and cook meals to save on food costs, while splurging on a special excursion, can be a practical compromise.
Once a budget is established, the next step is to create a plan for saving. Romanoff suggests starting small by setting aside a portion of each paycheck specifically for travel expenses. In addition to traditional saving methods, individuals can explore creative ways to save money and maximize their travel experiences. This could include taking advantage of frequent flier miles and credit card rewards, as well as planning trips during off-peak times when prices are typically lower. By being flexible with travel dates and destinations, travelers can make the most of their budget and avoid going into unnecessary debt for the sake of a vacation.
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