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Questions to ask yourself if you're thinking of taking a vacation while you're trying to get out of debt
So before you start dreaming of a week lounging on an exotic island, or a weekend in New York City, you need to ask yourself one question: can you really afford to go on vacation if you're attempting to get out of debt?
It's easy to think that you deserve a vacation each year, because we all work hard, and we all need a break from our regular routine once in a while. But having consumer debt means that you've been consistently spending more than you can afford, and adding to your debt by going on vacation is the last thing you need.
1. Would a vacation drain your savings account?
Even if you have debt, you should be putting a little bit of money into an emergency fund every time you get paid. It will give you a cushion to fall back on, and the confidence in knowing you have money to your name.
Having an emergency fund is extremely important, and it should only be used during a true emergency – not to fund your latest vacation idea. If going on vacation would cause you to completely drain your savings account, you can't afford to go.
2. Would a vacation delay your debt repayment plan?
If you're in consumer debt, you most likely got there by not having enough savings in the bank to get you through a tough situation, or spending more than you could afford. It's possible you're still paying off your vacation from two years ago!
Consider the impact of what a vacation right now would do to your debt repayment plan. You likely would not be able to become debt-free within the same timeframe that you set for yourself if you intend on adding to your debt by spending more than you can afford on a vacation.
If you've received a tax refund, birthday money or a small inheritance, and were planning on using those funds to pay for your vacation, put that money towards your consumer debt instead. This will relieve more stress than a week on a beach ever could.
Page 1 of 2 -- Is your vacation money better put towards your debt? Find out on page 2.3. Is the money better put towards your debt?
If you've been able to squeeze your pay cheques for extra cash to set aside for your vacation, yet you have no emergency fund, and you've never contributed to an RRSP, perhaps your vacation money is better off staying in the bank.
Having consumer debt is an indication that you have been spending more than you can afford, and continuing the trend by going on vacation will only hurt your chances of financial recovery.
Even though it might seem hard to wait a few more years to go on the vacation of your dreams, it may be the right thing for you to do – and it will motivate you to work even harder to get out of debt as fast as you can and start saving money.
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