Say No to Temptation: 5 Life Events You Should Not Go Into Debt For

A groom kisses the hand of his bride during their wedding reception.
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You know those once-in-a-lifetime moments you can’t put a price on?

Hey, I’m as sentimental as the next person, but big life events shouldn’t sink your finances.

So despite the hype, here are five life moments you shouldn’t go into debt for — and ways to avoid spending beyond your means.

Five Life Events You Should Not Go Into Debt For

You’ll never get this time back again, so don’t worry about the money — said every person who ever gave bad financial advice.

Big moments in your life should be special, but not at the expense of your financial future. Here are five that shouldn’t land you in debt.

1. Your Wedding Day

You’re engaged? Congratulations!

Plenty of people have dreamed since they were kids about their wedding day, so we’re not going to tell you to ditch the big wedding and elope.

But considering the national average cost of a wedding was just shy of $34,000 according to a 2018 study by The Knot, you could be paying off that special day for years — or decades.

Pro Tip

Decide with your fiance the top three priorities for your wedding. Establishing what’s worth splurging on will help you create a budget reflective of what you really want your wedding to be like.

Rather than starting your new life as a married couple digging out of debt, why not make your happily ever last long after the reception?

You can start with a wedding budget. It might not sound romantic, but look at it this way: You can put every dollar you save on the wedding toward the honeymoon — or even a home.

And we have plenty of ways to save money on your wedding — without anyone realizing you cut some corners or skipped a few traditions.

2. A Vacation

Vacations are supposed to help you unwind and relax.

You know what’s not relaxing? Coming back from a trip to a pile of credit card debt.

If your vacation photos are tinged with regret — “Why did I go to that overpriced hotel brunch every day?” — consider making a plan to save for your trip before you ever leave home.

Pro Tip

One way to save: a sinking fund. Divide the estimated total cost of your vacation by the number of months left until you leave. That’s how much money you need to set aside every month.

We have plenty of ways to keep money in your pocket, from booking the cheapest day to fly to saving money on food when traveling. We even have ways to make money when you travel.

And what could be more relaxing than coming back from vacation with extra money to spend… on the next trip?

3. Your Kid’s College Tuition

As a parent, you probably want to give your kid the best chance to succeed (if not, maybe you should have gotten a cat instead).

The gift of college tuition may be tempting, particularly given the current $1.5 trillion in student loan debt hanging over Americans’ heads. But taking on student loan debt as a parent is definitely not in your best interest.

If you take out a Parent Plus Loan, you’re legally responsible for repayment and cannot transfer the loan to your child.

If you haven’t heard it already, here’s the advice from financial experts: Your kids can take out loans to go to college; you can’t take out loans to retire.

And in the long run, your kids will more than likely get a better deal on student loans than you will as a parent. That’s because compared to federal loans taken out by students, Direct Plus Loans for parents have higher interest rates and are much more restrictive when it comes to repayment and forgiveness options.

We have plenty of strategies for your kids to pay off student loans. If you really want to help, you can chip in on the payments until they can cover the costs themselves.

4. The Holidays

Here’s a little secret about Christmas you may or may not know: It comes every year. Shocker, right?

OK, all kidding aside, the holidays can trigger those special treasured memories of family traditions and a tree surrounded by presents.

However, all the parties and presents can really take a toll on your bank account, and spending yourself into debt isn’t what makes the holidays special — or at least it shouldn’t be.

But we get it. You still want to give the kiddos in your life that unforgettable moment of unwrapping the perfect present. So why not start a new tradition: the four-gift rule. You can still enjoy the joy of seeing your kids’ face light up, but you won’t bust Santa’s budget with lots of items they’ll forget a half hour later.

And don’t set spending limits on only the ho-ho-holidays. Consider cheap dates for Valentine’s Day, DIY Easter treats and birthday freebies.

The point is, there’s no reason every holiday should leave you digging out of debt afterward.

5. A New Car

Even though the financial experts might advise it, it may be a bit unrealistic to suggest none of us should go into debt when buying a car.

Unless you have an extra $30,000 or so, (the average price for a mid-size car was $27,968 in October 2019, according to Kelley Blue Book) you probably can’t pay cash for your next vehicle.

But going into debt to buy a brand new car? Not so fast there, motorhead.

It’s not just that new cars are more expensive — they also in general lose 23.5% of their retail value after a year and about 60% in the first five years, according to Edmunds.

So if you pay $40,000 for a brand new car, it will be worth about $30,600 after the first year — and $16,000 after five years. Ouch.

And if you think the solution is simply to take out a longer car loan, you’re not alone. For new passenger vehicles, the number of new loans between 85 and 96 months increased 38% in the first quarter of 2019 compared with the same period in 2018, according to Experian.

By extending loans to seven or eight years, dealers can get you in a car for a lower monthly payment — but you’ll be paying a bundle more in interest.

How much more? Compare:

If you pay $30,000 for a car and take out a 60-month loan at 5%, you’ll pay $3,968 in interest on that amount. But if you take out a 96-month loan at the same rate, you’ll pay $6,461 in interest — almost $2,500 more.

We have plenty of tips for avoiding auto loan debt, but one of the best ways is to avoid the allure of the new car smell and stick to your budget.

The best reward of staying within your means could result in your biggest life event of all: becoming debt free.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.