Average Vacation Ends With $1,108 of Debt (and It’s Totally Avoidable)
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I just got back from a 10-day stretch in Europe — and let me tell ya, it was expensive.
Something about being on vacation throws the frugal side of me completely out the window. I realized this while I chugged a 60-euro ($66.89) bottle of Champagne in front of the Eiffel Tower one afternoon like it was nothing (worth it!!!!).
The good news is, I saved for my trip. Expensive wine, late nights out and a spontaneous day in Amsterdam didn’t throw me into a financial hole.
However, that isn’t the case for most Americans.
A new survey revealed that many Americans are hurling themselves into debt to pay for vacations.
Why Do People Go Into Debt for Vacation?
LearnVest, a personal finance planning company, recently revealed new findings from its Money Habits and Confessions Survey, in which 1,000 adults in the U.S. were polled between May 17 and May 23 about their money habits.
In the survey, 32% of respondents said saving for vacations is a financial priority, but less than half of them actually account for vacations in their annual budgets.
This lack of planning may explain why 74% of respondents say they’ve gone into debt to pay for a vacation. The average respondent's debt for a trip was $1,108.
Aside from the lack of vacation planning, LearnVest suggests additional reasons why people come home with debt, such as:
- Falling for flash airfare sales. Flash airfare sales sound great, but it’s easy to jump at them without having the money available. Can you really afford that cheap ticket, or are you buying it just because it looks like a good deal? I won’t lie — I think I look up tickets back to Europe almost every day. There are multiple times when I’ve seen an extremely low price and wanted to pull the trigger, but I’ve grown to always think twice.
- Buying plane tickets with a credit card. Putting a pricy airline ticket on a credit card is one of the fastest ways to pay way too much for it in the end. You may tell yourself, “Oh, I don’t have the money now, but I’ll just pay it off in a few months!” The truth is, you’ll end up paying for the ticket plus whatever interest it may incur. Don’t do it!
Some Good News (I Think?)
We may not be saving enough to go on vacation, but we are at least taking small steps in the right direction when it comes to prepping for one.
The survey shows that people are doing a few things well when they prep for vacations, such as reducing restaurant visits, shopping less and spending less on entertainment.
Although these efforts are notable, they’re still not enough.
If you want to have a baller vacay (that doesn’t involve you coming home chained to a pile of debt), here are a few things you can do to generate the money you need:
- Consider getting a side gig for the months leading up to your trip. This can be a great way to build extra funds without disrupting your regular budget.
- Sell your unwanted things. Ever heard of the Letgo app? By being able to easily sell things from the palm of your hand, you can embrace minimalism and maximize your vacation fund.
- Make your money work smarter, not harder. Investing sounds scary, but Stash is an easy-to-use app that walks you through the process. If you start out small and build your portfolio, you could have a good amount of money waiting for you when you’re ready to cash it out for your trip.
Kelly Smith is a junior writer and engagement specialist at The Penny Hoarder. Catch her on Twitter at @keywordkelly.