Last week, when I shared the good and bad about my summer travel, a skeptical reader had questions for me and how I managed to take those trips. He wrote, “I guess your kid’s college funds are all topped up and you’ve paid off your mortgage?” Actually, no and no!
It got me thinking: Should families have their finances perfectly in order before taking family vacations? Should we hold off on travel until we’ve met certain financial goals?
Even when we use miles and points to pay the majority of our vacation costs, we still have to fork out some cash for food, airport parking, pet sitting, excursions, etc. What’s the minimum financial stability we should have before spending money on vacations?
What the Experts Say
Dave Ramsey is arguably one of the most popular personal finance gurus. His Baby Steps program is a plan for families to erase debt, build up an emergency fund, save for retirement and eventually pay off the mortgage early. Where do vacations fit into that?
According to Dave’s blog, he recommends waiting to take vacations until after completing Baby Step 3, which involves paying off all debt (including car loans, student loans and credit card debt) and building up a six-month emergency fund. Then, while saving up for college and retirement and starting to tackle the early mortgage payoff, he encourages families to take affordable vacations without going into debt.
Suze Orman takes a more holistic approach to personal finance to determine if you can afford a vacation. Like Dave, she also hates credit card debt but is more focused on the big picture of how much retirement savings a person has. In her “Can I Afford It?” segments, I’ve seen her deny vacation approval to many folks. This video at the 21:00 mark shows a rare occasion where she approves a viewer to take a vacation.
My Opinion on Personal Finances and Vacations
Unlike my reader’s comment mentioned above, I think it’s ridiculous to expect families to pay off mortgages and completely fund college before taking vacations. For most middle-class families, that goal is unattainable while the kids are still young. Even the experts aren’t that extreme.
I also don’t entirely agree with Dave Ramsey and Suze Orman. I don’t think that low-interest car loans need to be paid off immediately or avoided altogether. Can you imagine if families with student loans or car loans didn’t go on vacation? The majority of Americans would have to stop traveling.
We still have a mortgage, a car loan, and our kids’ college funds aren’t fully funded. But, that’s not going to stop my family from going on vacations.
For me personally, I won’t go into debt for a vacation. That’s where I draw the line. However, I will charge part of a vacation on a 0% interest credit card if I know I can pay it off in a few months (like using the Disney Visa for a cruise with 6 months 0% interest). If we can spare the miles/points/cash without significantly affecting our ability to keep adding to our retirement fund, we will take the trip. Vacations are a high priority for my family.
On the other hand, I believe that social media has influenced some people to take vacations they can’t afford just to keep up with the Joneses. If a vacation will impact your ability to retire at a reasonable age, is it worth it?
I believe balance is key. Families can work toward responsible financial goals AND go on vacations.
If our financial situation worsened, I’d still find a way to take some sort of trip. It might be a road trip or camping while eating sandwiches from a cooler, but we’d still be taking vacations.
Time doesn’t slow down for anyone. Tomorrow isn’t guaranteed. One health emergency can change your ability to travel in an instant. I’ve read multiple surveys and articles about regrets elderly people have, and not traveling enough is always on the list.
Final Thoughts
Personal finances can be tricky. They are also, by definition, personal. I am not going to judge anyone for taking a family vacation or not taking a vacation based on their finances. Do your own research, and make your own decisions.
How do you prioritize vacations vs. your other financial goals? I’d love to hear your thoughts.
Disclaimer: I am not a financial planning expert. If you’re looking for specific advice for your financial situation, I encourage you to consult an expert.
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Author: Nancy
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.
I’m a little late to the party, but I use your guidelines for my travel.
I never traveled in college and grad school because I didn’t have the money. Once I paid off that debt, I started traveling, but I still have a mortgage. To never, ever travel when you are financially stable, but with some debt(like mortgages and cars) is ridiculous. Credit card debt is no go for me. If I had it, I wouldn’t travel.
I agree, going into debt is never good. Someone on a disney message board recently said they really wanted to take the family to Disney, but a series of bad events meant that the only way to go was to charge everything and take on the payments with interest. I told them that it was a bad call.
Points and miles can help with the cost, but everyone should live within their means. That does not mean that you never go anywhere or do anything because you have long-term, low-interest debt, and have not saved $100,000/kid for college. We’d all be miserable.
@Beth Thanks for sharing your thoughts! I recently read an article that said 75% of people have gone into debt for vacations. Yikes!
You really handled his remarks well! Guess it’s good to question our thinking at times. Dave Ramsey really helps tons of people, however he doesn’t believe in credit card usage at all, nor does he think that we can use any rewards to our advantage. He really doesn’t understand the game we play and the true savings. Many people that I talk to, also just don’t get it. We all know the value we can get by doing the credit card offers. I also think we should take vacations with our families and create memories, but also be financially responsible. Many older people have told me to travel before I retire, if I can. My hubby and I have traveled a lot before retirement, and continue to after retirement and don’t regret it!! What great opportunities we’ve had using our miles and points!
@Lynn Yes, Dave and Suze aren’t fans of credit cards. They are probably right, most people aren’t disciplined enough. I’m glad you’ve had so many travel opportunities with miles and points!
Paying off mortgages are for financial inept people. If you have a 4% mortgage your money is best spent elsewhere. This could be investing in stocks with a higher return or taking a vacation. 4% interest opportunity cost is very little considering the memories generated when traveling to international destinations. It is hard to remember things when you do them 50 weeks a year. In my life, aside from 1-5, most of my vivid memories come from traveling with my family as everything that goes on is of note and not standard. Ask me what I did when I went to Times Square or Rockefeller center and I have no idea the route we took (I live in NYC and this is standard). Ask me what route we talk walking in Budapest, I can do so from memory.
Thank you everyone for your comments and feedback! 🙂
There are plenty of blogs out there and I keep coming back to your blog because I can relate to travelling as a family, I value your insights/opinions on travel, I learn a lot by browsing thru your archives and your travel pattern matches mine also.
Travelling and reading makes me feel balanced, without it…I would feel like something in my life is lacking. I enjoy all aspects of travel…the planning, the anticipation, earning points for future travel, the whole experience of getting to destination and also travel photography.
I prioritize travel because it’s important to me. A lot of our disposable income is saved towards travelling. I don’t go shopping for clothes (my old expensive hobby) and that has freed up a lot of my funds. I would never go into credit card debt for travel though…that’s a big no no for me. Knowing my personality, I won’t enjoy my vacation knowing that when I come home, I’m going to be in debt.
Nice job turning a nasty comment into an inspiration for a thoughtful blog post! As you can see, for every troll you have many more readers run to your support.
I started reading this blog before I was even married and it has always been a great source of inspiration for affordable trip ideas. Now that I have a toddler I am utilizing the info here even more.
About finances, I am with you on your approach: travel when you don’t have to take on extra high-interest debts while still contributing to college fund and retirement. The sad truth is that some of us won’t even live to see retirement. I know way too many people who lost a parent when they were young. So, by the time you have your finance altogether, like you said your health may not allow you to travel.
@Katye I didn’t know you had a baby. Congrats! I’m so happy you are still around after all these years. As in, reading the blog and commenting. 😉
I agree with Tammie, that guy was a jerk and you were very kind in your response. Love your blog. Both Leana and you are always so helpful and I thank you for that. I am sure your kids will have many benefits from their travels. I myself immigrated from Germany and I took my son back there many times. I think it has broadened his horizon and made him a well rounded young man.
I think rather than having a paid-off house and college fully funded, a more reasonable priority ought to be carrying no credit card debt, and fully funding retirement contributions. No one is guaranteed a job (age discrimination in the workplace is very real), and no one can guarantee we can work beyond our 60s if we need it.
Kids can take out loans for college in many instances, but of course we can’t do that for retirement.
I read that guy’s comment. He was just being a jerk and very judgmental. I feel like there is a lot of that in the boarding area blogs. It’s cool that you can attract more readers but there are also a lot of trolls. They have nothing better to do than read blogs they are not interested in and then make rude comments.
I love the blog! And I’m with you. Finances are important to us but travel is critical for me. It’s my passion and the main reason I got into miles and points is so I could keep affording travel with all the financial responsibilities of a family. I’m so grateful for it!