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.
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.
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.