We all need to take a break and have fun now and then. Some call it a vacation, others call it a trip, travel, or holiday. Whatever you call it, we all need to hit the pause button on daily life and get away now and then.
That could be a long weekend, a three-week trip abroad, or a one-week trip to a new part of the country. Whatever it is, getting away is good for us.
Life is short. While I’m a huge proponent of saving and investing, I’m equally bullish on using some of my money to enjoy life now. I just want to do it intentionally and responsibly.
Getting into debt and stressing about paying off your vacation a year after you took it, is missing the point. That almost does more harm than good. Vacations are supposed to reduce stress, not add stress months and years after you took it.
You can travel and take vacations without getting into debt. I call it the guilt-free vacation. The solution is in these 5 simple steps.
Identify Trips You Value
The first step to taking the guilt-free vacation is to identify what you value. Think back to vacations you have taken in the past, and what you want to do in the future. What have you always wanted to do, or what trip do you want take again? This list is what you value.
Your list can be as long or as short as you want it to be—it’s your list! This is my list, I’ll keep it to around 20 for this example.
- Road trip across the US
- Live in Paris for a few months
- Kenya-safari
- Yearly spring training trip
- Annual college football trip
- Camping at a national park
- Japan
- Antarctica
- Australia
- Live in New York City for a year
- Sedona
- 49ers game every year
- New Zealand
- Airbnb for one month in Austin
- Yearly Las Vegas trip
- Live in Chicago for a year
- Live in London for a few months
- National Parks road trip
- Costa Rica
- Sugar Bowl in New Orleans for New Year’s Eve
Pick the Trips You Want to Take This Year
Step two is to pick the trips you want to take this year. This can be done at the start of the year, or at any point really.
A few people have told me they like to make their list while they’re actually on vacation. Usually in the late spring or early summer. They do this because they’re feeling relaxed and motivated to make plans for the next vacation. I personally don’t do it this way, but I think it’s a great idea.
This is my list for the year. I understand some of these trips may not happen due to COVID, but I’m going to be optimistic and make the list. If the trips don’t happen, I’ll rollover the money saved into next year.
- Airbnb in Austin for one month
- Yearly spring training trip
- Annual college football trip (2021)
- Las Vegas trip
- Camping at a national park
- Spontaneous trip
I like to add a spontaneous trip to account for an unexpected small trip. For example, when the San Francisco Giants won the World Series in 2010, I traveled out of state to game 3 (the only game they lost). I didn’t expect they would be in the World Series that year so I didn’t have that on my original list. However, I had the spontaneous trip category so that covered the cost.
Estimate the Cost and Add 10 Percent
Step three is to estimate the cost of the trips on your list. I’ll drop down my list from step two so we can estimate it.
- Airbnb in Austin for one month: $3,000 (driving)
- Yearly spring training trip: $300 (driving and staying with friends)
- Annual college football trip (2021): $600 (using airline miles for a free flight)
- Las Vegas trip: $700
- Camping at a national park: $150 (driving)
- Spontaneous trip(s): $500
- Subtotal: $5,250
- Add 10 percent: $525
- Grand Total: $5,775
Trips often have some kind of unexpected cost so I add 10 percent to cover that for the year. That way I’m not stressing about spending an extra couple hundred dollars on any given trip. Anything left over from this pot can just be rolled over into next year.
My grand total for the year is $5,775. That’s a daunting number to come up with all at once. However, if I save $481 per month this year, I will get to that number. $481 is much more achievable than $5,775 all at once.
What if someone tallying up their total for the year decides it’s more than they want to spend? That’s where they’ll need to prioritize their trips even more, find a way to create additional income, or travel hack. The last trip on the wish list might need to wait until next year.
What often gets people into trouble, is they know they are going to be short, but take the trip anyway on credit. That doesn’t solve any problems, it just gives a temporary high followed by months or years of preventable bad debt.
Automate
Once you have your total cash amount calculated for the year, it’s time to automate. Just like I’ve written about in other articles about saving and investing, open up an online banking account. Once opened, set up monthly withdrawals from your checking account, or straight from your paycheck.
This is part of paying yourself first. If these vacations and trips are high on your value list, automating the money is a great way to be intentional about making sure you have the money to do the things you want.
In my example, the trips I want to take this year are estimated to cost $5,775. $481 when broken down monthly. That means I’ll be automatically transferring $481 every month into my online vacation fund. Since I’m placing a high value on my trips, I’m going to transfer the money at the start of the month, so I know they’ll be funded.
Once I have this set up for the year, I really don’t have to do anything else. I can focus on other things knowing the things I want to do are going to be paid for worry free.
Pay it Off
The last step is to pay it off, which is a two-step process. Step one is to pay for as much of your trip as you can before you even leave. Airlines, most accommodations, and some entertainment are all great items to pay for prior to leaving.
Step two is to pay off the whole trip as soon as you get home. That will mostly be food, alcohol, some entertainment, and miscellaneous costs. Take care of these costs immediately so they are not hanging over your head. Pay them off with the money you’ve been saving throughout the year, and be done with it.
Now that your trip is paid for in full, you’ve just taken a guilt-free vacation. No looming credit card debt, no balance carried over to the next month. Just the memories of a great trip, and the knowledge that you’ll be able to repeat this process for years to come.
What’s the best trip you’ve ever taken? Where do you most want to go next?
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