I know many people who have gone off on walkabouts and returned with more than just great memories, culture, and insight into the world. I’m talking about the guy that writes negatives in your net worth column. I’m talking about the destroyer of freedom, debt.
When traveling it’s easy to justify an expensive meal, hotel stay, or activity that is out of your price range and income level by thinking “I’ll only get this chance once so I’ll make the most of it.” This way of thinking can be damaging to your financial security, though, as you can get home after the whirlwind and high of a trip and look with anxiety at the massive credit card debt you racked up. Psychologically, excessive debt can create feelings of fear and stress. You worry about meeting your monthly payments, or being in debt up to your eyeballs until you kick the bucket. Debt has a way of destroying any excitement and pleasure you gained from a trip in the long run when you look back and still find yourself paying for that “damn trip” years down the road.
When I was traveling I encountered this funny, foreign view of the world: spend only what you have. I’ve met many foreign travelers who are befuddled with the notion of spending into debt instead of budgeting ahead of time and planning travel as an expense, or just not traveling if you could not afford it. In America, our bloated government teaches us to spend even if we don’t have the money. But, look how that reckless mentality is working. Welfare programs we can’t afford, a daily mounting debt, and a deficit so large that each US citizen would have to pay $40,000 today just to pay it off. Debt is no laughing matter, and beyond that, debt destroys freedom.
There are two types of freedom, freedom from something and freedom to do something. Debt eliminates your freedom to do things. Sure, at first you can travel. But, then you come home $15,000 in the hole (I’ve seen it happen) and are strapped in to working off your debt for the next five years instead of traveling.
Being in debt limits your ability to live because your always trying to stay on top of your bills instead of saving for the future. Especially today, when interest rates for CC’s and personal loans are exponentially greater than interest income from savings accounts and CD’s, you can never expect to come out on top if you keep a lot of debt. As a luxury item, travel will be one of the first things to get cut when the money isn’t around to pay for it. But by spending within your limits when you travel you set yourself up for more travel in the future.
Also, contrary to what most people think you can travel quite lavishly on a small budget. The key is being willing to search for a good deal, or to travel to places in the off-season. Here are some resources to help you stay on budget and out of debt:
Mint.com : A great online, and mobile tool where you can set spending and saving goals, track your expenses in real time and see your net worth change over time.
Hackmytrip.com: Let your spending work for you. A great resource for wading through the special promos, pricing schemes, special CC deals, etc. Learn to get a return on investment for your traveling.
The Points Guy: Find out some tips and tricks for using those CC points, airline miles, loyalty programs and more to your advantage. This guy is great.
BOOKS TO READ:
The Millionaire Next Door: Thomas Stanley has served as a consultant to businesses looking to market to the extremely wealthy, and has spent more than 20 years interviewing people with Net Incomes of $1 million and above. His book provides insight into the habits and stories of the very successful in our society…and his thoughts may not be what you expected.
CALCULATORS AND WORKSHEETS:
Travel Budget Calculator: Here’s a nifty calculator to get you thinking about some of the travel expenses you’re likely to incur.
Travel Worksheet: Another quick guide to get you thinking about your expenses
Online Budget Maker: A great online budget maker by Dave Ramsey. The cool thing about this budget is that it comes with tips regarding spending from Dave. Don’t just make a budget, but learn what spending levels are appropriate for specific expenses. Then, when you’re done, just print it out and refer to it as needed.