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How Much Should You Spend on a Vacation?
Everyone Deserves Some R&R, but Don't Let Your Vacation Break the Bank
By Suze Orman
As far as I am concerned, vacations are a necessity, not a luxury. But where I see so many people take a wrong turn is when they spend money for a luxury vacation that they can¡¦t afford.
While I think one of the best things you can do for yourself, your family, and yes, the quality of your work, is to take a break every now and then to recharge the batteries, it makes absolutely no sense to book a vacation that will blow your bank account. You end up spending one week enjoying yourself, and the other 51 weeks of the year stressing over the huge new load of debt you racked up by putting the plane tickets, hotel, and restaurant bills on a credit card you have no way of paying off any time in the foreseeable future.
Or even worse, you think it¡¦s totally okay to pile up the credit card balance for your vacation, because you think you deserve to indulge yourself given how hard you work!
That¡¦s the story I got the other day at the hairdresser. The woman washing my hair and I were chatting and she tells me she has just returned from the most wonderful vacation¡Kthat cost her $4,000. Now this is someone who is probably lucky to make $7 or so an hour plus tips. She then tells me she¡¦s got it all under control; she just put it on her low-rate credit card, like all her other vacations. Turns out she thinks 12 percent is low, and, worse, seemed unconcerned about the $25,000 balance she¡¦d rung up so far.
There¡¦s no telling what type of reaction I might have had if it weren¡¦t for the water hose she had aimed at my head. I remained calm and simply asked her if she could do it all over again, would she try and take less expensive vacations. I was expecting a moment of revelation when she would see the danger of what she was doing. Instead, here¡¦s what I got:
¡§Suze, I work so hard I deserve to treat myself to a great vacation. I don¡¦t care what it costs.¡¨ I asked her if she ever worried about the hole she was digging and she told me, ¡§Only when I think about it. So I just don¡¦t go there or I would get too stressed out.¡¨
That approach stresses me out! Come on, people. I get that everyone deserves a vacation but here¡¦s what you also really deserve: a secure life where you aren¡¦t buried in credit card or home equity debt, and the confidence that you are on course to be able to retire comfortably.
If your vacation spending is compromising any of your financial goals I am sorry to say that your brain is already on permanent vacation.
In Five Signs You Should Stay Home, I spell out the major money moves you need to take care of before you start booking a big-time vacation at a five-star resort.
But here¡¦s a great rule of thumb: if you will need to pay interest to finance the vacation¡Xmeaning if you can¡¦t pay off the whole credit card charge when it comes in¡Xthe hard truth is that you can¡¦t afford the vacation.
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