Do You Need to Be Debt-Free to Travel?Jun 27, 2018
Travelling the globe has become easier than ever, so do you need to be debt free before you become a world traveller? In this episode of our podcast series, our Licensed Insolvency Trustees (LITs) speak to this topic in detail:
- What Canadians with debt should consider when they’re planning a vacation.
- What to do when you’re tempted to blow the budget on a once-in-a-lifetime trip.
- How to return home from a trip without additional debt.
What should in-debt Canadians consider when planning a vacation?
Paul Ihnatiuk, LIT from our BDO Hamilton office recommends that families planning a vacation take some time to think everything through before committing to a trip. Here a preview of his advice in this podcast episode:
- Start saving early by adding a line to your budget such as “saving for vacation”; treat it like a bill by making sure to contribute each and every month.
- Always aim to pay for travel up front; that means cash over credit. And never add to your debt load to travel.
- Not taking on travel debt is just as important as sticking to your debt repayment
If you’re looking to prioritize saving for a vacation as one of your personal savings goals, the 50/20/30 budget guideline is a good way to do it. If travel is truly a priority when you still have debt, it may also mean making compromises in other areas of your discretionary budget.
As you save for a trip, take steps to reduce your existing debt at the same time — as your debt decreases your ability to save goes up. Just make sure you continue to have room in your budget for other important savings goals like retirement and emergencies.
While you don’t need to be debt-free to travel, you don’t want to lose sight of what you’re working toward and that’s reducing your debt load. Have travel plans in place already? Make sure to listen to the podcast for advice on how to travel without taking on additional debt.