Marc Serafino
It is everything but hard to pump up the spending while on summer vacation. When you return home, the hangover with all the bills kicks in and the real pain begins.
If you paid for all the fun with your credit card(s), now’s the time to tackle that debt — otherwise it could easily get out of control. Here are 5 tips to help you on that noble path…
1. Assess the debt
The sooner your start the better. Yes, it will won’t be all that pleasant, but this is something you have to do one way or another; to confront the spending and assess the debt. Only by knowing what you’re dealing with will help you put it under control.
While going through all the payments made in the past week or more, you may also notice potential errors, like a double bill, and be able to address it in a timely fashion — when your bank may be able and willing to protect you against it.
At the end, you should realized how much you owe and what’s the interest rate.
2. Check against your budget
We advise that before taking any vacation, one should budget for it. If you did this, now’s the time to compare the spending with your previously defined budget. Don’t worry though — many of us go over our budgets; the important thing is to realize just how over the top we went and determine how to address the extra spending. So could better prepare for the next year.
On the other hand, if you haven’t prepared a budget, we advise you to go through your credit card statement to learn a thing or two from it. Most importantly is to realized where your money went so you can budget for it on your next vacation. This should be an experience to learn from.
3. Create a repayment plan
Create a repayment plan that involves fixed monthly amounts. You need to make a commitment and, the harder part, stick to it. The idea should be to look beyond monthly minimums and pay as much as you can every month. The reason is simple — the more you can pay each month, the sooner you’ll be out of debt. Then, once you’re ready, set up an autopay and watch your debt disappear from one month to the other.
The situation is trickier if you made payments with more than one credit card. There could be good reasons for taking that route — like earning extra points — but that will also make your problem slightly more complicated. Now you will have to decide which credit card debt to payoff first. Also, you will have to spread your monthly commitment to two accounts. Start with a card that includes a higher APR… (Related: 6 Ways to Motivate Yourself to Pay Off Debt)
4. Pay something extra when you can
See if you can up the game by throwing something extra towards your debt repayment. Adding $100 every now and then could take you a long way. Again, the sooner you can get out of debt the better.
But where the extra money could come from, you may be wondering? It could be from a side hustle, selling unwanted items on eBay, unexpected gifts, or a raise at work. Alternatively, you may slow down with your spending and, say, cook more at home instead of dining out on a regular basis.
5. Start saving for your next year’s summer vacation
Once you paid off your debt, you should immediately start saving for the summer vacation next year. The moment you pay it off, say to yourself “lesson learned” and begin preparing for “round 2.”
This time next year, you should have a budget AND money for the vacation. The best case scenario is to return from holiday debt free. It won’t be easy, but it is feasible if you add some discipline into your daily routine.
Say you want to take a $1,500 trip to Greece; it will take you 5 months to set aside $300 or 3 months per $500. Perhaps you can take a side gig, or perhaps you could ask for a rise. You’ll have to figure out that part for yourself, but you get where this is going, right? With that in mind, we wish you many more nice trips. Debt free, if possible. 😉
