Is It Worth Going Into Debt for Travel?
Summer is upon us, and this comes with a significant increase in travel both domestically and internationally. I tend to be a huge news junkie and probably watch more news than I should, but as I was perusing news sites, I came upon this article from CNBC and some other news sites that reported that 36% of Americans plan to take on debt in order to travel this summer, or they plan to use a credit card and pay off the bill via multiple cycles.
The article also says that 47% of Millennials, who are around the age 28 - 43 and Generation Z, who are mostly in their late teens to early twenties, are the most likely who are willing to accrue debt in order to travel.
In full disclosure, I am in my early 40s, so I am a Millennial. I have been extremely fortunate to have a job that grants me the opportunity to do the kind of travel that I do. While I am 100% in support of traveling and exploring the world and all of its wonders, I personally do not think it is wise to accumulate or take on debt in order to travel. Contrary to what many might believe, while I do travel relatively frequently, I am adamant about remaining debt free for as long as possible. Taking on debt to travel is definitely not something I would recommend doing, especially for people who are younger since all kinds of things or emergencies can come up that might require significant expenses, and when and if those things happen, you will need to have access funds.
I believe that a person should only travel when they have the ability to pay it in full, and the trip will not break the bank. To me, this just makes common financial sense. Is travel absolutely necessary? No, it is not. I do not believe it is worth spending thousands of dollars on a trip which you will eventually have to pay back with interest. Even though travel certainly enriches life, I do believe that it is wise to first make sure you have enough money to cover key and necessary expenses preferably without going into any kind of debt.
It is frankly not worth taking on unnecessary debt. While I understand some people would say that "You only live once," and "You should travel when you are young," I would respond that travel is something you should do when you have the ability and time to do it. Believe it or not, a huge number of places and sites have been around for tens of hundreds if not thousands of years. If they have been around for that long, it is likely that they will be around for a few more years. Why not wait a bit until you have the money to do it then you will not need to worry about the future implications of the debt? Whenever I make travel plans, I always make sure to look at how it will affect my finances in the future.
Although I would personally advise someone to avoid taking on debt in order to simply travel, I understand that some people might want to do that. In that case, I would recommend following these five tips that can help decrease the financial implications:
1) Do Your Research
Regardless of your financial status, before any trip, do as much research as you can about the location, such as what are typical expenses you are likely to have there, and what you expect things to cost. Then, make a list of the things and activities you absolutely want to do and get an idea of what these things will cost.
2) Look into “City Cards”
Depending on where you want to go, some places (particularly in European cities) offer various “City Cards” that can definitely be worth it. Typically, for a flat fee based on how many days you want the card to be valid, these “City Cards” often offer free or discounted entrance fees for many attractions along with possibly discounted or free transportation as part of the initial price of the card. These can be really good deals if you use them a lot during your time. I have used these before in Stockholm, Sweden and Copenhagen, Denmark. I also used a several-day rail pass in Switzerland that more than made up its initial cost in the number of times I used trains.
3) Look into Off or Shoulder Seasons
Even though summer is definitely the most popular time for many people to travel, it is sometimes better to travel during off or shoulder seasons. For me personally, I almost never travel to Europe in the summer because that is when prices are at their absolute highest along with the extremely high number of tourists. In addition, when I travel to the Caribbean, I usually go during September and October.
Granted, traveling off and shoulder seasons has its advantages and disadvantages. If you go to a place like Europe in January and February, it will definitely be cold, and the weather will often be overcast. If you go to the Caribbean at the height of hurricane season, you are taking a chance on the trip being cancelled or less than ideal. However, going during off or shoulder season means there will likely be less crowds, and the cost of accommodation will usually be a bit lower. It is important to recognize though that this is gradually no longer becoming the case, and sometimes prices will be more or less the same regardless of the time of year. It is also important to remember that if you go during shoulder or off-season, some attractions might not be accessible during those times (I found this out when I was in Azerbaijan in December).
4) Create a Budget and Stick to It
In my opinion, this is probably the most important part of traveling. I know all too well that it becomes unusually easy to spend more money than expected when traveling. Small spur-of-the-moment expenses can very quickly add up if you’re not careful. If you do decide to travel during the summer and take on debt to pay for it, I recommend creating a set budget of what you plan to spend. Once you create your budget, you should stick to it and not exceed it if possible.
5) Pay with Cash
Even though it is getting a bit harder to pay in cash in some locations in Europe, there are still a huge number of places throughout the world that accept physical cash. I’m not saying you should not travel with credit cards; in fact, you should have at least one or two in case something happens, and you need to make larger purchases. However, during daily outings, I would recommend paying for things in cash whenever possible while traveling. Paying in cash can be a good deterrent from going overboard on spending money that you may not have on a credit card. When I travel, I tend to pay in cash most of the time for smaller purchases, and at the end of each day, I count up my physical cash to determine how much I still have left. This keeps me mindful of what I can use and helps me keep an updated budget. Admittedly, carrying large amounts of cash when traveling is never a good idea since too many things can happen. However, if you do your research ahead of time, you can get a general estimate of how much you should bring, and you won’t end up bringing too much or too little.
Ultimately, do I think people should take on debt in order to travel? No, I do not. In fact, I think it is very risky, especially since I believe debt should never be taken on unless absolutely necessary. However, if you are still interested in traveling but might not necessarily have the money to do it, following the preceding five tips can certainly give you an opportunity to explore the world without going too far into debt.
What do you think about taking on debt to travel? Do you recommend it or not?
