Planning Your Summer Vacation

Going away on a vacation this summer? Get your planning started now to avoid coming home to debt. Although it’s only March and the skiing is still good, many of you are sitting there dreaming of your summer getaway.

Too many people wait to start planning their vacation and then put the whole thing on their credit card and worry about paying for it when they come home. There are two main things you should be doing today to avoid this common pitfall.

First, you should lay out your plans now and decide which parts of the trip you should be booking well in advance to take advantage of lower rates. The biggest single item here is often the ability to book flights and/or rooms on miles instead of paying cash. Airlines generally only have a certain number of seats that can be booked with miles and they go to those travellers that book them first. The best time to book your flight on miles was probably a few months ago but seats are still available if you get on it today. If you want until May to look for these seats, they’ll almost surely be gone. Now some of you are reading this and thinking that this doesn’t apply to you as your credit card’s reward system has “no blackout dates”. Reward cards like that (in addition to being the worst value travel cards out there) base the number of points needed on the dollar value of the ticket. These underlying costs continue to climb as the plane fills so you should be booking your tickets today as well. If no good deals or air mile tickets are available, set up a “fare alert” through any major travel website and get notified when the price drops.

The second thing you need to get working on today to get your vacation planning started is an account to pay for it all. Waiting till vacation time to start thinking about how to pay for your trip can be a costly error. Set up a separate bank account or TFSA and use this as your “vacation fund”. Plan out a budget of what the trip will cost and figure out how much you need to contribute each month to have that amount ready before the vacation date arrives. Ideally you should set up an automatic monthly or weekly contribution into this account so that these contributions aren’t forgotten about.

You may also consider putting a few lump sum deposits into this account to reach the full amount required ahead of schedule. If you receive some unexpected cash from a tax refund, work bonus or garage sale, deposit it into the account as well. By doing so, you can reach your targeted amount a few months early and then either stop the monthly contributions or maybe even allow them to continue and help build up early for next year’s trip.

If you’re overwhelmed on where to begin, consider consulting with a certified financial planner to discuss creative savings ideas and get some help on how to get started.

Vacations are supposed to be all about relaxing, unwinding and enjoying special time with your family and friends. You should come home from a vacation well rested and with a little less stress in your life. If you come home to a fresh pile of debt, this becomes very hard. A little planning today can go a long way to helping you to come back recharged and a little more worry free.

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