Pay Back Your Student Loans And Take Your Dream Vacation
Photo by Moyan Brenan
Most people finish high school, go straight to college and then are up to their eyeballs in student loan debt. This is normally at the exact point when people want to travel. It’s a tough spot to be stuck in. Do you want to continue paying off student loans (which could take forever) and give up on your dreams of travel or grab another loan and worry about the consequences later? The latter is not recommended.
Financial professionals recommend paying off loans before planning vacations, however this is not always possible. The good news is that there are ways to manage both and these tips on how to find the balance between your responsibilities and the things you enjoy in life can help you.
No matter what, do not stop paying your student loans.
It is fair to say that thinking about the figure of your student loan in total is far from a happy thought process. One way to manage this, is to think about it like any other monthly bill. Like a mortgage – it comes off your monthly cheque for a period.
Conquer your loans bit by bit, month by month. Once you have managed this and have all your bills paid, any extra cash leftover means you can afford to travel.
The next step is to begin the saving process, and this is determined by how long you will be traveling for. Lots of people choose not to work throughout their travels and if this is the case for you, you will need to ensure you have enough money in your savings to cover a couple of debt payments.
If you’re planning more of a vacation for a limited time, you should still ensure that you won’t return home unable to make next month’s repayment. Just like the direct debit for the monthly loan repayment, there should be a direct debit to a savings account. You should manage your budget wisely prior to starting to save so that you have a rough idea of how much you can afford to save monthly.
Remember – once it’s in the savings account, it’s for travel purposes only.
Following this, you need to start thinking about where your ideal destination would be, how long you would like to go for and how much it will cost. Once you have a clear budget, stick to it, and things will be easier.
Different trips will require different budgeting. A backpacking trip through Europe is more fluid, and you can determine a lot of your expenses, apart from airfare. Something like an all-inclusive stay in the Caribbean is usually a set price. This prevents you from having to worry about extra or unexpected costs as generally everything is included.
It will come as no surprise that you will need to live frugally when you are saving and when you are traveling. This does not mean you have to cut yourself out from society but make sure and consider the pennies you are spending.
Everybody loves a latte or coffee in the morning, however a daily latte from Starbucks equates to around $25 a week. This is a huge amount of money that you should be contributing to your weekly saving fund while taking some instant coffee out the door in the morning.
Do a weekly shop and try not to eat out as this mounts up quickly. Also, many people find one of the main expenses while making efforts to save is alcohol. If you are planning a vacation, take a bit of a detox while trying to save and you can party as much as you like when you’re trotting across the globe. If you’re spending a lot of time shopping for clothes online, kick that to the curb, too.
Similarly, when you’re traveling, it should be as cheap as possible. Flights and accommodations should be paid for well in advance to get the best price. Hostels are always a cheap option, while also presenting the opportunity to meet new people if you happen to be a solo traveller. Hostels also have kitchens to store food in and free Wi-Fi preventing unnecessary spending.
Almost anybody can travel hack and it’s useful to know this when you’re booking your flights. After all, they are the most expensive part of the travel process. Get yourself an airline or travel reward credit card. Most come with a bonus for spending a certain amount in your first few months as a card holder. Imagine spending less than $200 for a flight that costs $1000. It can and has been done.
Work While You Travel
If you are managing all the above tasks but still feel that you can’t afford to travel, the other option is to travel and work at the same time.
It might not make the most sense if you’re going on a two-week vacation however if you are going on a longer trip, it’s the perfect solution to getting out of your hometown without falling behind on your loan repayments. Of course, some cities will be more expensive than others, which is why the research at the planning and preparation stage is essential.