How to avoid debt jetlag

By Suzie Barnaby

Holiday time

You need a holiday. You want to get away from the stress of everyday life for a couple of weeks. You want to lay by a pool, sip on a cocktail and feel the ocean breeze and sun on your skin.

Or you want to explore your taste for adventure and put your physical and mental limits to the test. Whatever your idea of a perfect holiday is, you want it now!

Travel is good for our physical and mental health for a myriad of reasons.

It helps you appreciate life and allows you to be more grateful for what you have. It can also serve as a reminder as to how lucky you are to be able to see the world and all the beautiful things it has to offer.

The physical health benefits can include all of the exercise you fit in as you explore cities and destinations by foot. Yes, the benefits of travel are endless, however, to experience all of this, it does cost money and the last thing you want to come home to is a whopping case of debt jetlag!

Ideally you want to have funds available for travel, either from your savings or cashflow.

If you've already saved for a holiday before you go it’s a great feeling to not have credit card debts to pay off once you’ve arrived home. Let alone interest to pay!

If you really must go now and haven’t saved for the trip what can you do?

It’s very common for people to use their credit card to fund trips that they have not saved for. It can be easy when using a credit card to spend more than you can afford which may mean you quickly fall down a slippery slope of debt. If you can’t afford to promptly repay what you spent on your holiday, the debt can grow very quickly.

If you do use a credit card, try to avoid cash advances. Using your card to withdraw cash means no interest free period and an immediate interest rate in the vicinity of 20%! Look for credit cards with an interest free period, low fees, and rewards, including travel related benefits.

Some cards also offer free travel insurance. Another option may be to restructure your mortgage so that you have funds available to travel, but the interest rates are significantly lower (perhaps by as much as 15%pa) than credit cards.

You may even decide to refinance your mortgage at a lower rate and use the savings to help cover the cost of a trip. However, this approach should be carefully considered because failing to plan how you’ll repay the holiday debt after it’s rolled into your mortgage can increase your interest charges over the long term. Spend wisely while travelling.

For example instead of eating out in touristy restaurants, try eating from some of the local, less expensive street food stalls. It’s often a tastier option and a great way to get to know the locals. Finally, research your accommodation and daily tour options. You can save plenty by finding cheaper accommodation options and taking self-guided tours.

Avoid a nasty case of debt jetlag dampening your next adventure by planning how you’re going to fund your holiday in advance. With the right planning and some financial savvy, you can look forward to a fabulous holiday and to arriving home full of happy memories and energised intentions.

Dream, Plan, Travel Event – Reserve your seat 

If you would like to find out more about planning financially for the trip of a lifetime, please come along to our Dream, Plan, Travel event which will be held at 5.30pm on Thursday 18 October, 2018.

You can register for this event by clicking here.