TRAVEL TIPS: Paying for Your Trip

While there are a select few people who get their travel paid for them, I'm not one of them (but I'm willing to change that - Ed) and chances are neither are you. So where do we come up with the money to travel with?

First, you need to know how much your trip will cost. There are two approaches you can take with this. We use both, depending on how much we want to go to a particular location or how much we want to spend on a trip.

If you know where you want to go, you need to know how much it will cost to go there. You can research how much your destination will cost using travel sites like Hotels.com, Kayak, and Expedia where you can get a pretty good ballpark estimation of how much it will cost for your airfare and lodging. You can also look up rental car rates there too, if needed.

Be sure to include an estimate of how much food will cost and how much your hotel will feed you, if at all. If you're driving, figure out your gas mileage and calculate that too.

Once you have that amount, add at least 10% to that to cover any incidentals along the way, total it all up and that's how much you'll need to save.

Figure out when you want to go, how many weeks away from now it is, and divide that number by the cost of the trip. That's how much you'll need to sock away each week. Do that, and you'll have enough to go when the time comes.

The other way to figure out how much it will cost is to set aside a certain amount each week, say $50 and then decide when you want to go, let's say 6 months from now. 26 weeks of $50 will get you $1,300. 

When the time gets near, find out where you can go for that amount and plan your trip to somewhere you can afford (don't think that amount is too little either...we did a week in the Dominican, all-inclusive including air, for less than $1,200 per person).

Some people will say they don't have the discipline to put aside that set amount of money each week. That's sad...you need some discipline to travel successfully anyway so why not start with the money? If you don't think there's any money to save, try skipping one Starbucks latte and an extra value meal each week...there's $10 right there and it's going to be healthier too.

OK, let's think of some other strategies...

Does your employer use Direct Deposit? Many employers that use Direct Deposit allow you to not only automatically deposit the money to your bank account, but also a few other accounts as well. For example, if you work for the U.S. Government, you can set up your deposit to be split up to as many as three accounts so let's say 80% can go into your main checking account, 10% into a household expense account, and another 10% into a vacation account.

Now you're saving up your vacation money without even thinking about it.

If you can't take advantage of this, talk to your bank or credit union. Many will allow automatic transfers into separate savings accounts that can be used the same way.

However you pay for your vacation, I strongly urge you not to charge it.  Save up for it, don't end up paying for it long after it's over.

Other ways to help pay for travel, or at least soak up some of the costs is to use reward credit/debit cards and to join loyalty programs. 

Travel rewards cards earn points for each dollar spent that can be cashed in for things like airfare and hotels. Be sure to read the fine print, however, because many of these cards charge a lot of fees for it. Here are some recommended cards:  http://www.consumerismcommentary.com/the-best-travel-rewards-credit-cards/

We don't travel by air a whole lot, so we prefer a cash back card that pays you a certain percentage rebate for each use. Our favorite is the Costco Citi Visa card that racks up several hundred dollars a year for use in everyday use including 4% for gas, 3% for travel and restaurants, 2% for purchases at Costco, and 1% for everything else (our cash back paid for our Bahamas cruise this year).  Some other recommended rewards cards are listed here: http://www.businessinsider.com/the-5-best-rewards-credit-cards-2011-2


Hotel loyalty programs are also good to earn free room stays. Find a chain you like, join the club, and start racking up the points. We use Hyatt, Marriott, Hilton, and...to a lesser extent...Choice Hotels.  By joining the loyalty program, which is completely free, we not only get points for free stays (and get at least a free night in a hotel each year), we also get some added perks at the hotel just by being a member such as upgraded rooms or late check-outs.

These are all tips to help you accumulate the money you need to afford a vacation.  It's actually not too hard to do. Figure a price, save an amount each week till you reach it, use rewards and loyalty programs to help you accumulate free travel and lodging, and off you go.

-Darryl
Copyright 2012 - Darryl Musick (updated 2017)
All Rights Reserved
Disclaimer

TRAVEL TIPS: Money Management While Away From Home

Money…it not only makes the world go around, it’s the power behind your vacation.  We’re going to do a couple of Travel Tips about it. First, how to manage it during your trip.

Most people by now, but by no means all, realize that you shouldn’t carry big wads of cash with you to pay for things on your trip.  There are several ways to accomplish this with minimal cash…

Credit cards are the most handy forms of payment for the traveler. No cash involved, quick transaction, and a list of your spending is provided to you on your next bill.

We like to use a card that is accepted widely and offers us a rebate for using it. Others like to get points, like frequent flyer miles, when using their cards.  I try to put all travel expenses on the same card so I can get a running total, check for errors, and pay one bill for the entire trip.

Beware that you still need to stick to your budget. You don’t get that list of expenses until well after you’re home so keep track of what you’re spending…it’s very easy to ignore when you’re using plastic.  Also be aware of how credit cards work in other countries. Restaurants in France, for example, don’t have the separate tip line that you see in the U.S. on the credit slip. You need to leave your gratuity in cash.

Other countries, in Europe in another example, use credit cards that have RFID chips in them and many places and ATMs won’t accept cards without them…at this time, most American credit cards do have them embedded. Look for the gold chip on the front of the card. Check with your card issuer before you go to see if you will have a problem.

Also check with your card issuer before you leave to let them know you’ll be traveling.  Many credit card companies will suspend a credit card that is used far from home automatically to prevent fraud. You can clear that up with a call but that call may be hard and expensive to make in a foreign country. Much easier and cheaper to do it before you leave...a toll-free number to call is usually listed on the back of the card.

If you don’t have a credit card or prefer a cash-like “pay as you go” system, use your bank’s ATM card with a Visa or MasterCard logo to make purchases on your trip. This works just like a credit card but you need to be aware that the money is instantly deducted from your account. Keep scrupulous track of debit card use to make sure you do not overdraw your account and incur a fee.

For both credit and debit cards, most come with extra foreign transaction fees on every purchase made outside of your home country. Again, check with your issuer before you go. There are some cards that come without these fees.  Here’s a list of some cards without them, http://www.cardhub.com/credit-cards/foreign-transaction-fee/ , and another one here: http://www.nerdwallet.com/blog/top-credit-cards/no-foreign-transaction-fee-credit-card/ .

One difference between credit cards and debit cards in general is that credit cards offer better protection against fraud and also come with perks like damage insurance for your rental car.

As much as we’d like to go cashless, it is not quite possible to do completely. You’re going to need some. Like we mentioned in our Travel Tip about tipping, we like to go to the bank first and get a hundred (or two) dollar’s worth of ones and fives for tips.

On vacation, travelers used to count on traveler’s checks. Don’t bother with these relics anymore…it is very hard to find merchants now who take them and you’re going to have to find a bank teller to cash them now.  In a pinch, you can also usually cash a check at your hotel’s front desk.

Instead, use your ATM card. You usually get the best exchange rates and can get your cash quickly and conveniently. Know that you’ll get dinged with fees so don’t use an ATM for a small sum. Get a hundred dollars or more to make it financially feasible.

Also, make sure you do it discreetly and safely.  Use a money belt and your hotel’s safe for large sums.

Finally, don’t go into hock for your vacation…only spend what you can afford. Also, only go where you can afford to go…don’t get to the point where you have to take out a loan to pay for it…and have fun!

-Darryl
Copyright 2012 – Darryl Musick
All Rights Reserved