Planning your theme park vacation: Step 1 - save, don't borrow, the money
Published: November 6, 2008 at 11:44 AM
Many folks equate "theme park vacation" with "week in Orlando." While we certainly will find ways for many of you to get that great, affordable vacation to Central Florida, I'll also show you other options from around the country (and, in a few cases, the world). A family weekend at Legoland and the beach in Carlsbad, Calif. The couple days at Dollywood while camping in the Great Smoky Mountains National Park. A mid-year history trip to Williamsburg, Virginia, with a day at Busch Gardens, too.
But before we get to any potential itineraries, we have an important issue to address first: money. Like I said, the goal here is to plan a vacation for the lowest possible price. To do that, you need to start right now.
The easiest way to save 10-20 percent, or even more, on your family vacation is to pay for it with your own money. Don't borrow it from the bank by charging it to a credit card. (Or, worse, doing something truly foolish like paying for it with a home equity loan.) If you put your vacation expenses on a credit card and leave them there for a year, you'll end up paying not just the cost of the vacation, but 10-20 percent more for the interest charges on that balance, too.
Pay off your vacation when you take it, and you save that extra expense. And, if you squirrel away your money into an interest-paying account during the year, you can consider the interest you earn an extra discount on the cost of your theme park vacation. (There's an engaging video at DaveRamsey.com that using the example of buying a car to show how people who pay cash end up way ahead in the long run over folks who borrow. Also, it's okay to put your vacation expenses on a credit card if you pay it off every month. Charging to, then paying off, a low- or no-annual-fee rewards card also can help you cover the cost of a vacation by earning you free airfare, hotel rooms and rental cars, too. Just try to use one card for all your expenses throughout the year to maximize your rewards.)
Saving in advance also helps you control the cost of your family vacation. If you didn't save it, you can't spend it. But don't think that means you can't have a fun vacation. I'm writing this series to help you find a fun, relaxing and memorable vacation, no matter what your budget ultimately turns out to be.
So how are you going to save up for your vacation? If you are fortunate enough not to be living from paycheck to paycheck, think about how much money you would be willing to take out of savings, right now, for a family trip. That's your base. If you are living paycheck-to-paycheck, your base is zero, but don't worry. We can find a way to build from there.
Whatever you do, do not take money from a retirement account, or reduce the amount you are contributing toward a 401(k), to pay for your vacation. That's just borrowing from your future, and we're trying not to borrow for this, remember? :-)
Let's start by writing down every single thing you spend money on for the next week. Next Thursday morning, look at that list and decide what you can cut out and instead put that money toward your vacation. Bringing lunch from home instead of going out? Buying a cheaper cup of coffee in the morning, or brewing it at home? Skipping a couple weekend getaways for a better week-long vacation? Figure out how much money you can set aside each week to pay for your vacation. Then do it. Transfer it into a savings account and leave it there.
Count your pennies, too. Put a jar on the night-stand and dump your spare change into it every night. Have your kids do the same with their own jars. You might be surprised how much "walking around" souvenir money you've saved this way by next summer.
With your budget in hand, you'll be able to make a more informed decision about what kind of vacation your family will be able to afford. Not only that, you'll be able to envision your vacation knowing that it will not put you deeper in a financial hole. How reassuring would that be?
It gets better, too. With your 2009 vacation paid off the moment you get home, you'll be able to start saving for 2010, without any old vacation debt payments slowing you down. And so on.
Next week, we'll start thinking about specific destinations. Excited yet? You should be. Planning a trip can be a great way to enjoy your vacation 52 weeks a year. Start writing down your expenses and let's get started.