Do the Math Before Booking That Winter Vacation.

It seems that people are more than making up for the time (and experiences) they put off during the pandemic.

Figures from the International Air Transport Association show that travel has reached 90% of pre-pandemic levels. According to hotel analysts, travel is not being viewed as a ‘nice to have’ – but a priority!

But just because you can book a winter escape, the question is, should you?

With today’s runaway inflation and rising cost of living, debt advisors recommend you crunch the numbers before laying down your credit card on a winter getaway.

Here are some important calculations to tell you if now is the best time to take a trip and if it’s a treat you can truly afford.

Calculation 1:

How much money can you put toward repaying that trip?

Like everyone, you’re probably noticing your paycheck doesn’t go as far as it once did. Rising costs for food, gas, rent/mortgage mean less money at the end of the month to cover discretionary spending (the ‘nice to haves’… like entertainment and travel.)

Where possible, using any savings you have vs. a credit card is always advisable. That 21%+ interest rate can add up fast.

A big deciding factor is if you have money left over at the end of the month – or if there is other discretionary spending you can redirect into your holiday budget.

Based on your discretionary income, figure out what you can afford to spend without getting too deep into debt. Better still, try avoiding going into debt altogether.

If you put $3,000 on your credit card, figure out how long it will take you to pay it back. If you can commit to $1,000 a month… you can pay it off in a few months. If you only have $200 at the end of the month, it will take significantly longer.

And we can guarantee that a $3,000 holiday is going to cost a lot more than $3000 once you add in tax, interest and everything else. Again, ask yourself… can I really afford this?

Calculation 2:

Set a Travel Budget… and Stick to It!

Once you know how much you can afford… set a budget to match. Your budget will impact which destinations, flights, hotels and packages you choose. Don’t forget, you’ll need to eat… so include food and beverage costs. Be sure to budget for incidentals (eg. taxis, souvenirs, travel insurance, luggage costs).

Experts recommend including a 10% contingency to cover unexpected costs that may arise.

Pro tip: There are several great travel budget templates available online.

 

While memories last forever, debt can last for years and have a major impact on your life.

 

Calculation 3:

Shop Around for the Best Deal

This is a no-brainer. Do your homework.

Shop around and see what locations are most affordable and which are over-the-top expensive. If you are going to a place like Disney World, be sure to factor in the cost of park passes.

See which airlines (and which flights) offer the best value. Can you save money on package deals, or are you better off booking everything yourself? You can often reduce costs by choosing an Airbnb instead of a hotel.

If the vacation you had your heart set on is out of your budget… don’t worry. Look for alternatives. There are a lot of hidden gems out there! You just need to know where to look. Alternatively, maybe consider a staycation if that’s more in line with your budget.

Other tips:

• Look for areas outside the major tourist districts: Hotels are always more expensive downtown and near top tourist attractions. You’re likely to find cheaper room rates a few kilometers away. (Just make sure it’s a safe part of town).
  
  
• Avoid high travel season: Late December is the most expensive time of year to travel. You can save thousands by shifting your travel schedule to early December or January/February when demand is down.

For example, an all-inclusive Sunwing Vacations getaway from Calgary to the Grand Oasis Hotel in Cancun between December 19-26 is $2,265 (per adult, based on double occupancy). That same package (1-day shorter) jumps to $2,935 if you book over the holidays (Dec. 22-27, 2023).

• Be flexible with departure times: The more convenient a flight time, the more popular – and expensive – it will be. Leaving earlier or later may cut into your beach time, but it could save you hundreds.
  
  
• Consider Monthly Payments: Some travel companies allow you to book your trip based on a monthly payment plan. For some, this may be a more workable option. That said, interest rates can rival that of credit cards.

Calculation 4:

Start Saving Now for Future Travel

As mentioned earlier, it is far better to pay off a vacation at the time of booking than putting it on your credit card.

Start putting away money every month with the goal of booking a vacation next winter. Waiting a year may put you in a far better financial position than booking today.

You Want to Escape Stress – Not Add to It! 

One of the biggest reasons to book a vacation is to relax and escape the pressures of everyday life. If you’re already struggling to pay your mortgage and cover grocery bills… adding a $6,000 vacation will only compound your worries.

If the numbers add up and you can afford it… enjoy that well-deserved getaway. If not, consider putting it off and avoid the added stress of unmanageable debt.