HOW TO PAY FOR VACATION / THE AVERAGE BC FAMILY SPEND ON VACATION.
How to pay for vacation or payoff your vacation loan?
Now that we are into the Canada Day Long Weekend, here is a blog that might help someone you know or perhaps you’re considering how to pay for much needed vacation expenses. We all either know someone or have done it ourselves; borrowed too much or extended our budget too far in search of that dream vacation.
THE WRONG & RIGHT WAY TO PAY FOR YOUR NEXT VACATION
I have no money should I put the trip on my credit card?
Credit cards come with a high rate of interest and amortized over a short period of time. Charging a vacation to a credit card can have devastating impacts on your finances when you return. As well trying to refinance that debt at the end of your vacation is a reactive measure, try being proactive. If your vacation costs affect your ability to maintain a good credit rating and you are a home owner this could dramatically affect your ability to refinance your mortgage or even renew.
Apply for a Line Of Credit, Home Equity Loan or a Personal Loan prior to leaving.
By applying for a vacation loan prior to your dream vacation you will have a better sense of your monthly obligation prior to leaving. If you don’t have a plan for success you run the risk of damaging your credit rating by over extending yourself. This may lead to a bad credit rating and make it harder & more costly to qualify for loans with bad credit.
Planning and budgeting all the money for that much needed vacation is by far the best way to enjoy that dream vacation. If you are paying for all or the majority of that summer or winter vacation prior to leaving you run little to no chance of falling into financial hardship.
This is really a personal decision that depends greatly on your fixed living costs, lifestyle choices and the cost of living across Canada. If you value seeing the world over having higher net worth in housing, cars, higher education, money left over for family then adjustments will be made so that you have larger sums set aside for travel.
Some reports state the average family will spend on vacation 5 – 10% of their gross annual income each year. That works out to either side of 1 months’ pay. So a family with a combined annual income of $80,000 will spend on average $4,000 to $8,000 per year on vacation. This could be one big trip to a sunny destination or split up between camping and traveling depending on the amount of time off you can afford. If you are self employed you must consider that you may not be earning money while you are away and adjustments will need to be made to compensate for this.
That is the million dollar question; with housing costs in Vancouver BC, the highest in Canada, the average detached home price $1.36-million and average rent in Metro Vancouver at $1,005 for a one bedroom and $1,281 for a two bedroom. Couple that with the BC average weekly wage of $873.14 = $45,403.28 annually. This comes down to a life style choice for many Vancouverites. Maybe you go on less than the national average due to you living in a city that offers so much to do. Or maybe you go on one big trip every two years.
WHAT DO YOU DO TO FIND VACATION MONEY?
- Put it on credit & make payments
- Live in a smaller home
- Rent in a less expensive neighborhood
- Only have 1 car
- No Car
- Walk to work
- Have family flip the bill
- Only go on vacation once a year
- Don’t dine out
- Live a simple life
- Don’t have children
Airline Tickets: Cost of airline tickets are on of the largest expenses in traveling.
Hotel Prices: A hotel across from the water is a great way to save big on your next vacation.
Food & Alcohol: All inclusive options can bring down the costs of food & alcohol.
Entertainment: Water activities nightlife and tours are all costs that can add to the cost of your next vacation.
Pets: If you are taking your pet or leaving it behind there can be an extra cost.
Medical: Additional medical coverage for vacations outside of Canada is a must.
Transportation: Cabs, buses even rental cars can quickly add up. Plan on what you are doing and how you are doing it.
Souvenirs: Purchasing and in some cases shipping those gifts home come with an added cost.