How To Travel And Reduce DebtJun 18, 2018
The summer is calling and the urge to travel is growing; how can you do it and still be committed to reduce your debt load? This is one of the topics our Licensed Insolvency Trustees (LIT) tackled in the June edition of the BDO Podcast.
Throughout the podcast, you’ll hear advice to a variety of travel and debt questions including:
- Should Canadians travel when they’re in debt?
- What should people consider when planning a vacation?
- What is the advice for people who are tempted to blow the budget on an once-in-a-lifetime trip?
- How to return home from a trip without additional debt?
Ultimately, this boils down to your comfort level with debt and how you plan your finances. However, the question remain should you or should you not travel when you have debt?
Craig Fryzuk, LIT from BDO Calgary offers his advice on this question. Long-term debt like a mortgage or student loans can take years to pay off. Pushing travel off until these debts are paid off is unrealistic, but before putting money down on a trip, he recommends:
- Taking a thorough look at your debt including what type of debt you carry and how much interest you pay.
- Do you have a debt repayment strategy or a plan to get help with debt?
- Look at your overall financial health including your income and savings, as many Gen Xers haven’t saved anything for retirement.
If the bulk of your debt load is high-interest debt like credit cards, it may be in your best interest to rethink or downsize your travel plans to focus on reducing that debt first.
Your budget will also play a big role in your decision on whether or not you can travel and remain committed to paying down debt. Do you have wiggle room to save or are you maxed out each month? Will your travel impact your ability to keep on track with your debt repayment plans?
Travelling with debt isn’t impossible. Taking the time to save and plan everything out, however, is going to be the most important step you can take to avoid adding to your debt load while traveling. Knowing how much a trip will cost will allow you to make an informed decision about the impacts the trip will have on your overall financial health.
Should you decide to travel with debt there are steps you can take to avoid taking on new debt, which you can get from listening to the podcast.