That annual vacation isn't a right, it's a luxury. Financial planner Diane McCurdy offers some simple ways to break the costly "vacation entitlement" habit--and start saving now for next summer's outing.
Our income barely covers our monthly bills, we just financed a new SUV, the kids need braces, and we have $5,000 in consumer debt--but darn it, we work hard and we deserve a vacation! Can you relate to this sentiment? As summer gets into full swing and your friends and coworkers rhapsodize about their upcoming cruises and road trips, it's easy to start thinking you have a "right" to a vacation of your own. And that, says financial planner Diane McCurdy, is when the temptation to whip out the credit card starts to seem reasonable.
"In our instant gratification culture, people really do feel entitled to a big summer vacation," says McCurdy, author of How Much Is Enough? Balancing Today's Needs with Tomorrow's Retirement Goals (Wiley, 2005, ISBN: 0-471-73871-9, $14.95). "They rationalize, 'Well, I work really hard and I need a break for my own mental health, so I'll just put this trip on the card or on my line of credit and pay it back later.'
"But what if your grandmother who lives across the country dies and you have to put that trip on the card, too?" she asks. "What if your heat pump breaks down and you have to replace it? What if you do finance the vacation and spend the whole two weeks stressed out about the money you're spending? It is rarely a good idea to go into debt unnecessarily--and vacation is not a necessity."
So does McCurdy suggest foregoing your summer fun entirely? Not at all. She merely believes that vacations should never be "charged." If you can't pay cash for your dream vacation this summer then figure out an inexpensive alternative and postpone that lavish trip until next summer--and start saving for it right now.
Here is her three-step plan for breaking the vacation entitlement mindset:
"Be creative," urges McCurdy. "Get the whole family involved in brainstorming cheap or even free vacation ideas. You might discover that a day at the local water park is as satisfying to the kids as a week at Disney World."
"These are just a few tricks that will help you save for a guilt-free vacation next summer," says McCurdy. "Just don't forget to factor in all the costs associated with the vacation: new swimsuits, taxi rides to and from the airport, dog boarding fees, whatever."
"Finally, don't try to cram too many activities into the vacation," says McCurdy. "Allow some down time to sightsee or lounge around the hotel pool. Not only will you save money, you'll actually be able to relax--which is the whole point, after all."
"For many people, vacations are just one more way to keep up with the Joneses," notes McCurdy. "Even if you're not consciously trying to impress your neighbors or coworkers, you see them taking these lavish trips every year and it starts to seem 'normal.' It's not. If you can't afford a trip, it's an irresponsible choice, and if you have to charge it, then by definition you can't afford it.
"Chances are the Joneses are in hock up to their eyeballs and living paycheck to paycheck," she adds. "They're a financial planner's nightmare, and you don't have to live that way just because they do. So make your budget, start planning ahead, and get busy saving. When you finally do achieve vacation nirvana, you'll be able to savor every moment--and you'll have gotten started on a saner, more financially sound way of life."
Diane McCurdy, CFP, is an experienced financial planner with more than twenty-five years of experience working with clients. She began by starting her own insurance agency, which expanded over time. McCurdy is now an elder planning counselor as well as a Certified Financial Planner. She is a member of the Million Dollar Round Table, a group of the top 30,000 insurance and financial service professionals from sixty-one countries. McCurdy has appeared frequently on TV and radio in Canada and more recently has been speaking to groups in the United States and elsewhere.
How Much Is Enough? Balancing Today's Needs with Tomorrow's Retirement Goals (Wiley, 2005, ISBN: 0-471-73871-9, $14.95) is available at bookstores nationwide, major online booksellers, or direct from the publisher by calling (800) 225-5945. In Canada, call (800) 567-4797.
For more information, please visit how-much-is-enough.com.
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