You did a bang-up job this year with planning your vacation. You documented through the numerous selfies of you and whoever happened to be in the background every living moment of this trip. In fact, this trip was the road trip of a lifetime in terms of the mix of fun days out combined with culture and incredible food.
While not traveling abroad, you hung out in some cool places, and after checking out all of the locale’s culinary delights, you have become the sophisticated traveler, and your credit card is proof. On the trip home, you returned to a stack of bills, some overdue, a few calls from friends asking about the trip, and one creditor regarding a late payment from your low rate car loan. Your finances are not in the pits yet, but this trip, while helping your mental health, has really been detrimental to your finances.
Continue reading to learn more about how you can easily avoid the financial aftermath of an expensive holiday and instead come home feeling relaxed and refreshed.
Calculate The Damage
After posting all of those pictures of your fantastic road trip on Facebook, calculate the total cost of the trip. This figure should include every purchase you made including hotel accommodations, gas, car rental, meals, and any excursions. With that amount decided on, set up a budget for paying off the figure. For the most part, it is difficult to tackle a financial problem if you do not have a set amount to look at.
Institute A Spending Freeze
At this point, you have already spent the money on the trip, so you cannot get it back. Depending on your financial circumstance, you might have to exercise a little discipline or completely shut off your spending altogether. By instituting a spending freeze on non-essential items, you can actually find extra money to not only stay afloat but to also pay down existing credit card amounts.
When instituting this freeze, exchange going to the movies with watching movies online or on cable. Instead of eating out, learn how to cook some of your favorite entrées. Finally, absolutely avoid purchasing new clothes unless you are absolutely necessary. This might seem draconian, but by avoiding frivolous spending, you can actually pay down on existing loan balances.
Devise A Plan For Paying Balances
After instituting a spending hiatus, create an agenda for climbing out of debt. Most financial advisors counsel clients to pay smaller debts first and then apply the extra money to larger debts. Another approach is to look at the interest rate on the loans you have and pay off higher interest-bearing loans.
If your situation is serious, consider consolidating your loans and paying one interest rate on your outstanding debt. By devising a plan, you actually have actionable objectives that culminate in the goal of reducing debt.
Whether it is a holiday bonus or a tax refund, consider applying any extra funding to reduce your loan balances. The temptation would normally be to see this money as extras that can be applied toward a fun day out or going shopping, but ultimately, you want to reduce the amount of debt you are currently shouldering. Finally, the sooner you pay down the debt the sooner you can save for another trip, for long-range plans, or any of your financial goals.
Road Trip Recovery
The road to financial recovery after an expensive trip is not long with discipline. By cutting off spending and drafting a plan, by year’s end you can have reduced your total debt, depending on the damage. Enjoying life is important, so it is not that you have incurred debt in taking a trip, but it is how you manage that debt when returning home.