Monday, 22 July 2019
Americans With Debt Don't Want to Sacrifice on Travel: Should You Save So You Can See the World?
As a nation, we're struggling with more debt than ever. According to recent statistics, U.S. consumer debt increased by 5% from April to May of 2019, totaling $4.09 trillion. Between credit card debt, educational loans, and bankruptcies resulting from unpaid medical bills (the last of which affected an estimated 2 million Americans during 2013), it's no wonder that many of us are feeling bogged down by what we owe. But evidently, we aren't willing to give up certain privileges due to our debt. In fact, a substantial number of Americans say they wouldn't forgo traveling due to their debt -- and some are even willing to take on more debt to have these experiences.
In 2017, domestic travel increased by nearly 2%, representing 2.25 billion personal trips throughout the United States. But whether you want to stay state-side or travel to a distant country, being able to afford a vacation can be a challenge. That's particularly true if you're already struggling to pay for your lifestyle. And yet, according to an online survey conducted by CreditCards.com, 70% of U.S. adults who have existing credit card debt report that they would be unwilling to reduce their leisure travel expenses by 50%.
Despite the fact that many Americans are leaving unused vacation days on the table each year, those who do choose to travel tend to view these expenses as necessary ones. The average household with credit card debt spends roughly $2,211 per year on leisure travel, while households with no credit card debt spend around $3,188 per year on leisure travel. Since the federal government shows that the average household with this type of debt owes $5,700 and the average credit card charges a 17.76% interest rate, making no progress on paying off this debt can have huge consequences. According to one expert, making only the minimum payment on your credit card will keep you in debt for almost 20 years and force you to pay nearly $7,500 in added interest, which can make it nearly impossible for you to start saving for retirement or higher education for your children.
Still, many Americans remain undeterred. Millennials, in particular, are not willing to put off a vacation -- even if they can't actually afford to travel. This generation is actually the most likely to go into debt due to traveling, perhaps because these individuals are more concerned with experiences than material belongings. And since millennials already deal with low wages, side hustles, student loans, and unaffordable housing, it's no surprise that debt has become constant in their lives.
Although it's not impossible to travel with debt (particularly if you're dealing with student loan debt or car loans, rather than credit card debt), it'll behoove you to be smart when planning your trip and to take steps to tackle that debt prior to setting out. Planning a trip on the cheap -- choosing a vacation that's closer to home, for example, or offering to house sit for a friend can be a great way to see new places. You might also consider taking a shorter trip, cutting back on food expenses when possible, or keeping an eye out for free or affordable activities. Of course, you'll also want to make attempts to face your debt so that you can feasibly afford a vacation. Identifying the habits that have added to your debt, assessing what needs to be done to pay it off, and meeting with a financial planner can all allow you to gain a bit more monetary freedom.
It's clear that countless Americans are more than willing to travel in spite of their debts. But by paying off those debts and saving money specifically for travel purposes, you can alleviate some anxiety and take action to gain control of your financial situation -- without having to skip a much-deserved getaway.