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Nazran
06-03-2009, 08:36 AM
I don't use credit cards after getting myself in to trouble early on in my adult life. My wife and I have managed to save X amount of money in the last nine years. I am thinking I am going to finance a 5night 6day-ish trip in a deluxe with dining in a few years.

My thought process is....

If I lost my job today I have about 2 months of living expenses saved. I would hope by the time of the trip (Summer 2011) I should have enough money saved to last about 9-12 months if I were to lose my job, barring some unforseen huge expense. (Do you hear me house AC! Hold out little buddy!)

My question (which I realize may be tough to answer not knowing cost of living, economy, job strength, etc etc) How much in savings would you need to have before you felt comfortable taking a large chunk out of it to finance a trip? In 2011 that might take my 9-12 months of living expenses and reduce them to 6-9 months.

I hope this makes sense.

lovemygoofy
06-03-2009, 08:47 AM
Great question!

My husband and I are thinking and talking this over almost everyday lately. We had a great savings account before our move two months ago, which cut us almost in half. Still waiting not so patiently for reimbursement to make our padding up. We are also still getting used to a new budget and new high cost of living here.

We would love to take a vacation but hate to think about taking money out of the savings account that we are slowly, and I mean s-l-o-w-l-y rebuilding. Our solution is to cut our savings account deposit to 75% and 25% to a vacation account. We also plan to split any tax return money or raises for these accounts When we are happy with the amount in the regular savings or reach our vacation amount goal, we will vacation.

Instead of one extreme or the other maybe you can do something similar to this and create a vacation account. You will still be building and have a good savings and still have the money saved on the side for a vacation.

extremesoccermom
06-03-2009, 08:49 AM
I also don't do debt. We have been debt free except the house since 2006. I budget my savings, vacation, house repairs, car repairs, groceries, weekly allowances (including my own) and utilities.
For us vacation is a must. Currently I have enough for 6 months if either DH or I loose our job but I am increasing that to 12 months. We had wanted to buy more DVC points but that is on hold now. Once I get the 12 month cushion built up THEN I will save for the "extras".
Not sure if I am really answering your question but I would save up the 12 months then start saving for vacation. Or do both at the same time depending on your confidence in your job.
By the way I also have 3 jobs. All my babysitting money pays for DS19 college and vacation funds. My regular job pays the bills and savings. My AVON sales goes for a little of everything - right now I am saving for a Wii and Wii fit.

wall*e2008
06-03-2009, 10:26 AM
I would save the money and then in the end of 2010 I would evaluate your job situation and saving account and then decide if you can afford a vacation and the amount you could afford.

PinkRhombus
06-03-2009, 10:32 AM
We have a larger than normal emergency fund...like to keep it around $5,000. That would cover the air conditioner going out, etc. Anything above that is fair game for travel and extras. Can't do ANYTHING extra until it gets back up to that level.

Then, honestly, we'd hit up our girls private school savings (it's just a plain account we use to stash the money) if we had something bigger happen. If we couldn't afford the basics, we certainly shouldn't be paying for private school tuition. We pay tuition in full for school each year, so they would at least be able to finish the year out.

Ava
06-03-2009, 10:36 AM
If you feel like your job is somewhat stable, I would start a seperate "vacation account" to save for the trip. If something happens and you do lose your job or have a large expense come up, you can always use the vacation money towards it and then start building up the account again.

RN4Babies
06-03-2009, 11:05 AM
Other than my mortgage, I have no debt either. I had always thought that having six months of living expenses in savings would be enough....then I was diagnosed with cancer two years ago. I was 45 years old, going through a divorce, and the sole support for my two kids.

I'm now aiming for a twelve month cushion. (Currently at eight months!!). Short term and long term disability payments were better than nothing, but my medical bills have been humungous. I'm an RN and am not at all worried about job security, but my health situation is always at the back of my mind.

We did do a WDW budget trip (first trip to WDW for my kids!) this past February. We stayed offsite for a week, had a great time at the four different parks, Hoop De Doo, etc. With all that we've been through during the last couple of years, it was money well spent IMO. Before that, our vacations were mini weekend getaways, long weekend camping trips, etc.

Everyone's situation and comfort level is different; when the time comes, see where you're at and go from there.

wall*e2008
06-03-2009, 11:10 AM
Other than my mortgage, I have no debt either. I had always thought that having six months of living expenses in savings would be enough....then I was diagnosed with cancer two years ago. I was 45 years old, going through a divorce, and the sole support for my two kids.

I'm now aiming for a twelve month cushion. (Currently at eight months!!). Short term and long term disability payments were better than nothing, but my medical bills have been humungous. I'm an RN and am not at all worried about job security, but my health situation is always at the back of my mind.

We did do a WDW budget trip (first trip to WDW for my kids!) this past February. We stayed offsite for a week, had a great time at the four different parks, Hoop De Doo, etc. With all that we've been through during the last couple of years, it was money well spent IMO. Before that, our vacations were mini weekend getaways, long weekend camping trips, etc.

Everyone's situation and comfort level is different; when the time comes, see where you're at and go from there.

I hope you are now cancer free.

You are one strong women to battle cancer, get a divorce and the sole supported of your kids all at the same time.:worship:

Karenj2
06-03-2009, 12:38 PM
I use CCs (well, one in particular and have a backup), but pay them off fully every month. Our only debt is our mortgage, a car loan, and a loan for our IVF treatments since we're not covered by HMO.

As for savings - what I do is have multiple accounts:
- our checking account (which isn't really a savings account, but we've got a mini "buffer" for the automatically withdrawn payments...)
- General Savings (which is where we used to move money from to go to the checking account, but it's been static for a while.)
- Christmas Savings (self explanatory)
- Emergency Fund (which we currently have about 2 months of ALL expenses covered, or 5 months of just our mortgage covered. We're working on having a full year of ALL expenses covered, just in case.)
- IVF loan repayment (we can't pay extra to our loan per month, so we're putting money aside so that when we reach the halfway point we'll be able to pay off the balance.)


So, my longwinded answer to your question is, if you're still agressively saving towards your EF, I'd say go for your vacation! You could also do what OP have done - continue to save towards your EF, and find "extra" ways to save for your vacation, so your EF savings don't take as much of a hit.

We have a larger than normal emergency fund...like to keep it around $5,000. That would cover the air conditioner going out, etc. Anything above that is fair game for travel and extras. Can't do ANYTHING extra until it gets back up to that level.

I'll be honest with you - I think you've got a different idea of what an emergency fund is than me... DH and I have basically said that anything other than losing our jobs does not count as an emergency and has to come out of our general savings. The reason we've got that mindset is that in 2004 I lost my job, then he went on long term disability for an illness. Basically we were living on 1/4 of what we used to make for a year and a half, and it ate up our savings VERY quickly! We borrowed money from his brother (which we've repaid), but then luckily DH got better and we both got jobs.

tnd
06-03-2009, 12:49 PM
I treat my savings as sacrosanct. Once money goes in, it only comes out for emergencies or major purposes (e.g. a major car repair, home repair, downpayment on new car, etc.). Right now, we're at about a 6 month emergency fund, which I am comfortable with because my husband has a secure job. We're still saving, but not for the emergency fund. We are saving more for a new car because our 13 year old car will probably need to be replaced in the next year or two.

For us, vacations are budgeted and paid out of current income, not pulled out of savings. We budget vacation as a line item and cut back in other luxuries to make up for it. To me, an emergency fund in savings is for emergencies. Vacations aren't emergencies, so they get budgeted like other items we want.

Handbag Lady
06-03-2009, 01:54 PM
Are you emergency funds x months based on what your take-home pay is for that time period or is it your expenses for that time period? I've always wondered.

I have expenses for x months, but I'm working on making it take-home pay to build in more cushion.


Anyway, we plan ahead $2000 for vacation or whatever amount and then pre-pay from pay-check excess on everything we can so that the vacation is paid for in cash before we go.

Colleen27
06-03-2009, 02:32 PM
Are you emergency funds x months based on what your take-home pay is for that time period or is it your expenses for that time period? I've always wondered.
.

We base it on expenses, for a couple of reasons. First and foremost, our expenses are pretty much fixed, other than fluctuations in the prices of gas/food and such, while our income is highly variable. There might be a difference of $4000 between our best and worst months in any given year. So planning based on expenses is much easier. Second, our expenses are only a fraction of our income on an annual basis. Planning to have one year's income in savings would be enough to cover 3+ years' worth of expenses, and we don't feel like we need to have quite that much of a cushion set aside.

Colleen27
06-03-2009, 02:37 PM
My question (which I realize may be tough to answer not knowing cost of living, economy, job strength, etc etc) How much in savings would you need to have before you felt comfortable taking a large chunk out of it to finance a trip? In 2011 that might take my 9-12 months of living expenses and reduce them to 6-9 months.


It would really depend on how secure I felt my income was. We were fine with a 3-6 month cushion when DH was traditionally employed, but built up to about 18mo worth of living expenses when he decided to start his own business so that we could weather ups and downs.