Total Money Makeover vs. Vacations

Discussion in 'Budget Board' started by sk!mom, Sep 6, 2005.

  1. sk!mom

    sk!mom DIS Veteran

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    I posted a reply similar to this on one of the threads but I decided to start a new thread. I'm not trying to be judgemental- I am really interested in how people reconcile vacations with trying to become and stay debt free.

    As I skimmed various threads on this topic, I noticed that many who are participating have recently taken or are planning expensive Disney trips according to their signatures. I've read enough of Dave Ramsey's stuff to know that he wouldn't recommend vacations for those that are struggling financially. At the very least, if you do not have a healthy emergency fund in place then an expensive vacation is probably not the best idea.

    DH and I saved and took one trip to WDW in 1990. We did not return until 2001. This gap was partly caused by us traveling to other places but also partly because in our early years we had other priorities such as getting well established in a debt free lifestyle. We are now in a position to budget more for vacations and have been to WDW 3 times since 2001.

    Vacations are very important to me but I wouldn't take one that I couldn't comfortably afford without dipping into my emergency fund.

    What do others think? Is a vacation necessary enough to go into debt or spend emergency funds in order to go? or Should vacations only be taken with true "extra" funds?
     
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  3. shelly3girls

    shelly3girls <a href="http://www.wdwinfo.com/dis-sponsor/index.

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    We would definitely not go into debt or dip into emergency funds. I know that many people use Dave Ramsey's plan to truly get out of debt b/c they are in financial trouble. It seems that many on this board use his plan to have extra money to pay for these vacations while living out of debt and paying down mortgage or saving for retirement/college. I am not real familiar with his plan but it seems it works for either situation.

    We actually budget for our vacations. Yes, this money could go towards other things (those listed above) but we contribute to all of those things first then take a vacation(s) we can comfortably afford with what is left.
     
  4. lbgraves

    lbgraves Little Cinderella's Mommy

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    We wouldn't go on a vacation if we were not able to pay it off without having any interest added to the total. I wouldn't be able to enjoy it as much.
     
  5. NY Disney fan

    NY Disney fan DIS Veteran

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    I dipped into my emergency fund to go to Disney this year. The cost was extremely low and with the free dining plan we couldn't resist! Can you say Emergency? LOL!! My DH and I did not go anywhere this summer and didn't do anything fun so we decided to go to Disney for a Fall surprise. Between the time we reserved the trip and the actual trip (in 8 days) 50% of the money has been replaced. Sometimes you have to live a little, it just depends on how much you spend and what you can handle. After we come back from Disney, we are going full steam ahead with our savings. Our emergency fund is one month away from $10K and we are on target with retirement. I have practiced Mary Hunt's (cheapskate monthly.com) methods of financial planning combined with Suze Orman so I can confidently say I know what I am doing.

    Also, we have no debt except for mortgage.
     
  6. blanq

    blanq <font color=red>A 42 year old fan of Peter Pan's F

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    I am not doing the Dave Ramsey plan, but my household is on a budget for the first time. We have little debt to pay down (mortage of $135K, one car we owe $8K on and it is a 0% interest rate on the loan, and $3K on our home equity loan). We need to build up our emergency fund and would like to pay off the home equity and car loan, hence the budget. We are doing well with long term savings and education savings for our DS, so will stay on track with those plans. Will we continue to vacation? Absolutely, but while we used to spend about $10K a year on various trips, we are scaling back and budgeting just $3K for the next year. We have never gone into debt for any trip, and would not. If we had credit card debt, had trouble paying our bills, etc., we would not be vacationing at all.
     
  7. arminnie

    arminnie <font color=blue>Tossed the butter kept the gin<br

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    I made my first trip to WDW in 1980. I fell in love and was dying to go back.

    I did not get back until my company sent me to Orlando on business in the early 90s! I just didn't take vacations that I couldn't pay for.

    I'd like to give encouragement to those of you working hard on your budgets and retirement planning. I am now retired and because I didn't charge a bunch of vacations in the past, I can now go to WDW whenever I want.
     
  8. crisi

    crisi DIS Veteran

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    I think you need to apply these things to you in a fashion that will work. Money management can be like a diet (and it is). If you don't allow yourself any treats, you blow your budget. The trick is to balance the input with the outgo in a a fashion that allows you to reduce debt (or weight). For some people this may mean a strict "diet" and quick weight loss/debt reduction followed by a lifelong but easier maintenance mode that involves lifestyle changes from what they had, but less sacrifice than what they gave up relatively short term to get there. That's what Dave Ramsey seems to recommend. For others, this will be a lifelong struggle of losing 10 pounds (or $5,000 in debt) to gain seven back. As long as you don't gain more back than you lose, its progress.

    Personally, when it comes to finances, I'm a "sacrifice up front, enjoy a pleasant worry free life later" girl. We also spent years not going on vacation. But my first marriage was to a "do today, worry tomorrow" guy, so I've been there, too.
     
  9. RichNKatHolly

    RichNKatHolly DIS Veteran

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    I'm on the other thread mentioned as well. Like I said there, we personally will not go into debt to do our vacation in November. It was fully paid for in cash as will be our spending money. Now, we do not have a fully funded emergency fund, but will have one within months of returning home thanks to our tax refund.

    I guess I justify the expense since I know months later my emergency fund will be paid, and we do not have credit card debt. We don't own a house yet either. But I think my kids will have more fond memories of us taking a trip here and there rather than whether we rent or own. Don't get me wrong, a house would be great, but it is far off. We will go on vacation now and then not for a while. Well, not a Disney priced vacation anyway. Although there are many ways to do Disney on the cheap as well.

    I know many people charge their vacations, it is not for us, but it is not for me to tell them what to do either.

    Dave Ramsey's plan does allow for "blow money" but I'm not sure he means to the extent of several thousand dollars for a vacation. I am trying his plan having just finished the book yesterday, but I am making modifications to it as we go. IE. I will not stop contributing to DHs 401K so we can have an emergency fund set up sooner.

    Wow, that was long, sorry!
     
  10. JMSMommy

    JMSMommy Mouseketeer

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    We are still in "debt snowball" and going to Disney in less than 3 weeks.

    We've been in "debt snowball" quite a while due to losing that "gazelle intensity." I don't think our vacation is extravagent, it has been completely paid for since the end of July. The total due to free dining, staying in value, the youngest being just shy of 3 (he turns 3 in October) and driving down (although I'm beginning to wonder on that one) is quite "reasonable." We checked out the "debt snowball" projected end date (thanks to a Dh who is an Excel guru and is tracking and projecting) going to Disney put us paying off the total consumer debt by 2 months. 2 extra months in debt snowball was worth it to us to go to Disney to create those memories while the kids are young enough to think those characters truly are REAL.

    We are also planning on a rather LARGE expenditure next year that we will probably get a loan for (again projecting we are supposed to be consumer debt free when we travel, so we will probably be paying cash where possible and put off debt repayment). What are we doing? Adopting from China, and waiting until we can afford to pay cash will take too long. The current adoption tax credit is in process of possibly being raised, and we are going to apply for grants. We're doing fundraising too, but mostly we're trusting God since He is the one who put this on our hearts at this time. We felt that going to Disney with the boys before we start on the adoption road was the right thing for our family.

    From what I've read, heard, and learned from Dave is that it is okay to splurge on things as long as we can pay cash for them while in debt snowball. We have. We're okay with being in debt for 2 extra months overall.

    Dave probably wouldn't okay the "adoption loan" but I've learned when God tells me to do something I need to listen. I'm hoping that when it comes down to it, we won't have to get the loan, but it's the "back up" plan.
     
  11. lisajl

    lisajl <Font color=green>This is our dog Chloe!<br><font

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    We wanted to go to WDW this Thanksgiving, but realized we just can't do it.
    Now with my DD's health in question, we definately would not go.

    we are doing the TMMO, and I am very excited about it.
    We don't have a lot of debt, but I want it all gone. I really want to have that emergency fund ready for anything. So, no, we would and will not be going soon. Hopefully next year we will be in a better position.

    I will not charge another vacation! EVER!

    Lisa
     
  12. RichNKatHolly

    RichNKatHolly DIS Veteran

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    First off, congratulations and best of luck to you with the adoption. That is very exciting! Given the magnitude of this adoption and it's possible impact on your family I can definately see taking a trip with your children. I would too.

    There are just so many personal situations out there that I think any one plan - straight through and by the book - is not for everybody. you have to work it and make modifications to fit your situation.

    Hey, I think about cancelling our trip and putting that money into the bank to complete step #3, but like you, we will finish that step a few months after we return.


     
  13. disneysteve

    disneysteve You have to enjoy life, not go

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    Here is my personal opinion - not intended to criticize anyone who acts differently.

    We would not go into debt to take a vacation. A vacation, pure and simple, is a luxury purchase. It is a want, not a need.

    If we didn't have the funds to take a vacation and pay it off 100% when the credit card bill came, we wouldn't go.
     
  14. annsteere

    annsteere DIS Veteran

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    Just not adding to the debt was good enough for us when the kids were small. We were very disciplined about eating out and hiring sitters but the trip to DW seemed more important than building an emergency fund. (I've got a theory that my home equity can serve as an emergency fund--in an emergency I could use my home equity line of credit.)

    Actually, just not adding to our debt is good enough for me now. DD is in college and we are thinking about a quick trip before she takes a "real" job. We won't be staying concierge at the Grand Floridian, but we won't let the fact that I now have a car and some of her college education on the home equity loan stop us. I'm saving change, doing surveys, mystery shopping, and have an extra temporary part time job to avoid putting the trip on a charge card. But, she's growing up and growing away. Car payments will be made monthly and no better while we enjoy this time together.
     
  15. dadtoagirl

    dadtoagirl Slowly being driven broke by two women!

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    Double Post - Sorry
     
  16. dadtoagirl

    dadtoagirl Slowly being driven broke by two women!

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    We have paid off home equity loan this year and working on car and mortgage at the same time. Hope to be debt free in about 6 years ( will be 36 at that time). I however need a vacation to recover from it all. I would in no way take a vacation on credit or use debt to finance it. I leave in 9 days for a week at the world that will be paid for in cash. I will enjoy myself and when I get back we will get back to work.

    PS - The Total Money Makeover is not only for people who live paycheck to paycheck or in a bad financial condition. We live very comfortably and have always had one years pay in the bank as an emergency fund, own a nice home, wife is a SAHM. I just want to live out my later adult years without any debt hanging over my shoulders.
     
  17. Reese

    Reese DIS Veteran

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    That we are currently paying down quickly. We didn't want to falter from our plan so what we've done is I have taken a six month full time position at work and Dh and the two oldest kids have taken a morning paper route. The money they earn and the extra I'm bringing in all goes into the vacation account. This way we are able to still keep paying down our debt as aggressivly as before and should have our cc debt paid off by the time we go on vacation. The vacation is my carrot, I need the incentive dangling in front of my nose or else I would revert back to my old ways.

    I know that I could use the money to make a nice mortgage payment or pay off the cc sooner but we realized life is to short. We started planning this trip after our youngest DS was out of the Children's Hospital with a seroius illness. We wanted to make some memories and after all the bad luck the last two years have brought we thought we should do this. I just wanted to make sure that we would be putting ourselves no further behind by doing it.

    I should add that we are not struggling for money but we are carrying a debt load and my goal is to have that gone.
     
  18. bettyann29

    bettyann29 <font color=blue>Heres my contribution for today..

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    I wouldnt go if I was actually financially strapped.. but I do vacation quite frequently and I still have bills.. Could I use that vacation money to pay down bills, yes... but I dont.. I personally believe time spent with my family is money well spent and wouldnt have it any other way... I dont charge anything.. I save the money ahead of time.. I put money back each check like its a bill and start saving for the next..
     
  19. dvcgirl

    dvcgirl DIS Veteran

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    No, we'd never in a million years take a vacation if we were in debt. We'd also never dip into our emergency fund. And I'll go one further....We wouldn't take a vacation unless our retirement and investment goals for the year were in line.

    I understand that sometimes people need a vacation. Perhaps they haven't had one in awhile and so they skip some retirement savings, or they dip into the emergency fund...or even worse, go into debt. Every and now and again, you need a break from life. It's when that kind of "dipping" becomes a regular thing that people get into trouble.
     
  20. agotta

    agotta <font color=red>WISH Biggest Loser/Red Team</font>

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    I guess my attitude is life is to short. Mind you we don't have kids yet, so if for some reason we got too deep in financial trouble, it only affects us. That said, on our honeymoon we bought into the DVC. #1 I had a huge CM discount and #2 we knew down the road it would be worth it. So this next trip of ours that we really couldn't afford....we rented our points and it is paying for the entire vacation. That way we can still put money away toward debt/saving and enjoy ourselves on vacation. Yes we could have rented out those points and put it toward a credit card, but....
     
  21. etwinchester

    etwinchester DIS Veteran

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    I'm working on baby step #2. I'm not planning a Disney Vacation untill 2008 and by then, I should be done with that step. I'd rather go debt free (except for mortgage) and be able to enjoy the feeling...

    We do take 2 little weekend vacations per year. One is to Knoebels and the other is Wildwood. We plan for these vacations and make sure money is set aside. Big vacations will wait.
     

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