WDW with credit card debt?

[mhsjax]

Your kids are only young once! I would not have denied DD the opportunity of experiencing WDW as a child. Fortunately we don't have CC debt and can still take nice vacations, but not everyone is as fortunate. They need to decide for themselves if it is worth the cost and risk to take a vacation.

On a side note, I don't understand parents' desire to fully pay for their children's education. To me that creates a bigger sense of entitlement than any vacation would. Now if my DD was able to go to college, I'd love to help her out, but she would get loans to pay for the rest.

I agree with you on the first paragraph. That is where it ends. I think parents should, if they can, pay for their kids education. To me it is their job. Any sense of entitlement, if there was one, set in LONG before college.

 

[mefordis]

I agree with you on the first paragraph. That is where it ends. I think parents should, if they can, pay for their kids education. To me it is their job. Any sense of entitlement, if there was one, set in LONG before college.

I agree. My dd's great grandparents immigrated to the US from Russia where
they were not allowed to go to school. Education is very very important in our family and has been for generations. We send our kids to college. Period. After that, the rest is up to them.

I feel terrible for these new graduates who have 25k - 100k in college debt. What a burden.

 

[bumbershoot]

Just curious, what do you believe your financial situation should be before planning a vacation to WDW?

What my philosophy is and what I think should be in a perfect world and what I do aren't the same.

Perfect world, no one should have debt at all. So we should all be free to do the things we can do.

Philosophy is that as long as things are being paid and I'm not scared, live life.

What I'm doing is that we don't have CC debt or medical debt anymore, and we do have DVC debt and I'm still taking vacations.

Actually, for us (and Im NOT saying that it would EVER work again,or work for others, or anyone should take this as a "see, it worked for them!" moment or anything remotely like that...this is what happened with us and us alone at that moment in time), financing DVC was a step in finally getting a clue. DH had begged to try for a CC, got one, then I let him alone with its use on a trip that I had budgeted fully for, and he spent exactly twice as much as I had budgeted. That was the second time he'd spent money we did not have, so he was fired from that position in our household, LOL. We were paying that off slowly (and I"ll tell you it was only $800, not even 1K, but it felt HUGE to me) and at some point in there we decided that DVC would be good because we were *already spending scads* of money on Disney trips. And it was only going to get more expensive once we started going to WDW. To us it felt like we would be spending *less * money, especially overall, if we bought in.

They were happy to finance us, and 10+% felt cheap b/c of DH's car loan at the time (near usury rates), and the amount was doable monthly.

And then, a day after our 10 day recision period ended, DH got news that he was being laid off in 2 months.

Crash down it all went.

We would not have been able to get a loan to pay off the difference that we owed and what we could get for our "used" Bay Lake purchase, so we really had no choice but to keep it.

DH has amazing luck with jobs (let me knock on wood there) and he got one, then another when we realized the contract position he had gotten with his dream company just wasn't going to work, and it not only woke us the heck up, but we were never totally and completely scared and freaked out, either.

We're in a much better position now than we were then. So it worked out for us, and I don't think it would have worked out like that if we had not JUST taken out a loan from Disney for 16K or whatever it was.

Anyway, we've got "sinking funds", several areas where we save money that has a name (which works so well for us it isn't even funny), etc etc. We're not perfect, though. We're about to have a "re-finding Ramsey" seminar in our living room to get us back on track and on target to get back to the 401K funding and to smash down the DVC loan.


While I understand that perfect people who do things instinctively (like my brother) don't get Ramsey and think he gives rotten advice, the advice he gives is SO MUCH BETTER than the advice many people give to themselves, and he can make ALL the difference.

I think if you feel stable regarding your debt -- you can afford your payments, your job situation feels stable -- then go! My relationships with my family, the memories my kids have, shouldn't be solely based on whether or not I've paid off my debt.

I like that way of saying it.

Same with Dave Ramsey. All I heard about when looking at Dave Ramsey was about how "inspirational" it was to hear from the folks who claim, "I paid off $60,000 worth of debt in 12 months!" Wow, how inspirational to those of us in the real world who don't even make that much in a year, let alone pay for all expenses plus pay that amount towards debt.

I don't *listen* to him; I read the one main book of his, all the free content on his website, and I have been a part of the Ramsey-based message board livinglikenooneelse.com. People are incredibly honest there, and you can see their salaries, their debts, and how they did it. NO, someone making 50K can't pay off 60K in a year without something really interesting happening, but I've seen amazing amounts be paid off with amazingly, relatively, low incomes, from what-I-assume-to-be real people on that message board.

I'm glad it has all worked out for you, but there are many people who would have paid down their CCs with the home equity loan (by the way, lucky to have a home and qualify for an equity loan! we don't own a home b/c I'm too nervous to see what sort of hovel I assume we could buy with a decent, sane loan) and then just spent those CCs right back up! The home equity loan is scary for some people b/c they've seen that happens SO many times...and then the person might lose their home; not just get annoying calls every day (and etc, if it continues) from a CC company.

 

[mhambrick]

Up until last year we never took vacations. We owe some money on 1 credit card, plus have student loans, and things always need updated around the house. We always said when these things we're paid off we would start taking vacation.

Last year at age 29 I was diagnosed with stage 1 melanoma. That changed everything for me. We didn't go crazy spending a ton of money carelessly or anything and I still contribute to 401k, but we decided we will be taking modest vacations every year to give our girls ages 4 and 2 those memories.

 

[peacelover]

At this point in my life, it's a different answer than twenty years ago, or ten, or ten years from now. And I think the posters who talked about comfort levels have a good point.

For me, it's how much security do I have a how much do I need. In my world, I need more with kids at home, more as I get closer to retirement, and more if my or my husbands job isn't secure. I need less as retirement and college are better funded, less when the kids leave home, and less when I feel secure in my work. I feel more secure when my assets far outweigh my debts, and when that is the case, a little credit card debt because I'm tied up in the market may be a trade I take...and when my debts are greater than my assets, and growing, less secure.

I agree, as long as your aren't defaulting, or relying on public assistance, it's a personal question.

Very well put.

 

[ilovemk76]

None of the financial people you see on tv are cut and dry how it should be. Gail's 15% for transportation is $111 shy of just my gas costs. That's not including the cost of vehicles (have to buy one now and then), insurance (short another $105), and maintenance/repair. How do I cut transportation costs down that far when it doesn't even cover gas?

She would tell you to earn more money, like taking on a second job, your wife taking on a full time job rather than her part time job, sell one of your cars and keep the one that is great on gas.

25% in the life category doesn't come close to covering groceries and I still have medical insurance and my kids' prescriptions to pay for.

Then it is time for you to cut out all of those organic meats and vegetables your buy with your $1000/month food budget that does not include the free beef from your in-laws. Gail had a family like yours on and then even bought organic vodka. Time to put in a garden and can or freeze your organic vegetables. Grow those organic chickens too.

I just looked at one of her articles. It was about raises. She says, what if you save just half your raise? "With Connie's $400/month...." What? How out of touch with reality is that? My raises net me about $400 a year, and I don't think I know anyone who would tell different of theirs. The norm seems to be lower than that.

So save $200 per year and you are still ahead. So since you can't save $200/month it is better to save nothing? She was just showing an example.

Same with Dave Ramsey. All I heard about when looking at Dave Ramsey was about how "inspirational" it was to hear from the folks who claim, "I paid off $60,000 worth of debt in 12 months!" Wow, how inspirational to those of us in the real world who don't even make that much in a year, let alone pay for all expenses plus pay that amount towards debt.

Once your consumer debt is equal or more than your annual income you can never pay it off and have to file bankruptcy, so I would expect them to have a large salary to pay off this amount of debt. They might have also increased their income, by the spouse getting a full time job, and put all of that money toward the debt.

I hunted for years for informational help on debt reduction. All I could come up with is that you have to be making a hefty salary because there isn't any help when you are in the norm.

So not true. Gail has gotten people on a debt repayment plan who earned as little as $25K. Maybe you need to watch her show and see how she does it.

I ended up taking out a [[gasp!] home equity loan to pay off CC debt so that I could change from paying debt payments and turning right around with putting living expenses (groceries, electric bill, car insurance, heating oil, etc.) right back on the credit card.

This is only a good idea if you never run the cards up again. Gail talks about that on her show too.

Yeah, sure I still have debt. But the difference is, the payment is a very small fraction of what the CC payments were and I have $600 sitting in the bank right now to pay for my local taxes. I have $300 sitting in the bank right now to pay for my quarterly car insurance. I had $600 sitting in the bank last month when they came and filled my oil tank for heat. Prior to the home equity loan, that $600 for heating oil and $300 for car insurance would have been paid out as a CC payment, then when the oil came and the insurance bill was due, there would have been nothing but a CC to pay for it.

Just because you set up your categories too high does not mean she is wrong.

On all of these threads all you add is how bad off you are. Maybe it is time to look more closely at why your spending is so out of touch with your income and then increase your income, decrease your expenses or both.

 

[ssawka]

I agree with you on the first paragraph. That is where it ends. I think parents should, if they can, pay for their kids education. To me it is their job. Any sense of entitlement, if there was one, set in LONG before college.

I agree. My dd's great grandparents immigrated to the US from Russia where
they were not allowed to go to school. Education is very very important in our family and has been for generations. We send our kids to college. Period. After that, the rest is up to them.

I feel terrible for these new graduates who have 25k - 100k in college debt. What a burden.

I was not saying that education is not important, I know how extremely important it is. I am in the early stages of a PhD program right now.

What I was trying to say is that parents should not feel so obligated to fully pay for their children's education that they go without themselves, or worse put all their money towards education for their children that they don't save for their own retirement and become a burden to their children later in life.

I agree, as I said in my first post, that parents should help as much as they can, but it is really a balancing act. Loans will always be available to students.

When I was growing up, it was understood that my siblings and I would all go to college, but it was also understood that there would be loans involved since there was no way my parents were going to be able to pay for four children to go to school. My parents paid for everything we needed while in school, but once we graduated, the burden of loan repayment was ours.

I also knew that it was my responsibility to make sure I made sound decisions as far as what to study and to make sure that my degree would be useful once I got out of school. I understand that the economy is not what it was when I graduated, but there are still jobs available if college students put a great deal of thought into what to study and are willing to relocate. If there is such a concern that the student will not be able to repay the loans, then they need to ask themselves if they are choosing the correct course of study.

 

[Colleen27]

On a side note, I don't understand parents' desire to fully pay for their children's education. To me that creates a bigger sense of entitlement than any vacation would. Now if my DD was able to go to college, I'd love to help her out, but she would get loans to pay for the rest.

To me, that's a question of giving my kids the best start possible in life. So many of my friends are struggling to keep up with student loan payments on wages considerably lower than they (reasonably) expected they'd be earning after graduation and that is really life changing. I would prefer my children be able to make the major decisions in life like marriage, buying a home, having kids, starting a business, etc. without having to factor in the fact that they started adulthood with a large debt already hanging over them.

That said, we won't be able to cover 100% of our kids' college costs if they choose expensive schools or go on to grad school. If they stick to state colleges or a 2+2 program they'll be able to earn a bachelors without debt, and when the time comes that will be something we discuss with them when they're making their college choices.

 

[natfrac]

Everyone's situation is different and everyone's comfort level regarding debt is different. For us, we go to WDW annually even though we do have some cc debt. We both have very stable incomes and we have no problem meeting our bills. We pay cash for our vacations, because charging it takes away some of the fun for us. But that's just us...

 

[crisi]

On a side note, I don't understand parents' desire to fully pay for their children's education. To me that creates a bigger sense of entitlement than any vacation would. Now if my DD was able to go to college, I'd love to help her out, but she would get loans to pay for the rest.

And I don't get people who don't. To me, if you value vacations over paying for your kids college education, why shouldn't they value vacations and other luxuries more than getting one. Kids pick up more from your behavior on priorities than from what you say.

Now, I think you should save for your retirement first. And feed your family. But for me, I'd skip every vacation we've ever had if I couldn't save for four years worth of state school at the same time. My parents did and raised three kids without entitlement issues.

 

[ChisJo]

Just because you set up your categories too high does not mean she is wrong.

On all of these threads all you add is how bad off you are. Maybe it is time to look more closely at why your spending is so out of touch with your income and then increase your income, decrease your expenses or both.

I agree with you - Gail has helped me significantly. I thought I was amazing with money....but for some reason, I couldn't balance at the end of the month time and time again. I started reading her books and watching her show, and then finally took a closer look at my monthly spending. I was amazed at how much I was spending on so many things. For example, I was spending consistently 40% of my income on life expenditures. I was spending 22% on transportation, 22% on debt repayment, 20% housing, 19% on savings. Add that up....its more than 100%. I have pared back hugely on so many things, and am now balancing. I have no more credit card debt and don't even use plastic anymore. And, I only buy something online with my credit card if I have the money to pay it off immediately (ie: plane tickets, etc).

The one thing I like about Gail is she is able to make a budget for anyone, despite yearly income. She is a little hard hitting, blunt, and honest. When I started taking her advice, it was the first time in my entire adult life that I actually understood money. When I calculated what I would be paying in interest on my credit cards, loan, mortgage, and car payment, I just about vomited. That alone was enough to make me realize that I don't want to have debt anymore. If I can't afford it, I don't do it. We are a society that is impatient...if we can't afford it, we put it on credit. To me, unless its a situation like one of the previous posters where there is a sickness and it will perhaps be the only time to travel with the family, ok. But if its just cause you want to go somewhere without budgeting for it, that to me is silly.

 

[scrapper2k]

My uncle kept waiting for retirement but passed away before he had a chance to do anything. I don't think I could go on an expensive vacation if I had debt. Maybe an overnight to a place where the activities would be cheap or free.

 

[marie1203]

We wouldn't go on vacations with credit card debt after reading this I am amazed and the percentages people spends in certain categories. We have vacation while we had a car payment and a mortgage and that is ok with us. But if we had cc debt we will pay that off first.

 

[ValpoCory]

I much prefer Gail Vaz-Oxlades way of doing things.

35% - Housing (mortgage, taxes, insurance, PMI)
15% - Transportation (gas, auto repairs, car payments)
25% - Life (health insurance, vacation, life insurance, gym membership)
10% - Savings (emergency fund, retirement, college fund)
15% - Debt repayment.

What does Gail say about Tithing 10%? From which pool do you take that from?

 

[ValpoCory]

Everybody's comfort level is different. I would and will go on vacation with credit card debt, however I won't put a vacation on credit. If we don't have the cash then we don't go.

Interesting.

So let's say you have $10K in credit card debt, and $4K in cash. A vacation costs $4K. You pay cash for the vacation, and you are left with $10K in credit card debt.

Now let's say the week before the vacation you pay $4K to your credit cards, bringing your credit card debt down to $6K. You then go on a $4K vacation and charge it on credit. You are left with $10K in credit card debt.

So it's the same thing. Go ahead and put your vacation on credit. In fact, if you don't save up the $4K in cash, but pay it incrementally to the credit cards as you save it, you'll actually save money by putting your vacation on credit instead of saving cash for it, due to less interest.

 

[cruisecrasher]

Just curious, what do you believe your financial situation should be before planning a vacation to WDW?

Free of credit card debt with 6 months of expenses saved in the bank?
The above and additionally contributing at least 15% to retirement accounts and college savings accounts?

Just curious what you think the financially responsible thing to do is where vacations are concerned.


My belief for myself is that I would hold no credit card debt or personal loans before spending on a vacation. Also be contributing to my 401k and college savings.

I have been listening to Dave Ramsey's radio show, in case you are wondering what inspired me to start this thread!

We've done those, and college funds. And our house will be mortgage free in April. We're paying for our first family trip (DCL) this fall in cash.
That's what makes us happy and relaxed and generous.
I don't presume that everyone (or anyone for that matter) has the same priority as me. If they're ok carrying debt, thats their call. We're all free to live our own lives, once we're adults, I guess.

 

[Jubilee]

We live for the moment.

 

[sukhakuli]

We live for the moment.

Us, too. Life is SHORT. My dad is only 61 and will most likely not see 62 (damn cancer). I'm not wasting the best years of my life, when I'm healthy, my kids are still little and so on because I value money and finances more. Memories are worth more to me.

Of course, that's easy for me to say since we have no cc debt, car payments, and so on. Since dh will retire a fairly high ranking officer out of the military, our situation is a bit different. Our retirement and healthcare during our reclining years is already set. Dh's job is very stable, so I feel OK with 2-3 months of expenses in our account all the time. We made some smart investments, so we have a lot of assets, though they aren't liquid. And dh's income will only increase, especially when he is out of the military (he's a physician).

But there was a point in time when he was still in med school and we both had a lot of debts, and cc debts, and we traveled a lot. We did it cheap, but still. And those memories are fabulous, and I am very glad 10-15 years later that we did. So we paid more on interest, we still paid everything on time, and our credit score didn't suffer. And we had fun. That is worth something.

 

[hanutedmansionmomma]

yes, I do go on vacations and I do have cc debt.

I'm in the "life's too short" category.

 

[Sugar Jones]

Interesting.

So let's say you have $10K in credit card debt, and $4K in cash. A vacation costs $4K. You pay cash for the vacation, and you are left with $10K in credit card debt.

Now let's say the week before the vacation you pay $4K to your credit cards, bringing your credit card debt down to $6K. You then go on a $4K vacation and charge it on credit. You are left with $10K in credit card debt.

So it's the same thing. Go ahead and put your vacation on credit. In fact, if you don't save up the $4K in cash, but pay it incrementally to the credit cards as you save it, you'll actually save money by putting your vacation on credit instead of saving cash for it, due to less interest.

I kind of agree I guess, however if defeats my goal of not using credit cards again. I am lucky and have a fairly low interest rate on my card. It only 7.5% which is pretty good for a cc. For ME, paying cash for the vacation, while still paying down the cc and not adding to it is a win, win. However I do understand where your coming from.