Iceland’s beautiful geothermal Blue Lagoon. Sunsets on the beaches of Brazil. The architecture and music of Portugal. The art and food of Spain. What do they have in common? They’re some of my favorite memories from traveling across the globe.
Even though I’m committed to paying off debt, an enormous passion of mine is traveling. Many personal finance experts recommend that you pay off your debts before you travel. While that’s great advice, for people with huge debt loads, it can be unrealistic and disappointing. It may take years (or decades) to pay off debt!
In my life, I have made paying off debt and traveling dual priorities—and I’ve never regretted it. Here are several tips for budget travel and how you can take your dream vacation while paying off debt.
1. Pay in Cash
This should go without saying. Obviously, you don’t want to borrow and get deeper into debt because of your love for travel. Seeing new sights is great, but it kind of defeats the purpose if you have to come home to a larger debt load.
Instead of relying on credit cards or other loans to fund your adventures, save up some cold hard cash. Set up automatic transfers from your checking account to a separate savings account to make this easier.
Also, make sure you develop a realistic timeline and budget for your trip so you can save a sufficient amount. For my most recent trip to Spain, I saved for six months and automated my withdrawals every month in a sub-savings account that I titled, appropriately, “Spain.”
2. Consider Travel Hacking
Have you heard the term travel hacking before? It’s a way to use credit card rewards sign-up bonuses to get free or low-cost budget travel options. I used to think it was a scam and that it didn’t actually work.
That was until I realized that I was really committed to paying off my student loan debt, but I also wanted to travel on the cheap. I kept hearing about budget travelers going abroad and paying next to nothing for their flights. So I decided to try it.
I signed up with the American Airlines credit card, and within a few months, I got the reward sign-on bonus and I had 40,000 miles. Surprisingly, 40,000 miles is enough for a round-trip flight to Europe off-season (typically between October 15 and May 15). In total, I ended up paying $63 for my round-trip flight to Spain to cover taxes and airport fees. I was no longer a skeptic.
Flights are typically one of the most expensive factors in traveling—and my flight was worth $1,400. By not spending a lot of money on the flight, I dramatically reduced the amount I needed to save overall—which in turn helped me continue to pay off debt.
Now, there is one big caveat here: if you are also battling credit card debt, then travel hacking is absolutely not a good idea. Travel hacking should only be considered if you are a responsible credit user with no credit card debt. It’s crucial that you pay back your balance in full each and every time.
If travel hacking isn’t for you, you can still save up and look for deals on sites like Travelzoo, Hipmunk, Kayak and others. To get the best deal, consider flying during the week. In addition, comparison shop between various airports, dates, and times.
3. Find Cheap Accommodations
Next to the flight, accommodations are typically the second most expensive thing you have to budget for. Instead of using pricey hotels, consider renting through AirBnB to cut down on costs.
If you want to spend even less, stay in a hostel or go CouchSurfing. When I went to Spain and Portugal, I stayed in hostels only and paid roughly $20 per night. Overall, it was significantly cheaper to stay in a hostel than in a hotel.
Another option for the truly adventurous and hard-working is to volunteer your time in exchange for accommodations. I met several people at my hostel who worked 20 hours a week and received free accommodations and food. Simply contact the hostels where you are going and see what volunteer opportunities are available.
4. Stick to Your Debt Repayment
Although traveling is awesome, you don’t want it to derail your progress on your commitment to paying off your student loans. Make sure you can stick to your minimum payments as well as your timeline. If going on a trip will set you back significantly in your repayment, then reconsider travel or figure out how to do it on the cheap.
All my trips, everything included, have cost $1,000 or less. While I’m currently in “debt-slaughter mode,” $1,000 is less than one month’s worth of debt payments for me. Yes, I could have gotten out of debt a few months earlier by not going on these trips, but taking the time to relax and see the world actually re-inspired my debt payoff goal.
Before my last trip, I was starting to feel some debt fatigue. I was sick and tired of making payments and felt like I was working just to make payments—not a pretty place to be.
My two-week trip, which cost less than $1,000 total, completely transformed my outlook and inspired me to get out of debt in one year. Sometimes traveling can be an investment in your well-being and help encourage you to reach your goals! We can’t be productive machines all the time, and rest and relaxation are necessary to think clearly and make progress on your goals, whatever they are.
The key to taking your dream vacation while paying off debt is balance. Stick to your debt repayment plan, but start saving so you can pay for your vacation in cash.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|