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Should I Travel or Pay Off Debt?

Lots of people want to travel. After all, there is no greater thrill than experiencing new countries and cultures. However, for those with debt, traveling may seem like nothing more than a pipe-dream. However, you can travel when you have debt…you just need to ensure that you are doing it properly.

On this page, we are going to pose a few questions to you. Hopefully, by thinking about the answers to these questions, you will get a feel as to whether you can travel or whether you should be hunkering down and paying your debt off. 

You Are Always Going to Have Debt

Right off the bat, we do want to point out that you are always going to have some form of debt. This could be personal loans, student loans, a mortgage, or credit card bills. At some point, you will need to say “having debt doesn’t matter”, otherwise you will never be able to enjoy yourself and travel where you want to go.

How Much Debt Do You Have?

The first thing to consider is how much debt you actually have. If you have thousands upon thousands of dollars worth of debt, then it may not be worth traveling just yet. You may want to reduce some of the debt to help you save a bit of money in the long run (i.e. by reducing the overall amount of interest that you need to pay).

Obviously, you can ignore massive debts like your mortgage here. This could easily be a whopping amount of cash and, hopefully, you will be staying current on those repayments. The same goes for your student loans, although, to be honest, the bulk of people will pay off their student loans before they entertain the notion of traveling anywhere. As Megan over at says, “if you can’t afford to pay for your trip upfront and still make payments towards your debt, you shouldn’t travel” and “if you can afford to pay for it with cash, while still having enough for your monthly repayments, then travel away”.

Are You Up-To-Date on All Your Repayments?

If you have been missing payments on your debts, then you shouldn’t even think about traveling. You need to get your debts in order before traveling becomes a reality.

One would assume that if you are traveling, you will have some sort of ability to save money to take with you. So, if you have been constantly missing repayments on your debts, then it may be worthwhile putting money aside instead of traveling. This way you will have a nice little nest egg there to help cover if you can’t meet your bills one month. Of course, you can always use that chunk of cash to pay off a good bit of your debt to reduce repayments in the future.

What Are the Interest Rates Like on Your Credit Cards and Loans?

If you have a high-interest rate on any of your loans, then you should focus on reducing your debts as opposed to traveling. It is only sensible. If you pay off those high-interest debts, then, in the long run, you will be saving money. The money that you save on interest could ultimately go towards traveling a year or two down the line.

Do You Need to Borrow Money to Travel?

If you need to borrow money to travel, then you should not be traveling. Simple as that. There is no sense in making your debt problem worse. Honestly, if you cannot save up the money that you need to go traveling, then you simply shouldn’t be traveling in the first place. 

This is important even if you do manage to pull yourself out of the cycle of debt. You should never borrow to travel if you can help it. 

Can You Afford to Pay If You Are Not Working?

Chances are that you will not be entitled to vacation pay where you work. Therefore, you need to know that you are going to be able to keep up with any debt obligations while you are not at work. If you are already cutting it close, even when you are in full-time employment, then now may not be the best time to travel.

Can You Make Compromises on Your Travel Plans?

If you want to travel, but you have mountains of debt to deal with, is there a chance you can compromise on your travel plans? Even a short getaway can work wonders when it comes to alleviating stress. It will be a lot cheaper too. This will mean that you have to put your dream travel plans on hold for a short while, but at least you will be allowing yourself to climb out of a debt hole.

Image by NastyaSensei

Post Author: Lillia Hall

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Welcome to Foreigner’s Finances, your guide for new money decisions at home and traveling abroad!

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April 2024