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Credit & Debt Saving Smarts

Vacation Savings vs Credit Card Splurges: Invest in Memories not Debt

By Jewel / January 18, 2022

Dreaming of a getaway? Whether it’s a relaxing beach escape, an adventurous backpacking trip, or a cultural immersion, vacations offer excitement and anticipation. But financing your dream vacation can be daunting.

The Credit Card Trap:

Imagine finding the perfect $6,000 vacation package, but lacking the funds upfront. Putting it on a high-interest credit card (19.99%) seems tempting. However, with a $250 monthly payment, you’ll be stuck in debt for nearly three years! The interest balloons, turning your dream into a financial burden.

The Power of Saving:

Contrast that with saving $250 per month. In just 2 years, you’d have $6,000 for your dream vacation. By planning ahead and setting aside a portion of your income, you avoid high-interest debt and enjoy a stress-free getaway.

Long-Term Savings:

Saving $250 per month allows you to vacation every 2 years! Here’s why credit cards don’t stack up over 20 years:

  • Total Vacation Cost: 10 vacations at $6,000 each equals $60,000.
  • Minimum Credit Card Payments: At 19.99% interest, the minimum payment of $250 won’t even cover the interest, leaving you with a $60,000 balance after 20 years!

Save Smarter, Travel Happier:

Here’s how to save for your dream vacation without credit cards:

  1. Define Your Dream: Imagine your ideal destination and experiences. This vision will fuel your saving motivation.
  2. Cost It Out: Research flight, accommodation, activity, and meal costs. Create a realistic budget to determine your savings goal.
  3. Set Goals and a Timeline: Based on research and your finances, set a savings goal and timeline for your dream vacation. Determine a realistic monthly savings amount.
  4. Automate Savings: Set up automatic withdrawals from your checking account to a separate savings account. This ensures consistent saving towards your goal.
  5. Maximize Savings: For short-term goals like vacations, consider a Tax-Free Savings Account (TFSA) to maximize savings. Explore safe investment options like Guaranteed Investment Certificates (GICs) or Term Deposits to earn interest.

Discipline Pays Off:

By following these steps and taking a disciplined approach, you can avoid the credit card trap and enjoy a stress-free vacation. Start saving today and turn your travel dreams into reality!

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