A debt-free vacation next year
It’s vacation time! Who doesn’t enjoy a week or two of fun away? But, who wants to come home to a mountain of post-vacation bills? You’ve probably already taken or planned this year’s vacation and have either already paid for it–or not. Either way, here’s how to make next year’s vacation better and debt-free.
Start saving now! When your vacation planning includes an ‘afford as you go’ strategy, you won’t face big, long-term, high-interest bills when you return. Set money aside before it gets sucked into the costs of everyday living.
Pay yourself first! This is one of the best saving strategies there is – whether you’re saving for a holiday, retirement, or anything else. Set aside a portion of your pay as soon as you get it. You won’t end up spending it and your savings will grow steadily.
Make sure your savings pay! Get your savings out of low-interest bank accounts and into higher-return investments, such as:
- Money market mutual funds that earn competitive returns are usually easily and quickly redeemed and may even allow chequing privileges. If your vacation will take you south, check out money market funds that allow you to save in U.S. dollars and reduce your exchange risk.
- Guaranteed Investment Certificates (GICs) or term deposits when your vacation is a long way off and you can commit your cash for a longer term. Your cash is locked in for a fixed period but the interest rate is usually higher.
- Government savings bonds are usually cashable at any time. You can only purchase them within a limited period each year but your employer may offer an automatic deduction program to purchase them.
- Talk to your professional advisor about the best pay yourself first strategy for you–one that will not only reward you with a debt-free vacation but will also help you achieve all your other financial goals.
July 15, 2015