Debt Management

How to pay for experiences without going into debt


The key to financing experiences is to plan ahead. Here are six steps to setting up a specific goal and strategies to paying for that dream bucket-list item.

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You want awesome experiences? Great.

You want awesome experiences without going into debt? Plan ahead, experts say.

A June 2017 study published in the Journal of Consumer Research found that when people are interested in experiences, rather than material purchases, they are more willing to borrow. The study also found that consumers who used their credit cards in this way were more likely to have greater debt and to have paid more in finance fees.

Avoiding experience-related debt is about “flipping your mindset, adopting delayed gratification,” says Chris Durheim, who blogs at Keep Thrifty.

The first time he organized a family road trip, he crafted a plan – a very detailed plan.

Months in advance, he calculated the cost of lodging, groceries and dinner out at every stop. There was a line item for souvenirs, for gasoline, for entrance fees to attractions. Then his family started saving cash and rewards points. When they had enough, they hit the highway. In the end, the actual cost of the trip came within $100 of his original budget – leaving the Durheims with lots of memories, and zero vacation debt.

Whether you want to take the family to Europe, register for a pricey cooking class, arrange a sabbatical year or achieve any other expensive bucket-list experience, it’s best to strategize.

“You can always be working toward your goals,” said Holly Johnson, a financial expert and co-author, with her husband Greg, of the blog Club Thrifty.

To help you navigate that process, we’ve broken it down into six steps:

  1. Have a specific goal.
  2. Set up a budget.
  3. Strategize ways to lower your costs.
  4. Figure out what you can fund with rewards points.
  5. Rack up rewards, hotel points, airline miles.
  6. Review everyday spending to find ways to save cash.

1. Have a specific goal.
Don’t make it something hazy, as in, “Wouldn’t it be great to visit a resort in Mexico?” Pin down that dream and create a concrete goal: “Let’s go to Cancun over winter break.”

Jillian Johnsrud, who writes the blog Montana Money Adventures, recommends brainstorming a list of potential goals, picking out the one you want to accomplish first and writing it down. “Once you write it down, it forces you to commit to it a little bit,” she says.

2. Set up a budget.
Say you want to do a two-week road trip with the family, during which you will alternate between camping and staying in a hotel. These are some of the questions Johnsrud would ask:

  • Which campsites will you visit? What are their fees?
  • Do you want to rent or purchase an RV? What will that cost?
  • Can you find a hotel that offers free breakfast or other meals?
  • How much would we need to budget for gas?

And so on.

A spreadsheet is your friend. Enter each expense as a line item.

Video: How your points can pay for memorable experiences

3. Strategize ways to lower costs.
Consider the following options:

  • Could you travel somewhere else for less?
    Sure, you’ve always wanted to visit Copenhagen. But if you find airline seats on sale for Amsterdam, consider traveling to Holland instead. Or how about a weekend in the exclusive coastal enclave in Carmel, California. – in October? Low season rates can be half or less of what you’d pay at the height of tourist season.
  • Consider leasing equipment to cut costs.
    Hauling babies anywhere is not only daunting, but expensive. Small cars can’t always fit strollers and portable cribs and high chairs and on and on. But rather than rent a minivan for a week or two at the shore, look into renting the equipment itself when you arrive. Similarly, it might be cheaper to rent an RV for a road trip rather than buy one.
  • Scour the web and your inbox for travel-related discounts, rebates and promotions.
    As of September 2017, for example, LivingSocial was running a promotion for a one-night, weeknight stay at the Castle Hill Resort and Spa in Vermont, $99 per night, reduced 62 percent from the rack rate of $259.

4. Figure out what you can fund with rewards points.
Johnson, of Club Thrifty, took that 19-day European vacation, which she estimates would have cost about $20,000, for about $3,500 out of pocket. One reason: She went through Chase’s Ultimate Rewards portal to purchase experiences such as a cooking class in Florence and a tour of the Colosseum in Rome, all with points.

You can also redeem points to pay for Airbnb stays, if you have the Barclaycard Arrival Plus World Elite Mastercard, which lets card owners use points as statement credits against most travel expenses.*

5. Rack up rewards, hotel points, airline miles.
There are two ways to do this, both of which require monitoring so you don’t spend more than you can afford.

  • Charge more to your credit cards, and do it strategically.
    Say you’re running late from work one night, and stop to pick up Chinese takeout food for dinner. If you charge that to your Chase Sapphire Preferred Card or Chase Sapphire Reserve cards*, which give you 2 or 3 points per dollar spent dining out respectively, you’ve just doubled or tripled your points earning on that purchase.
  • Acquire new cards to score their sign-up bonuses.
    Many elite cards offer generous sign-up bonuses of 30,000 points or more if you spend a set amount on them in the first three months (usually $3,000-$5,000). The Marriott Rewards Premier credit card, for example, currently offers an 80,000-point bonus for a $5,000 spend in the first three months. * Depending on the kind of experience you are planning, your destination and needs, you can opt for an airline card, a hotel card, or a more flexible travel card that may allow you to transfer points between programs. Just be careful not to open too many credit cards in a short time period as each application can temporarily lower your credit score.

Video: Mastering your bucket list using points

6. Review everyday spending to find ways to save cash.

How do you save tens of thousands of dollars when you’re just getting by each month? Here is some advice from budget-savvy bloggers. Some of these tips might require you to make little adjustments to your lifestyle, but all of them are doable nonetheless:

  • Swap out pricey local activities for free or inexpensive ones.
    For instance: Rather than paying hundreds of dollars per seat for the touring company production of, say, “Hamilton: An American Musical” at your downtown theater, opt instead for a performance of Lin-Manuel Miranda’s earlier Broadway hit, “In the Heights,” at a local high school or community college. Both musicals won Tonys, but the second one is older, and high schools charge considerably less per ticket.
  • If you have kids, restrict them to one extra-curricular activity at a time.
    This will save you not only money, but familial sanity. It’s been a rule in Durheim’s Madison, Wisconsin, household for a few years now, and it’s one of the reasons the family can afford a big road trip each summer. “It’s a matter of trade-offs,” he said.
  • Shrink your grocery bill.
    Can you buy more in bulk? If you want organic produce, is there a nearby co-op you can join where the prices are more reasonable?
  • Use your public library.
    They have movies and music for rent, and books for borrowing. All of that is available free.

If cutting spending alone won’t get you there, here are some more ways to accumulate extra cash:

  • Bank any and every spare dollar that comes your way.
    Find $10 in the dryer? Stick it in the bucket-list fund.
  • Consider how you can make extra money.
    Can you rent out part of your home on Airbnb? How about creating passive income, such as a how-to book about something you’re an expert in, that you can try to sell?
  • What about a side hustle?
    Johnsrud’s advice: Consider learning one simple skill others need. She gives the example of learning how to create and send out emailed newsletters. So many businesses use them, but they take time and energy. Spend an hour a week for a year watching YouTube videos about how to do MailChimp. At some point, you’ll become an expert, and people will pay you to manage their newsletters. If you can make $2,000 a year doing that in your spare time, at the end of three years you’ll have $6,000 toward your bucket-list item.

In the effort of financing experiences without incurring debt, Johnsrud said, it’s all about the long game. Setting up a specific goal and clear strategies for financing that goal will bring you closer to making it come true.

“If you make small steps in the same direction for a very long time,” she says, “you can get places.”

*The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.

See related:Best times to book your trip to score a deal, 7 ways top get the most from rewards credit cardsMillennial dining trends eschew traditional ‘VIP’ card experiences

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