6 Ways to Pay for a Vacation When You Have Student Loan Debt
Hello there! Please enjoy this guest post by Kat Tretina.
Student loans should not hold you back from taking a well deserved and much needed vacation. Kat has listed some simple and practical steps that can help you take that vacation without breaking the bank.
Your student loan debt likely eats up a significant portion of your income. According to Student Loan Hero, the average monthly student loan payment for borrowers between 20 and 30 years old is $351 per month. When you’re just starting out, that amount might not leave you with much wiggle room in your budget.
But even though student loans can limit your ability to travel, you don’t need to stay home all summer.
6 ways to pay for a vacation when you have debt
Here are six tips you can use to enjoy a summer vacation without going further into debt.
1. Create a vacation budget
The first and most important step is coming up with a realistic budget for your vacation. A luxury two-week cruise or a tour of Europe might sound amazing, but when you have student loan debt, those options likely are out of reach. If you’re willing to make some sacrifices, however — such as staying in a hostel instead of an expensive hotel — you can still enjoy a vacation.
If you’re planning a trip for this summer, and you don’t have much time to save, so it’s better to plan a modest vacation for now and consider a larger trip later.
2. Open a new bank account
A great way to boost your travel fund and save for your vacation is to open a new savings account. Some banks offer cash incentives for opening a new account, so you could get free money just for signing up.
Having a designated travel account also can help you remain motivated to save. Set up recurring deposits and stash any extra money in your travel fund. Before you know it, you’ll have enough money to book your trip.
3. Cut your expenses
Go through your bank and credit card statements and take a hard look at your spending habits. See if there’s anything you can trim — such as meals at restaurants or an unused gym membership — to put more money toward your travel fund.
You also can save money and free up more cash each month by refinancing your student loans. When you refinance, you work with a lender to take out a new loan for just a portion, or the entire balance of your old loans. The new loan ideally will have better repayment terms than your old loan, possibly including a different interest rate, length of repayment, and a lower minimum monthly payment.
There are some drawbacks to refinancing — especially if you have federal student loans — but if you qualify for a lower interest rate or extend your repayment term, you could reduce your monthly payment significantly.
4. Pick up a side hustle
Unfortunately, there’s only so much you can trim from your budget. If your income barely covers your monthly expenses, there might not be much to cut. Instead, you’ll have to focus on boosting your earnings if you want to travel.
One way to increase your income is to launch a side hustle. Whether you deliver groceries or walk dogs, you can earn extra money on your own schedule. Put the money you earn from your side gig into your separate savings account dedicated to travel to help you reach your goal faster.
5. Book with discounted gift cards
Another way to stretch your travel budget further is to pay for your trip with discounted gift cards.
Millions of gift cards go unused each year, gathering dust in drawers. Many people opt to sell them to recoup some of their value, which can lead to steep discounts for you. You can buy gift cards for airlines, hotels, restaurants, and more for a fraction of their value.
For example, you can buy a Southwest Airlines gift card at an 8% discount, freeing up money to pay for the rest of your trip.
If you have gift cards to restaurants or retailers you haven’t used, you can turn those cards into cash by selling them to discount gift card sites. Depending on the retailer, you could get up to 90% of the card’s original value.
6. Use credit card points
If you have decent credit, you can sign up for a rewards credit card and start earning cash back from your routine spending. You could earn as much as 5% cash back on gas, groceries, and travel expenses. The rewards can add up quickly, and you can redeem them for statement credits, cash, or even gift cards to pay for your trip.
If you use the card only for regular purchases and recurring expenses and then pay off the balance each month, you can earn rewards without worrying about racking up credit card debt.
Planning your vacation
Although student debt can be a strain on your budget, it doesn’t mean you have to give up your dream of traveling. With a little planning and by using these tips, you can enjoy a summer vacation without worsening your debt situation.
Do you have any tips and tricks on how to travel on a budget while paying off your student loans? Please comment below!