We have major debt, can we go on vacation anyway?

Dear Pete,
Can you weigh-in on a discussion that my husband and I are having? We live paycheck to paycheck, have accumulated $7,500 in credit card debt, and we recently put about $800 in savings. We haven't been on a family vacation in six years, and he is wanting to take one. I think we bought too much house six years ago, and we have two car payments. These high monthly expenses have made vacationing very difficult, and he says we need to just do it, and figure it out later. What do you think?
Jessica

Hi Jessica,

Just a warning, your husband isn't going to like my answer. Maybe you won't either, but I'm okay with that. I'm not here to give you the answer you want to hear, I'm here to give you the best answer.

Let me begin by saying, I get this question a lot. Being in debt sucks, and everyone in debt is looking for a way to make their situation better right now. What you're looking for is a loophole, one that gives you the go ahead to make another bad decision. I can't give it to you because a vacation is a privilege, not a right. And it's a privilege your current financial situation hasn't earned you.

I only have the information you've given me, so I had to read into it a bit. This is how I see your current financial situation:

- You are living paycheck to paycheck

- You are over-housed

- You have two car payments which means there is no way you are staying under the recommended 15% transportation budget

- Because of the previous two I'm assuming you are paying around 60% of your take-home pay on housing and transportation

- From the way you talked about your credit card debt it makes me think you are still actively putting expenses on the card

- Because of all the above, I'm thinking you didn't work to save $800, but instead I'm assuming the $800 was either from a tax refund, inheritance, or some other cash windfall.

This is harsh, but the fact is the last six years of your financial lives have been a vacation from good decisions. You've been digging yourselves into a hole by spending more than you made all these years, and now you are paying for it.

"Not only would I not go on vacation, but I would add up the money you thought you were going to spend on a vacation, and commit that to your financial priorities. Which brings me to a very important point. You need financial priorities. A financial priority is an instant instruction manual for any dollar that might come into your life. Did you identify a $50 surplus in a particular budget category or get paid an extra fifty bucks? Great. In either of those scenarios, you should have a plan for your money before you find it. A financial priority, such as paying down your lowest credit card balance, will guide your money. Otherwise, every financial break you catch feels like found money destined for your whims' delight." (courtesy of the Indy Star)

It may take a year or two, but getting out of debt is the only way you will ever be able to afford a vacation.

Jessica, I also answered your question in my Indy Star column. I know this is hard stuff to hear, but the fact that you're asking the question makes me hope you are ready for a change.