Why Having A Budget For Your Vacation Is Worth It

Creating a budget for your vacation

Winter Break means it’s travel season!  

Most people are taking at least one trip, whether it’s by plane, car, or bus. While all these trips are taking place, let’s be real here, a budget is rarely in use due to the perception of the “limiting” factor. I get it, we all want to enjoy ourselves without thinking about money. We want to do all the things we rarely do at home such as eating out every day at fancy restaurants, going out on excursions, and splurging on other fun activities.

Here’s a reality check

Not having a budget is a problem–a huge problem actually because it’s a setup for failure. By failure, I mean overspending money you shouldn’t have spent. I know I’m not the only one that has done this. It’s the worse feeling in the world and it’s stressful. Dipping in money that you allocated for something else or taking 6 months to pay off your credit card because of that overindulgent vacation is not where it’s at.

Instead of allowing that stressful feeling to occur, reverse engineer your processes so you can feel accomplished instead of stressed after vacation.  Before getting into the benefits of planning financially for your trips, let’s get into the psyche of a budget.

The word budget has the same effect on people as it does a diet. It’s often seen as a tool for deprivation and limitation especially when it comes to planning vacations. To clarify, a budget is a spending plan for you to set you up for success. It allows you to determine whether you have enough money to do what you want to do. If the word budget just makes you cringe,  be creative and call it something different.

For this blog post, we’ll refer to it as a “glow up plan” because of the transformation it provides to you mentally and financially.

Make accurate decisions

A glow up plan for your vacation encourages you to maneuver differently. Creating one allows you to stay focused and make informed and accurate decisions. We all know that not having a plan and procrastinating is expensive- especially when it comes to flights. Knowing exactly what you can afford and planning your trip ahead of time will save you money and stress. Who doesn’t like saving money?

Avoid anxiety

We all take vacations to relax, immerse ourselves in different cultures and embark on new adventures. Wouldn’t it be great to keep that momentum going even after your vacation?  Setting a glow up plan will help to avoid anxiety so you don’t dread having to face that credit card bill knowing that it’s no bueno (not good). Plus it will save you some money on that credit card interest.

Learn to compromise

With everything in life, compromises will have to be made. You might have to swap that expensive hotel view by the water for that bungee jumping adventure you want to go on. It’s all about balance. It doesn’t mean you’ll have less of a great time, it means that you value that excursion more than the view by the hotel. A glow up plan allows you to prioritize what you want to get the most out of your trip.

This is just some of the many benefits you can have by implementing a glow up plan for your vacations. I guarantee if you try this at least once you will see how beneficial it is. If you aren’t sure how to keep track of your spending while on vacation: there’s an app for that!

It’s my favorite app and it’s called Fudget, which is available for iOS and Android.  It’s a manual glow up entry app that helps you keep you on top of your spending. Essentially you can create different categories and set a cash balance from there every time you spend you can add it as an expense and it will calculate your balance as you enter it. Check it out

#Budgeting #Saving #GirlPower #AspirePFS

 Article by Felicia Blaise, ClevergirlFinance

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What You Need To Know Before You Do A Credit Card Balance Transfer

Is a balance transfer a good idea?

One of the common ways to manage multiple credit cards and pay off debt quickly is by transferring your credit card balances from one or multiple credit cards to a single card that offers a much lower interest rate usually for a fixed period of time – Typically, you’ll find balance transfer offers advertised at a 0% introductory interest rate. While this approach might work if you are trying to save money on interest while you pay off your debt, it is also a huge trap people fall into and this is because credit card companies offer balance transfers and it’s associated incentives, as a way to make money.

“Playing around balance transfers can be a very expensive game if you don’t have a proper strategy in place.”

 How do credit card companies make money on balance transfers?

Well, it’s a pretty known fact that most people do not pay off the balances they transfer before their introductory rate expires which in turn allows the credit card companies to charge more interest than normal based on the agreement you made with them. This is because the interest rate on your balances after the introductory period is over, can be much higher than usual (details of which are highlighted in the fine print that can be pretty easy to glaze over).

The psychology of balance transfers & why people don’t pay off their balances

People don’t pay off these balance transfer amounts because they get comfortable seeing the “new” lower interest rate and they think they have now have more time to pay.   In addition, many people end up increasing their balances through new spending because they think that now that they’ve reduced their interest, the debt will be much easier to pay off.
Tips to create a proper balance transfer strategy

When it comes to balance transfers you should only do it if you have a solid sense of the following key points:

  1. You know for sure you will be paying off the entire balance transfer amount within the introductory offer period

In other words, you need to make sure you can afford to pay off your balance in full before the introductory period expires. Have you calculated how much you’d need to pay each month to pay off your balance in full by the expiration date? Here’s a calculator to help you out.

2. Be aware of the balance transfer fees and make sure they make sense

Many balance transfer agreements require you pay a percentage of your balance as a processing fee e.g. 1% – 5%. So it’s important to ask yourself when you do your calculations, if this 1% – 5%.fee is worthwhile (will you still save money?) when you compare your current interest rate vs. the fee amount broken up over the introductory period, assuming you plan to pay your balance in full within that time. If you run your calculations and find that you can’t pay your balance off in full before the introduction period offers, it might actually cost you more money in the long term if you make that balance transfer.
Tip: If you choose to do a balance transfer, look for a card that has no fees for the transfer and has a 0% introductory period of at least 6/12 months (in which time you can work to pay off your balance).

  1. Consider focusing off paying off your balance in full where it is now

Again, the credit card companies are not doing you any favors, offering balance transfers is a strategy they use to make the maximum amount of money possible on interest and for the most part – they always win. So don’t get into this game without a plan of attack.
If you feel like doing a balance transfer is going to be more trouble than it’s worth, don’t do it. The short term gratification of a 0% interest rate that is inevitably going to lead to you paying more interest over time is not worth it if you won’t be paying off your balance in full before that 0% interest rate is gone. The surest way to win is to buckle down and pay off your debt as aggressively and as quickly as possible.

Tip: If you choose to do a balance transfer, don’t run up new debt on your old credit card or on the new credit card. Remember the whole point of doing the balance transfer is to save money on interest payments so you can pay your balance off faster. Also, be sure that you don’t miss any payments or pay late as this could void your 0% interest rate. 

#Debt #Debtmanagement #debtfree #Girlpower #mymoney #AspirePFS

Credit:clevergirlfinance.com

How to Craft Your Debt Pay Off Strategy in 3 Simple Steps

How to Craft Your Debt Pay Off StrategyYou’ve made the decision to get rid of debt, and you are ready to fully commit to team #debtfree. But creating a solid debt payoff strategy can be a challenge. This is especially true if you have a mix of revolving and installment debt, that might also include a medley of personal loans.

  1. Write down all your debts

With the myriad of ways you can get into debt, it’s no surprise that you might not actually know exactly what type or how much of each debt you owe. Track you’re your account statements, order a copy of your credit report and check your credit card statements

For each obligation, make note of the current outstanding balance, the status of the debt (payment satisfied to-date, in deferment, delinquent, etc.), the type of interest rate (fixed or variable), the annual interest rate and minimum monthly payment requirements.

With this information, you will get a clear picture of your total debt and the monthly minimum payments that you need to include in your baseline budget.

You need to get a clear picture of your total debt
and the monthly minimum payments that you need
to include in your baseline budget.

  1. Calculate the daily cost of your debts

The annual interest rate on your debts only tells part of the story when it comes to the cost of your debt. For every debt you have, you should have a firm understanding of how the interest builds up on the outstanding balance, on a daily basis and frequency at which it is billed.

Revolving debts, like credit cards and lines of credit, have their own interest accrual and capitalization rules. Review your loan promissory notes, and the agreements associated with your credit card and other debts, to confirm the applicable terms and conditions, and under what circumstances accrued interest can be capitalized.

 Understanding these costs will also help your account for which debt payoff method will get you out of debt faster.

  1. Choose one priority debt to start

Once you have budgeted for your minimum debt payments, and you fully understand how the daily interest costs on those debts work, choose one priority debt to start making extra payments on. Do this by identifying the debt that has the highest interest rate. Make many extra payments towards it as you can, as often as possible, until it’s paid off.

 After that first debt payoff win, review your remaining debts and consider the next most annoying or the most costly debt, and tackle. Then, repeat the process keep going until the debt is all gone.

Other things to consider

This 3-step guide is the perfect way to get started on your debt payoff journey. Along the way though, always aim to cover the interest that builds up on your debt on a monthly basis, even if your lender doesn’t require it.

The next thing is, don’t ignore how delaying the payoff of debt with higher interest and higher principal balances can impact the length of your payoff.

With that said, be flexible enough on your journey to debt free, to switch the methods available to you on the way. And, most of all use each wins from paying off a debt to get you to the other side!