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No Fear No Favour

Americans Are Taking Debt To Pay For A Vacation. Why Can’t We?

A vacation is a leave of absence from a regular occupation, or a specific trip or journey, usually for the purpose of recreation. Vacation makes you happier, turn off the stress systems, to recuperate and to repair and increase productivity.

But what if those stress releaser increases your stress after the enjoyment and fun?

The concept of taking a vacation has developed through the last two centuries. Historically, the idea of travelling for recreation was a luxury that only wealthy people could afford. But today, Americans do not worry about the money; they don’t give a second thought to take debt for their gateway.

Nearly three-quarters of Americans have gone into debt to pay for a vacation, according to the result of a recent survey of 1,000 adults from financial planning platform LearnVest. Contributing to this trend is the fact that people do not financially account for vacations — the survey found that 55% of Americans don’t factor these expenses into their annual budgets.

On average, Americans will accrue $1,108 in debt for a vacation, according to the survey.

“Having a financial plan is a key to avoid debt when you go on a vacation,” LearnVest founder Alexa von Tobel said in a statement.

According to the survey, 55% of Americans said, they didn’t account for their vacation spending in their annual budget, while 66% said they spend more on a week-long vacation than they do on a month of rent. The problem is worse among Millennials, nearly half of whom (49%) said they were willing to take on debt for a vacation compared to just 18% of Boomers.

Financial experts suggest setting aside money for a planned vacation each month to avoid extra debt. “The priority should be financial stability in case of an emergency before “fun stuff” like vacation spending — but of course, it is hard to prioritise competing goals,” said Ted Halpern, president and wealth adviser at Halpern Financial in Ashburn, Va.

“Vacations may be what motivate you to keep saving toward your long-term retirement goals,” He adds.

By: Simran Dhingra

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