Channeling Your Inner Dave Ramsey: Financing Your Solo Travels

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So, you've finally made the decision to follow my advice and embark on that solo trip to your dream destination. Well, let's just imagine for a moment that you actually listened to me. Now what? The overwhelming questions and uncertainties of planning everything on your own start to flood your mind. You might feel a bit anxious or lose your composure, but take a deep breath and tell yourself, "I can handle this," just like you would when tackling a to-do list at Home Depot. Planning ahead involves setting your travel dates and choosing your destination, but the next step is figuring out how to finance it all. Since you won't be splitting costs with anyone, the responsibility falls solely on you. However, with careful planning and a few clever shortcuts, it's completely manageable.

Before I begin, I am not a financial advisor, and this is not financial advice. I highly recommend starting with a trusted financial advisor to see what your options are.

Hire A Financial Advisor

Like any vacation, going on a solo trip requires an investment. It's not just about spending money and time, but it's also similar to investing in your retirement, wedding, or home improvement project. However, it's not as simple as setting aside a portion of your paycheck for your 401(k). You'll need guidance from someone who can help you navigate through the available options. During your discussion, you can explore different ways to save such as paycheck deductions or saving on your own. Additionally, you can learn about the various types of accounts you can open and the options for deducting expenses. It's important to have a clear plan in mind regarding when you want to travel and how much you aim to save. Make sure to communicate your intentions clearly. The good news is that there are financial advisors who specialize in assisting solo travelers, and some of them even offer virtual consultations. Nerdwallet has a fantastic article and is a great place to start on financial advisors. They can help you manage your finances to make this a possibility.

Vacation Savings Accounts

Saving for a vacation can be made easier with Vacation Savings Accounts. While they may operate differently than the standard payroll deduction of a 401(k), the concept remains the same - by setting aside a small amount from each paycheck, your savings will grow over time. High-yield savings accounts and certificate of deposits (CDs) are popular choices due to their simplicity and accessibility. However, there are also other options available to explore. The Balance Money explains it further:

Some banks offer savings "clubs" that are specifically designed to help you save for a vacation. They're similar to Christmas Clubs in that you can't withdraw the money until your balance has hit your designated savings goal or before a certain date. This can be a handy advantage for savers who aren't particularly disciplined. You can take your money out early, but you'll most likely pay a penalty.

Otherwise, look for a bank that offers a savings bonus after you've held the account for a designated period of time, usually a few months. The bonus might be as little as 0.1%, but that can still contribute to a sunset cocktail while you're away. You might also want to look for an account that limits your ATM withdrawals so you're not tempted to touch the money before vacation time.

A high-yield savings account is a great place for vacation savings because it pays a higher yield than a standard savings account. But it doesn't come with the long-term commitment of a certificate of deposit (CD).

I highly recommend reaching out to a financial advisor to review your options, and see what is best for you. Otherwise, if you’re comfortable researching and deciding on your own, the best place to start might be with your local bank or credit union. Additionally, you may consider leveraging the expertise of your financial service provider, such as Fidelity, which manages your 401(k) or other savings plans, to explore the most suitable savings options for your needs.

Pay Over Time

This can get dangerous if you don’t utilize financial discipline. You will need to manage this properly or it will become a five alarm fire VERY quickly.

• Credit Cards: Fortunately, there are credit cards available that allow you to conveniently spread out your major expenses over time. For instance, you can use this option to make reservations for your hotel and rental car, and then gradually pay off the balance over a period of 3, 6, or 12 months, without incurring significant interest charges. Some of the credit card providers that offer this beneficial feature include American Express, Chase, and Citi. However, it's important to consider that eligibility may depend on your credit score and other factors. It’s not a good idea to open several accounts at the same time to take advantage of this feature, so you may want to check if your existing credit cards offer this great feature. According to CNBC, 56 million Americans are struggling with credit card debt, you don’t want to be part of that statistic, so tread carefully with this option.
• Airline/Hotel Points Credit Cards: This option is perfect for everyday expenses like groceries, gas, and even purchases on Amazon. By using this card, you can earn airline miles and hotel points. Airline miles cards are generally a better choice because you can use the miles to pay for flights, making them ideal for solo travelers. On the other hand, hotel points cards are more suitable if you prefer traveling by train or taking road trips, although it may take longer to redeem your points. It's important to do your research and plan accordingly. If you prefer not to be tied to a specific airline or hotel brand, consider the Chase Freedom or Capitol One Venture X cards. These cards allow you to accumulate points for travel while making everyday purchases such as gas and groceries. The Points Guy has a terrific comparison tool for which card works best for you.
• Pay Over Time Platforms: Apps such as Affirm, Paypal In 4, and Perpay allows you to pay for large purchases in monthly payments with little to no interest. This might be the safer alternative to having it on a credit card, but could also backfire if you don’t properly financially plan for the expense. This works perfectly for hotel and rental car purchases, or other travel related purchases, such as tours and events. The Balance Money provides a fantastic breakdown for which apps work best for the types of consumers (students, no credit check, bad credit, etc). As with credit cards, do your research and do not open any accounts without making a decision as to which is best for you.

PAY YOUR BILLS! In either case, you need to make sure you’re making your monthly payments or it will risk lowering your credit score, and worse. Pro Tip: “round up” your monthly payments to pay it off sooner, and lower your fees.

Solo traveling is an incredible adventure that requires careful planning and taking things one step at a time. It may seem daunting to plan a trip on your own, but it is definitely achievable. Along the way, you will inevitably make mistakes, but these experiences will serve as valuable lessons for future journeys. Remember, there is no ultimate guidebook that has all the answers. Instead, rely on thorough research and trust your instincts to make the best decisions for yourself. Embarking on a solo trip may require some financial sacrifices, such as saving up or taking on additional work to increase your purchasing power. It's no secret that the cost of living can be high, especially when it comes to the cost of groceries! However, every sacrifice will be worth it when you finally step onto that plane or train, enter your hotel room, and explore the destination you've always dreamt of visiting. This feeling of accomplishment and fulfillment is the true taste of victory. So, don't let the challenges deter you from embarking on a solo adventure. Embrace the journey, learn from your experiences, and savor the sweet taste of victory as you fulfill your travel dreams.