Travel has evolved tremendously in the past few years. From being a luxury, time off has become part of the self-care that we all need. With a vacation feeling like the need of the hour and the unpredictability of the future more evident than ever before, we feel like taking that leap of faith into a spirit-rejuvenating holiday.
While movies like, Zindagi Na Milegi Dobara talk about how travel has life-changing properties, we know that all of it comes with a cost, one that often strains our budget. A vacation can set you back financially if it was not well budgeted for in advance. You may have incurred credit card bills, EMIs and saved a little less than you aimed to.
So how do you recover financially from a vacation? Here are a few tips that will help you do so.
Pause spending
“You may be hopeful about the upcoming cycle of cash inflow, or your income. However, do not get carried away and spend on anything except the basics. Prioritise getting your savings back up, clearing your debt and any bills you have to pay because these financial issues will snowball and become worse,” Meghna Jaisingh, a chartered accountant and financial advisor explained.
Well, you don’t need a new dress, you can miss out on that one night out and eating at home won’t hurt.
Assess how much you’ve been set back
Once you’re back home, analyse your expenditure and how much you owe to a person or the bank. “The first step to dealing with the financial carnage your vacation caused is to analyse the depth of it. Calculate how much you owe your friends/family and how much they owe you. And then calculate how much would you have to pay to clear off your credit card debt,” Jaisingh explains.
Once you have an understanding of that, you need to know how many months it will take you to clear your debt. And then make a personal cash flow management plan accordingly.
Look for low-interest debts
If the debt that you incurred has high interest, you must aim to pay that off first. Jaisingh explains that you can do so—if you don’t have liquid cash—by borrowing money from a close family member or a friend who would give you the sum interest-free or you can do so by looking for a low-interest debt (from a bank). This means you will still be paying EMIs but a lot less and you can increase the duration of repayment as well, depending on how cash inflow.
Ask for leniency
If you owe money to your friends or family, don’t hesitate to ask them, if you can pay the debt off in instalments. They may or may not be in the position to help you with that but it doesn’t hurt to ask. “If they choose to offer you leniency, ensure that you decide on a realistic amount that you can pay in the stipulated cycle. Honour your word, so your financial stress doesn’t cause inconvenience to others. Also, if you don’t, you won’t get the same flexibility the next time you are strapped for cash,” Jaisingh points out.
Learn from it
“Do not dip into your emergency fund or investments for something like this. Otherwise, each time you are tempted to go for a holiday, you will do that and end up developing a comfort level with financial insecurity,” Jaisingh warns.
“Instead, learn from the setback and plan your money wisely. Set a fund for vacations; it doesn’t sound as important as an emergency fund or a health fund but it can help you stay on track financially,” Jaisingh explains.
She concludes that one should go for credit cards, that convert your debt into low-interest EMIs.
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