I feel like I'm out of touch with money. I watch things inflate and deflate. People with more education get less money. I don't even know what is what.
It is through that lens I ponder whether it's totally normal to spend $6,000 on a vacation, and whether or not it is crazy. I suppose it could be both or neither. Either way, the plane tickets are booked for my 4th trip to Croatia, happening in less than three months.
Before I continue with my self-rationalization, let me break down how I'm spending my money for this 10-day trip.
- $3,900 – airplane tickets
- $1,000 – villa rental for one week
- $500 – car rental
- $500 – various pre-trip costs (passport renewals, new backpack, sunglasses, etc)
- $1000 – on-the-ground spending (gasoline, food, attractions)
1) I Love to Travel
This is my number one reason, and it should be the number one reason for which you do anything. I suppose this reason could also be translated into: “But I wannnnnnaaaaaaaaa!” and I”m OK with that.
Once I figured out that you can't take it with you when you die, seeing the world seemed like a logical way to spend my money. I now realize that I wasn't looking to see the world so much as go somewhere that made me happier. I guess Croatia is that place, because I'm going there for the 4th time in 11 years. I have family there, so it feels like a home away from home.
Traveling, or more specifically – “getting away” – is my hobby. Some people collect coins, stamps or clothing – I collect experiences, stories and good vibes. A particularly rewarding travel experience can create an untouchable lingering peace that remains at least six months after.
For me, it's mental medicine.
2) I'm Taking My Kid
This year is the first time we are taking one of our children on an international trip. Traveling like this is expensive, and I'm figuring that the added expense of another body means an extra $1,750-2000 in spending on this trip. Plainly put, this is the main reason from a numbers standpoint that the trip is costing so much. That, coupled with the fact that some friends and colleagues will be joining us, we are unable to stay with my family who lives there, as is the normal custom. This is adding an extra $1,000 to the trip.
Bringing my 9 year old daughter, though expensive, is an investment in a better trip. I get to see familiar places again, through the eyes of a child having an experience I never dreamed of having as a child.
3) I Never Do it Annually
One of the reasons I'm OK doing it big this year (besides the fact that it is our 10 year wedding anniversary and that alone calls for a bigger experience), is that I only travel every other year. This makes it more affordable, and actually makes the experience more rewarding. Because we often go back to the same place, doing it every year could risk a burnout. As we get more financially secure, it is becoming an every other year thing.
After this one though, it might be prudent to wait three years. That will make our other daughter 7.5 years old, and more mature. Plus it will give us more time to recover from this $6,000 beating, and more time to prepare for adding another warm body to the mix.
4) I Have the Money
By saying “I have the money,” I don't mean that I earn enough to deserve to be able to do this. It means I actually set aside money each month for more than a year. I've talked a lot on this site about the importance of saving in advance for large, known expenses. Not only does this mean we can pay cash for it when it comes, it ensures that we aren't fooling ourselves into spending the money twice. It's better, in my opinion, to build your lifestyle around an income stream that recongizes that not every dollar deposited every two weeks is meant to be spent before the next check comes.
5) Credit Card Rewards!
I am also comfortable spending a bit more to get the exact right plane tickets I want because I have a buffer of credit card rewards and mile points that are helping defray some of the cost of this trip. Last November I signed up for a Barclaycard World Arrival Mastercard, which had a 40,000 mile signup bonus (worth $400) and earns double-miles when you use them to pay yourself back for travel. Since signing up I've earned a total of $650 from the Barclaycard, which I put towards our airplane tickets. The good thing about this card is that when you use the points for travel, you automatically earn a 10% point dividend, meaning that this card is earning you 2.2% in rewards.
By the time this trip happens in June, I predict that I will have earned $750 in total rewards, hopefully meaning my actual trip only costs $5,250 instead of $6,000.
6) My Financial Plan is Set
I've talked about being a “money adult” before. It doesn't mean that because you are an adult and earn money that you are doing things right. It can take many years into adulthood for us to get our financial plan truly set, a plan that reflects values other than impulse. I'm going to be 33 soon and I can finally say that I feel like my financial plan is set. Lately I've been feeling like I'm late to the party, like I should be further ahead at this age. Then I remember that '30 is the new 20′ and that the Baby Boomers fucked everything up by normalizing high amounts of debt, believing that everything always goes up, and that homes are investments. I've owned two homes and they've never earned me a damn penny.
So now I'm feeling pretty good about the “adult” things I own: life insurance policies, IRAs, pension accounts, paid-for car, FSA accounts. I'm maxing out two IRA accounts and my defined benefit pension gets $600 each month. I'm driving my taxable income down and saving big money by using flexible spending accounts for healthcare and public transit. All my bills are paid automatically except my credit card, on which I never carry a balance (though this trip may necessitate me carrying a balance for a month or two as I am fronting the money for parts of this vacation that others will pay me later – though I could easily not carry the balance, it is on a 0% interest card and my money is earning more in a savings account, meaning I'd rather borrow it from the credit card company than myself).
What about you? Would you spend $6,000 on a vacation?