BootsnAll Travel Community

Hi All,

Ok, I know the obvious answer to this question is pay off the bills so you don't have to pay ridiculous interest while gone but we're faced w/ paying off over 15k in debt before we leave on our trip which is in Aug. '08. We have zero in savings right now due to unfortunate work circumstances, etc. We had 7k in savings before. We're budgeting pretty hard and I currently have $1300 that i could fork into a savings account or use to pay down some debt. My first choice is to pay off the debt since I have been working really hard at being debt free but the truth is I really want to start funding for the trip again. I was wondering how many people out there set off for their trips w/ outstanding debt and just put them on auto pay?

I'm worried if we want to pay everything and then go we'll be put off by at least another year which i just don't want to wait for. To be honest, i don't have much to sell either, my car would probably fetch $1500 and i don't have anything else of much value. Also, we have to buy some items before trip (small laptop & very good digital camera & accessories - we're a writer and photographer so we cannot go w/out these things and hopefully we'll be working from the road as well). i guess i'm just feeling overwhelmed w/ debt and savings and not sure if i should start saving or keep paying off debt.

what would you guys do?

thanks!

We are just starting to plan our RTW, and we aren't sure when we are going to leave yet, but it's looking like sometime between August and December of 2008.

Anyway, we were in a lot of debt from our trip to Europe a few years ago. We finally got in a position last fall to really start making a dent into paying it off. We are definitely paying it off before we even start putting a significant amount away just so we don't have it hanging over our heads. If it delays the trip 6 months, it will suck, but it's worth it to us in the end. Everyone's different though, so just sharing what our opinion is.

I'm paying off all my debt before I go(3 more years to go at the scheduled rate) I thought about going before paying it off but that would make budgeting harder so I decided to just save less at a time but over a long period and go when my debt is gone! (stupid student loans!!)

Littlemustard this is probably the response you do not want to hear but I'll give you my two cents worth anyway!

I take it that since we are in the RTW thread that it is a long trip we are talking about and not a short 6 week trip or something similar.

Personally what I would do, and truth be told what I have done, is put the trip back. Then sit down and look at your budget. Put some/most of your spare income paying off your debt and then the rest in your savings account for your trip. That way you are attacking your debt and bringing it down plus you will see your holiday account start to make headway.

It is a hard decision to put back your trip I know since I've had to make that choice but I think I will enjoy my trip more getting rid of the debt before I head off on my RTW.

Well that is what I am doing anyway. While the negative was having to put back my RTW by a few years one of the bonuses is that because of that delay one of my friends will be due her long service leave as well so is thinking of joining me for at least some of my trip which should be fun!

The fact that you are asking the question means you are concerned about the debt at least on some level. Do you really want to go away on your trip with that hanging over your head?

Whatever you decide I hope everything works out for you, have fun!

oh and jpwic maybe we'll cross paths out there since that is the time frame for me as well!

If it is credit card debt, I would say pay it off before you go. If it's student loan debt, I would say have enough for all payments while you are gone and a few extra months of payments put away in a separate account, used only to auto-pay that bill each month.

You'll enjoy your trip more if you come home to less debt.

Definitely pay it off before you go... all the interest you're paying can be going towards another day or two in a certain location etc. Plus once you're paid off, you'll have a certain relief that you are now debt free like I did.

I would hate to have that hanging over my head... would make me enjoy my trip less. I'd try and at least pay off a good chunk of it first, and make sure I had a nice little financial cushion to return home to.

I say it depends on the interest rate. If your talking credit cards, then there's no contest. Gotta pay off the debt. But if we're talking student debt, or something else with a more acceptable rate, well, there's the responsible move and the follow your heart move.

We opted for the follow your heart move. I don't personally have any debt, but my girlfriend has over $30k in student loans outstanding, which, since I intend to spend my life with her, is as much mine as hers. Still, we opted to go for it, and took the trip of a lifetime. Even now that we're home again, and back into the daily drudge of ordinary life, I wouldn't trade those 5 months we spent travelling for anything. I know I couldn't have waited longer to go...I was itching for it, and I think that Kathy needed the change of pace as well.

There will have to come a time when you have to pay up, but if, when you factor in the extra interest costs as being part of your trip costs, you still think the trip is worth it, then go with that.

Also - a tip - until you need the money, keep it in some low risk investments. I don't know what products are available to you, but here, we were able to keep some money in an ING direct account at 3.5%, compared to our 7.5% loan, so it effectively cut down the real cost of not paying the loan to 4% during the saving period, and the early parts of our trip, until we had to start withdrawing. Mutual funds are higher risk, but I find that good, conservative funds can yield in the 10% range without exposing me to much up and down.

Thanks for the info. I know the reality should be to pay them off, i just feel that if i have to do it before hand i'll be here for 3 more years before i can go and I really don't want to wait that long. I'm already 31 and i've been wanting to do this for years, i can't bear the thought of waiting longer. I think i'm going to pay them down to 1/2 or 1/3 of what the credit limit is or try to get a higher credit limit. That should improve my credit then maybe i can transfer them to a much lower interest rate card.

I does sound nice to have it taken care of before hand and be able to completely leave reality for a while but it just seems so far off and hard to achieve.

Ever see the Suze Orman show? At one point people call in and ask if the can afford something and she allows or denies.

If this student loan or house debt just save enough to make the payments as someone has already mentioned. If this is credit card debt you have to pay it off. Going on the trip will just put you in more debt and it will get out of control if it isn't already. Having poorly managed debt can make other things more difficult and more expensive later on. This includes getting a car, a house, and even a job. Some companies do run credit checks when hiring.

I know it sucks to put off your trip, but it will be worth it. I would be on a plane tomorrow if it was up to me. However, I know that waiting long will put much more money in the bank and truly give me my dream trip.

Do you guys get 0% interest credit cards over there? What you can do in this country is transfer your debt to one of those and concentrate on paying it off without accruing any in the meantime. Then when the interest free period ends, transfer it to another 0% interest card and do the same.

But definitely pay off any credit card debt in full before you go - otherwise you have even more of a mountain to tackle when you get back.

The thing with the 0% interest is that if you don't pay it all off by the time the grace period is over you end up having to pay interest for the entire time the money was on the card. You just really need to read the fine print.

Hey LittleMustard - I know I've told you this before, but you should really look into teaching english abroad. If you are wanting to leave at the same time... save and pay off debt both until you want to leave. then you should do your first year as teaching - that way you can save and pay off debt while immersing yourself in another culture (and getting away from the present reality). Then after you're done with debt and have some more savings, you can hit the road for another year. Maybe?

You could at least save enough for minimum payments of your student loans and do those on the road, but other debt is probably not good :-\ Just my 2 cents...

I say pay off your debt before you go on the road. It would be so nice to come home to no debt. One poster suggested having $5000 in the bank for your return- that way there way you woulld not be desperate for money upon your return. One other reason for traveling debt free- If you are having a great time and out of funds and want to keep going, you can use credit cards for a little bit to keep your trip alive. Best of luck to you and your travels!

The transferring over to 0% interest cards is a good idea, but like Kathryn said you have to pay more if it's not paid up by the end of the introductory period. I get tons of these thigns in the mail, so if you are so inclined, I would transfer a manageable amount over to a 0% interest card, that you know you could pay off within that period, and pay that off. Then usually they send you blank checks in the mail that you can use for more purchases, etc, and these often come with 0% interest or 3.99% interest rate for a certain period of time. I'm not entirely sure if you can use the checks for more balance transfers but I believe you can.

Pay it off. It'll eliminate one more excuse for come back home.

Been there, done that. Trust me, do not go until your debt is paid off, and you have enough money saved to afford the trip.

This decision is about more than a RTW trip. This is about your relationship with money. You will either get your head straight about debt and savings now when you are younger and can better afford it, or later, when you will be older, with fewer options. If you wait, it will be far more expensive.

At the end of the day, of course, it's your decision. But as to the choices before you, know that I speak from experience about the true meaning of the alternatives.

Choose wisely, and good luck.

PAY IT OFF! If you just make the decision that it must be done and really prioritize, You would not believe how fast you can pay down debt. No cable, no movies, no eating out, no bars... etc. Debt disappears when you do these things and on top of that, the momentum really feels good once you get started. Besides, the diet of Ramen noodles now will make the plate of bland cornmeal in Africa taste great!

Sounds like it is credit card debt so you really have to PAY IT OFF. Call the credit card companies and don't hang up till they lower your rate, they hang up on you, or you talk to the president of the company and he personally refuses to lower it. They usually will lower the rate unless you miss or are late with payments. Don't worry about paying each card down to half. Just pay the highest interest card off first and make the minimum on the others. I know it sucks but you should take a second job and sign the paychecks directly over to paying off your debt.