E The Financial Phenomenon Of Debt Lag

If you asked every single vacationer in America to hand over $22 dollars, and placed that money in a pile, you’d be looking at the amount of interest alone that is accrued by American holiday-goers. 

While we’re happy as a nation to talk about where we’re headed every summer, what’s less spoken about is the lack of proper financial planning around repaying our holiday time, which leads to a financial phenomenon now labelled ‘debt lag’.

Before we dive in, here are some stats that highlight just how bad we’ve become with handling our holiday finances:

● The combined total amount of interest accrued on holiday credit card expenses (debt lag) stands at $2.7 billion for the US

● The average American accumulated $1,518 of debt on their last holiday

● One in five Americans did not plan a budget for their holiday
 

These statistics come as a bittersweet reminder for American vacationers in that while they do signify a disregard for proper management of personal finances, it’s also possible to remove them from your obligations provided you play your cards right. Here are some suggestions for tackling holiday debts.
 

Optimize your holiday beforehand

It might be a hard pill to swallow, but we all know that planning a budget is the only way to know pretty well anything about where your money is going. When you start budgeting, you begin owning your bank account (and not the other way around). Planning this budget, coupled with using comparison tools to find flight, accommodation and travel savings makes for a lean, wallet-friendly holiday.
 

Never pay for foreign transaction fees

When you’re already committed to your bank for you credit or debit card, why should you then be paying them for your overseas transactions? The simple answer is that you shouldn’t be – there is no reason to. Luckily, there are travel cards out there created with no foreign transaction or overseas ATM fees, and they’re the ones you want to seriously consider when you’re packing your bags. Just leave enough time to get your application cleared and the card in your hand, as well as make sure to let the provider know in advance when you plan to be abroad – the last thing you want is to be locked out of your own card in a foreign country and strapped for cash.
 

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Comments

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Gary Anderson 5 years ago Contributor's comment

Debt is like a hangover that lasts for days.

Fred Schebesta 5 years ago Author's comment

Agreed. Definitely worse than your normal hangover. Have you had a personal experience Gary?

Gary Anderson 5 years ago Contributor's comment

I raised 4 children. Debt was an issue when they were young, when I wanted them to see the world, or at least a small part of the world. Debt was an easy way to get them out away from the small town in which we were living. But it caused problems later on for me. Still, I think they benefited as two of them have had jobs that required considerable traveling.