If you have perused those year-end lists of hot destinations, then wondered how you could afford any of those places, this column is for you.
A couple of financial whizzes shared their insights on making your travel dreams come true without financing them on your credit cards or limiting yourselves to calling a trip to the Clown Motel in Tonopah, Nev., a vacation. Not that there's anything wrong with that.
Here are six ways to see the world and get the last laugh on the budget blues.
— Consider thinking about a budget as enabling rather than constricting, said Sean McQuay, a credit-card analyst with NerdWallet.com. That way, the goal becomes inspiring instead of punitive. Mind game? Maybe. But whether your ideal is Tokyo or Tonopah, skipping a famous-maker cuppa becomes not a sacrifice but a strategy that gets you closer to where you want to be.
The shift won't happen immediately, he noted; it takes practice to reverse old ways of thinking.
— Make the goals realistic. When McQuay and his wife began their financial planning, they budgeted nothing for dinners out and entertainment. It was, in his words, a "disaster." Again, deprivation isn't the key; the destination dream is. So be gentle with yourself lest you burn out.
— Look at big-picture spending, he added. By percentage, where is your money going? You need not figure to the penny, but if you see that you're spending, say, about 25% of your monthly income on eating out, you may be able to redirect that money into a vacation fund by making a meal that warms your El Niño-chilled bones and can also be reborn as a brown-bag lunch or two.
— Don't spend money you don't have to. Well, duh. But sometimes you don't realize the tools you may have at hand. Wallaby Financial, designed to help consumers save, offers a database (www.walla.by/cardbase) that explains which cards have benefits that can help you save by not spending. It's not just rewards cards; some cards offer benefits that mean you don't have to shell out money, said Matthew Goldman, founder and chief executive of Wallaby Financial.
He cited, for instance, Chase Sapphire Preferred, which provides primary, not secondary, rental car coverage. That means you can skip the expensive buy-it-at-the-counter insurance every rental company seems to push and avoid using your own car insurance if you have to make a claim. (Of course, you must rent the car using the card or else you don't get the benefit.)
— Consider buying status, Goldman said. You may not be able to buy yourself on to Hollywood's A-list, but the right airline credit card (and we don't mean the ones you get if you are the crème de la crème of spenders) means you may get preferred boarding and not have to pay for a checked bag.
If you were to fly American, for example, you would pay $25 for a checked bag. The Citi AAdvantage Platinum Select MasterCard card costs $95 a year (free for the first year), so with four checked bags you're ahead by $5 (or $100 if it's your first year). This, of course, requires your loyalty; you, in turn, get to be in Group 1 for boarding too.
— Don't waste money on foreign transaction fees, Goldman said. It used to be that many cards charged this fee for buying in foreign currency and converting that amount into dollars, but thanks to the improving economy and the corresponding improvement in credit-card competition (never mind that it's a questionable fee to begin with), more cards are saying so long to that fee, which can add as much as 3% to your purchases abroad (or even to purchases you make from home if they're from a company abroad).