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Can I afford a vacation? Suze Orman would say NO!

Some college friends and I have been planning a vacation with just-us-girls (~$1,000 per person) for 2009. After all, who knows if we’ll be able to do something similar in the future?

But the worsening economy and job market, combined with doubts about my own job security, made me hesitant to spend a substantial sum on a luxury item – a vacation. (By hesitant, I mean, a tiny voice inside my head is yelling “it’s ridiculous to spend $1K on fun when none of your peers who have been laid off can find a job!”

On the other hand, I really want to go. I have saved up a healthy emergency fund. I don’t spend extravagantly. I’m only young once. Who knows how long before my friends and I are tied to family, children, graduate school, or other financial obligations? But maybe, all these reasons are just excuses for being dishonest about my financial situation.

Suze Orman has a show where she answers viewer’s questions on “can I afford a vacation (or any other expense)?” Most of the time, she says NO. That’s what I think she’d say if I ask her about the vacation.

I remember reading one of her books (forgot which one… she has so many!) where she highlights the perils of “financial dishonesty.” Basically, the story goes:

Joe X is laid off. He had already put a hefty deposit on an island vacation with his buddies. Instead of acknowledging his new financial reality (i.e. no job, no income) and forfeiting his deposit, Joe decided to go on vacation anyway by using his credit card.

When he came back, he found that a prospective employer had called him for an interview and that his house was flooded. If he had stayed home, he would’ve known about the interview and perhaps gotten a new job, and he would’ve noticed the water leak and prevented it from becoming a flood that destroyed his house.

Suze’s conclusion? Joe going on a vacation that he couldn’t afford = financial dishonesty = increased debt + continued unemployment + water-damaged home.

Obviously, Suze Orman is of the Financial-Karma-Takes-No-Prisoners school of thought.

I really would prefer not to end up like Joe X. So, though it pains me, the girls’ vacation of 2009 will have to be downgraded. Instead of a $1,000/person on a cruise or Mexico, maybe we will settle for a $300/person long weekend in Vegas.

What do you think? Can I (or, should I) take a $1,000 vacation this year?

  • Sense - *I* think you are doing FANTASTICALLY for your age, but what do I know? I’m no Suze. :)

    She’d first look at all your debts, and what you’ve saved, and then your age…if you have cc debt, she’d automatically say ‘no’; given what you’ve saved and your no cc debt status, and that the $1K cost is less than 1/25th of your freedom fund, and that you saved up for it, she might actually say ‘yes’… if the economy was ok.

    This is totally a judgment call on your part; if it makes you uncomfortable, downgrade. If you think your job is pretty secure, then go for it! Since i turned 30 i’ve started regretting not doing more things with my friends when I was younger…

    Wellheeled: aww thanks for your kind words! I think we shouldn’t let opportunities pass us by because of money, but it’s hard to strike the right balance… Glad that you are enjoying NZ!
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  • Laura - Try signing up for travelzoo.com’s newsletter – they have some pretty great special deals, including full packages. If you’re flexible on where you go, it might be great to just wait for a good deal and jump on it!ReplyCancel

  • Crystal Bock - There’s really no reason to spend $1,000 on a cruise to Mexico…I mean, it’s MEXICO!! I’m 27 and have traveled around the country 6 times in my 20s, and have never spent more than $500/trip. Plus, I’m sure I got to see a lot more and have many more experiences than you would on a prepackaged cruise! In addition, more of your money would go towards helping local peoples and communities, instead of conglomerate cruise companies…investing of a different type!

    You seem like you’re in such good standing for your age and are truly an inspirational saver. Sometimes in life (and I do mean sometimes when you’re saving as aggressively as youself) there are experiences that are worth more than saving money! Go on the trip, woman! Enjoy your youth and your friends! Make a memory that’s not dependent on the stock markets or interest rates! But, definitely trim some costs and make a kickass vacation that is much more affordable (STA travel and Lonely Planet are great sites to check out)!!ReplyCancel

  • Single Guy Money - If I were you, I cancel the $1000 vacation and take the least expensive trip. Some people would say cancel both vacations but I like to reward myself every now and then.

    Why struggle and save money when you can’t spend (some) of it on a little fun?ReplyCancel

  • Fabulously Broke - I have to go with Cougar Suze on this one.

    Downgrade the vaycay.

    Really, it’s about being with your friends anyway, right? :)

    Fabulously Broke in the City
    Just a girl trying to find a balance between being a Shopaholic and a Saver.
    ReplyCancel

  • Sarah - You should go on the more expensive trip. You are way too hard on yourself. You have a year’s worth of savings in your emergency fund so I think a $1,000 vacation is in your reach. Even if you lost your job after taking the vacation, you’d still be fine. Save up for the vacation and enjoy yourself. There is no shame in spending money when you are financially responsible.ReplyCancel

  • dogatemyfinances - My girlfriends did this a couple years out of college in Ocean City, Maryland, all we could afford. I am so glad we did it. After that, people started getting married and having kids, so the timing was really key.

    Because of the economy, it should be easy to talk the ladies down to a cheaper vacation, like Vegas. It’s the company, not the destination, right?

    If you can talk it down to less than 1K (yikes!), I say go. The 1K would be really tough. I would probably still go but it would make me really uncomfortable.ReplyCancel

  • Cents in the City - I believe Suze Suggests that you save 6 months to 12 months of living expenses. You’ve estimated to have about 15 months, which is quite impressive. As long as you don’t have credit card debt, I think she would approve of your trip.

    Maybe instead of a cruise to Mexico you can find a cheap flight. Why not make plans to schedule the vacation for later in the year? Then you can take a few months to save and put money aside specifically for the trip. If you lose your job, you’ll still have the money in a bank account in case you need to draw from it. Hopefully everything will go well, you’ll still have a job and also the money for a trip. You won’t feel guilty spending money you’ve specifically earmarked for a vacation. It’s hard for me to let go of large sums of money for vacations, so I maintain a separate ING account for this purpose.ReplyCancel

  • Chantalle - $1,000 wouldn’t even cover part of my plane ticket home!

    But I do think it is a bit much for this current economy. You do have a healthy emergency fund, but you want to enjoy your vacation, not constantly worry about if you are doing the right thing or feel guilty about it.

    So just like some other commenters said – downgrade the vacation. You’ll still have fun, just less guilt!ReplyCancel

  • savings - I’d say go for it! It’s only $1,000 and you have enough money saved for a year, so it’s not like you’re hurting. As long as you stick to a budget, you have nothing to worry about. Life is about having fun too.ReplyCancel

  • Jem - If I were in your shoes, I would go on the trip as planned. My reasoning: you have an extremely healthy emergency fund, you aren’t drowning it debt, and if I remember correctly, you have a safety net in the form of your family. All this means that even if the worst should happen, you are more than prepared for it.

    I think that sometimes our good financial habits can come back and bite us in the behind when it comes to these things. We are so focused on being responsible, saving money, and spending wisely and these are great things, but this tight focus can also make us forget what the real purpose of having money is. Money is a tool, meant to make our lives better. We save so we don’t have to work when we are old and gray, so we don’t end up in the poorhouse if we have am emergency, so we can do things that make us happy while still paying our bills. We don’t save just to have money sitting in the bank that we never touch.

    Yes, times are tough right now, and if you get laid off I’m sure it will be a difficult time. But you have a large cushion to protect you if you fall, and if things get so bad that you burned through more than a years worth of living expenses, the money you spend on this trip will not be enough to save you.

    So go and enjoy yourself and your time with your friends. And, if it makes you feel better, try to cut back in other areas when you can to balance things out.ReplyCancel

  • Ashley - Well, who am I kidding, I would probably still take the bigger vacation. But there is nothing preventing all of you girls from just putting it off for another year or two, is there? There’s always time for a girl’s vacation!!

    I think maybe the downgraded vacation is the best option. Maybe a little painful, but smarter.ReplyCancel

  • Squirrell - What does Suze always say? “People first, then money, then things.” Sure, you could put that $1,000 in the bank. But if I were doing a cost-benefit analysis of the situation, taking into account your extremely impressive financial responsibility and stability, long-term memories and good times, then my money’s on the vacation. Enjoy this time with these people, your good friends, who are so important in your life. You have the ability to do so, which is a luxury and a blessing that you should have no qualms taking advantage of.ReplyCancel

  • Kim - I think $1000 is more than I would probably spend, but I also think it depends on the situation. My husband and I save up for our vacations (along with other savings), so we don’t have to feel guilty when we take a break and go somewhere. But, you could have just as much fun somewhere less expensive.

    I don’t agree with the thought process of financial karma is a bit*h – I just think Joe had bad luck.ReplyCancel

  • me - Go for it! You’re young, you have TONS of money saved up, you’ve been working hard so that you can impress your employer! Do it!

    Plus, and I’m around the same age as you, as people get into relationships and start getting married, having babies, having to do family stuff, there are fewer and fewer opportunities to actually have a girls weekend. People’s priorities change, and it sucks when you look back on all the time you USED to have and realize that you could have gone on an awesome vacation with your friends.

    You are probably the most financially secure out of all your friends, simply because of your savings. If they have concerns regarding finances, it might be worth it to downgrade the vacation but your finances are healthy, you can afford to go!ReplyCancel

  • Margo - Talk to your GF’s. Are they in as strong a position as you are? Chances are, someone else in the group is having the same hesitation. Get their feedback and see if everyone is still gung ho for Mexico. If so, you’ve earned it and should enjoy yourself!!ReplyCancel

  • Goal #7 for 2009 « Well-Heeled, with a mission - [...] $5K Freedom Fund goal will be iffy if I go on a vacation AND if I lose my job. Maybe I will try extra hard to cut back on eating out costs to [...]ReplyCancel

  • Jamillah - That part of the show always crack me up. She says no to:

    1. Things you really don’t need

    2. You have CC debt

    3. If you leasing a car (She will jump through the tv on you).

    Downgrade the vacation. You will still have fun in Vegas too. Have fun and post some pictures.ReplyCancel

  • Jen - Go for it! You have a super healthy emergency fund and you’ve saved for this vacation. What the other posters are saying is right – life gets more complicated and the opportunities for fun with your friends become harder to find.
    Money should be used for experiences, and what better experience than a week in Mexico with your friends?? If you didn’t have the money that would be one thing, but you do. Don’t let fear rule your life. You’ve saved for the vacation, now go and have fun.ReplyCancel

  • SP - I honestly think Suze would approve you!

    BUT I also think downgrading to Vegas would be perfectly acceptable as well, extra reasonable and prudent, and the smartest choice in this economy. But no one would fault you if you did take a 1k vacation. seriously. Not even Suze.ReplyCancel

  • MEG - Go for it! You are young and have no dependents and have over a year’s worth of expenses saved. What are you saving for if not to be able to create and share experiences with your friends and family?

    Personally, travel is a big part of my budget and I prioritize it over other things. But that’s just me. Sure you could do something cheaper or postpone it – but I would go for it. Especially this year – you can get GREAT deals because the tourism industry is bracing for a meltdown.

    In fact I AM going for it. My high school friends and I have been trying to meet up for years, and finally we can all afford to go and take off work (or grad school) at the same time. So I’m spending $1000 (actually more like $1,200 total) to meet them in Jamaica for a week in March. It’s all inclusive, so I know my budget in advance.ReplyCancel

  • MEG - PS Vegas won’t necessarily be cheaper after you account for rooms and cabs and food and drinks and entertainment unless your flight there is a fraction of the one to Mexico. At least cruises are (usually) all inclusive so you know exactly what you’ll spend in advance and don’t have to budget for $12 pina coladas.

    Wellheeled – we’ll be making the drive, which is one reason why I expect the costs to be lower. Also, we’ll probably get a suite and split the cost. And honestly the Vegas trip will be shorter (3 days instead of a week). Your Jamaica trip sounds amazing! What resort are you staying at? If you don’t mind me asking.
    ReplyCancel

  • Becca - Do it. We’re never younger, and it is cheaper now than it will be in a while. I’m going to Ireland for the sane reason now. you can’t give up your live entirely for the future.

    Go!ReplyCancel

  • Becca - same reason, sorry. also, life instead of live.ReplyCancel

  • Revanche - Dude. Go. You have tons in the e-fund, it’ll stretch further if you’re living at home (much as you love that idea), you’re continuing to save all the way up to the time of the trip.

    If you’re doubtful about the price tag, then downgrade some parts of the trip. Talk to the girls about the baseline level of comfort, maybe they’re feeling a bit insecure too, and shave some money off the trip price. But go.

    It’s really hard, REALLY hard, to coordinate more than two schedules at any given time so if you have the commitment of your girls for this year and you can all afford it without debt, with jobs, without risk, then go.

    The most important things are that you’re comfortable with what you’re spending, that you’re making the choice that makes you happy, and you’ve already got all your financial bases covered as much as you can have.ReplyCancel

  • fellow 20-something saver yet enjoyer - dude. you only live once. traveling is one of those things that, in my opinion, shouldn’t be put off…especially if you can afford it. You have more than enough in savings. GO!!! This should not even be a question. have fun! :) ReplyCancel

  • Moneymonk - I don’t know how old you are but you did well for any American to have a hefty saving acct. Seems like a $1,000 will not throw your financial life out of whack.

    I know you feel guilty because of the economy, but your economy is doing well.

    Considering you have no credit card debt, go for it. Create a good memoryReplyCancel

  • Bonnie - I think you can totally go without guilt!ReplyCancel

  • jw - I would go but downgrade a little if that makes you more comfortable. I think Mexico can be enjoyed for less than $1000 but I live in L.A. so flights are cheap. I am not sure where you’re located.ReplyCancel

  • Globetrotting Bride - You are a great saver so I say take that vacation and enjoy!!! $1,000 is small price to pay for a memory you’ll always treasure. And, if you can manage a less expensive trip, that’s even better! I’m one to skimp in other areas so I can enjoy nice trips as often as I can.ReplyCancel

  • Chris - i wouldn’t go on any vacation at this time … …. …. <> i’d wait until i had a lot more savings.ReplyCancel

  • Jett - If you are saying $1,000 is the total amount that you will spend on vacation, after taxes and expenses…$1,000 total — it does not sound outrageous to me. You have one years salary saved for an emergency, you deserve the reward.

    BUT…if your travel and hotel is $1,000 and the cost of food, souvenirs, expenses has not been figured in yet, then tread cautiously. Before you know it a $1,000 trip could rachet up to $2,000 after a few Margaritas. So go, have fun, enjoy your life, spend responsibly.ReplyCancel

  • Jane - W, in the name of everything that is holy in this world, you must go on this trip. You have an insane emergency fund for your age, and you’re so good about budgeting and investing in your daily life. A nice vacation every few years is essential to rebalance your mental state, especially in this economy.

    Take your trip. Please. And take a lot of pictures so you can look back fondly on all the fun you had.ReplyCancel

  • Aimee - I am a Suze-a-holic, and I can tell you honestly, Suze would approve of your vacation. You have been really responsible. I would try to save the money separately and feel free to be slightly more lenient about your freedom account since you might be able to do some catch up saving as the year goes on. Honestly, $1K seems like a good budget and you shouldn’t feel self conscious about what kind of vacation you decide on. Sure some people would get farther on a $1K, but this is a girly vacation right? So what if you do something cheesy. It’s not just about having as much money in the bank as possible. Sometimes people after being frugal for long get hung up about spending anything. We have to remember its our life we need to experience it also and time with friends is precious.ReplyCancel

  • PKL - I recommend the book How To Make Your Travel Dollars Worth A Fortune: The Contrarian Traveler’s Guide To Getting More For Less by Tim Leffel.

    The author explains how, out of habit and ignorance, Americans spend far too much on foreign travel and come to see overseas trips as “expensive” when they can be cheaper than a domestic trip.

    My review of the book is here.ReplyCancel

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