Highland Light, Truro, MA
For those of us suffering from extreme frugality, it can be difficult to determine when and how to pull the trigger on anything whimsical. You’ve streamlined everything in your daily life down to the nub; going off and spending money would destroy what you cultivated in your bank account.
So I have been working on a rubric for when vacation is ok. Sometimes it’s good to be able to do a sanity check. Do any of these guidelines seem too lenient? I challenge you to convince me!
- When you are out of debt. I really cannot see going on any sort of pleasure-motivated holiday while in debt. (In the past couple months my liquid net worth – not counting 401K etc. – shifted positive, so that if you added up my savings and small amount of remaining student loan debt, it would be green. More on that soon.)
- To treat your family or do good in another way. I just took my mom and sister for a weekend trip to Cape Cod, and heard about a friend who will be taking a trip to volunteer. I know some people have hardcore frugality principles but these types of trips sound guilt-free to me on an ethical level. If you have everything else in order and want to spend some money whimsically, I cannot think of a better way than this.
- If vacation takes up X% of your income and allows you to achieve your Y% savings goal. If your honest saving goal is 50% of your income per year, and you are meeting that goal and have room in your remaining funds to spend 5% that would otherwise go back to savings, I think you could spend a small fraction like this (if it is acceptable to you) and not worry about it. If your take-home pay is $3K/month or $36K/year, and you are able to save $18K reliably with another $1800 to spare, I would not sweat spending up to this much on vacation. In this scenario you are already saving 50% of your income! To me this is like a triathlete debating whether to go for the ice cream cone. Granted, if your saving goal is like 85% of your take-home pay, then either you probably don’t get to go on vacation or you need to re-assess your goals.
- When your vacation plan is blissfully frugal. I dream about bike-and-camp vacations, whose only cost is the airfare and potential bike rental. A cheap vacation inherently meets #3, which makes it even more appealing.
- To advance an interest or hobby. I admire people for whom a vacation is an extension of an existing interest. (Bike vacations also fall under this category.) Traveling to further your scuba or language skills, follow a favorite band, learn more about your lineage, etc., seem very cool and more significant than a trip for the hell of it. When you are justifying spending money, that is.
When vacation isn’t so hot:
- When vacation will tempt you to make bad decisions. The opposite of a breezy bike vacation, a vacation to, say, Las Vegas will likely result in poor choices. “Luxury” destinations make you want to go big and avoid the fray, and that is just the beginning. You will be compelled to buy tickets to shows you may not like, gamble your money away to a statistically dominant House, and do all this in silly clothes you impulse-bought to look more like a hooker. I am not interested in Vegas vacas at all.
- When you are aiming for a short-term money goal. Unlike #3 above, a short-term goal should take precedence or else it will never get done. I think short-term is something you expect or need to accomplish within a year and is reasonably one-off in nature. Saving for a new car, a certification for a 2nd job, or house down payment are all things that should not be hindered by frivolous spending. Or they just won’t get done and undesirable results will follow! Choice is up to you.
Maybe these are common sense. But it is very hard to quantify and justify when it is time to spend purely on yourself if you like to save. And even if you have decided on the amount and purpose, it is easy to second-guess based on the frivolity. So I like to keep things measured and meaningful to ensure confidence in the plan.