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Survey: Debt Stress Derails Vacation Plans

 
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June 27, 2013

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Worried about debt? If you're like many Americans in that boat, you might cancel your cruise, say sayonara to your safari or even reschedule your road trip to save money, a new CreditCardGuide.com survey shows.

The survey by CreditCardGuide.com, conducted via telephone interview by Princeton Survey Research Associates International, found that 30 percent of Americans — and 47 percent of those who count credit card debt as their biggest worry — said they put off taking a vacation in the past year. A few even put off major life events, such as getting married or having a baby.

How debt derails plans and purchases
Click image to enlarge.

“Consumers are feeling more stressed out and boxed in,” says Charles Green, a professor of finance at Seminole State College of Florida, who also runs a personal finance site, MyMoneyUniversity.com. “Many no longer have the ability to achieve what is known as the American Dream.”

It's no surprise that vacations are the first item those harried consumers cut.

“Vacations are not a necessity,” Green says.

Debt puts vacations on the back burner
Shelving vacation plans is common in our stressed-out, overworked culture, even before you add debt to the mix, experts say.

“America is the most hardworking nation on earth,” says William Bailey, associate professor of personal finance at the University of Arkansas, adding that American workers put in more hours than those in any other country, including Japan.

Also, vacations are short-term plans that typically are paid for either with discretionary income or by going deeper into debt. Many consumers don't have much extra money right now, so Bailey says it's not surprising that many people who are in debt don't want to add more to their tab.

Robert Flashman, a professor in the Department of Family Sciences at the University of Kentucky, says he suspects many consumers still are taking time off, but are forgoing high-dollar vacations more typical before the recession.

“People might say, 'We have this car loan to pay, so instead of going to Disney World, let's stick closer to home,'” he says. “They're looking at things more realistically.”

Pricey vacations were not the only plans put on hold due to debt, the survey of 1,004 American adults found. Consumers said that due to debt, they put off an array purchases or life events in the past 12 months:

  • 23 percent of survey respondents delayed buying car.
  • 18 percent postponed buying a home.
  • 15 percent put off retiring.
  • 9 percent delayed going to college or professional school.
  • 7 percent held off on having kids.
  • 5 percent decided to wait to get married.

Consumers so overwhelmed by debt they're putting their dreams on hold indefinitely should consider meeting with a credit counselor at a reputable local nonprofit organization, Bailey says. “It's confidential and there's no cost.”

Changing priorities: putting relationships first
While many consumers put off purchases such as vacations, houses and cars because of debt, the survey showed that few in their prime marrying and child-raising years are putting off getting married and having kids.

“People might say, 'We have this car loan to pay, so instead of going to Disney World, let's stick closer to home.'” – Robert Flashman, University of Kentucky

Among 18-to-49-year-olds, 7 percent said they put off marriage, and 9 percent said they put off having kids because of debt in the past year. Meanwhile, 23 percent in that same age group put off buying a home, and 26 percent put off buying a car due to debt.

Younger consumers tend to put a high value on relationships and experiences over accruing possessions such as houses and cars, says, Kit Yarrow, a consumer psychologist at Golden Gate University in California, who has studied the financial attitudes and habits of Generation Y.

“This has less to do with the economy and more to do with characteristics of the younger generation,” Yarrow says.

Younger Americans are postponing marriage and kids longer in general but, once they are ready, they're likely to move forward despite money worries, Yarrow says. With many couples getting married in their late 20s and beyond, they know they have less time to have babies than previous generations that married earlier.

“When you've found a partner you want to be with forever, you're not going to say, 'I love you but we can't afford to get married,'” she says.

Yarrow warns that debt can add huge amounts of stress, guilt and resentment to a new marriage, especially when one partner owes a lot and the other doesn't. It's especially important for the partner with less or no debt to feel confident that he or she won't have to give up big dreams in the future because of a partner's debt, according to Yarrow.

“Couples can work it out, but you've got to face it head on,” she says.

Save that vacation: 4 tips
So, if you're in debt, should you delay life goals? That depends, experts say.

For example, Yarrow says it can make a lot of sense to put off big consumer purchases such as houses and cars — and to drastically scale back vacation plans. But, for many people, it doesn't make sense to put off marriage and kids.

“When you've found a partner you want to be with forever, you're not going to say, 'I love you but we can't afford to get married,'” – Kit Yarrow, Golden Gate University in California

If you make relationships a priority while squeezed by debt, though, the money to pay for weddings, diapers and day care has to come from somewhere.

But should it be your vacation budget? These four tips will help you have it all without getting deeper in debt:

1. Create a timeline. If you're putting off purchases and life goals with no end in sight, make a road map. Create a budget, determine how long it will take to pay off your debt and figure out when you can make your big dreams happen.

2. Nurture your dreams while you pay down debt. Rather than mentally pushing off big goals into the future, cultivate them now. For example, if your dream is to buy a house, you might research mortgage loans, look at real estate websites and make a list of the features you want in a home, Yarrow says.

“It can be really motivating and help inspire you to pay off your debt,” she says.

3. Weigh the costs and benefits of a vacation. Vacations can provide much-needed rest and relaxation.

“People tend to have experiences that rejuvenate them, Yarrow says.  “They might go out in nature, go to an art gallery, take in a show. It gives you a little brain lift.”

Just consider the downsides, too: Trips can be expensive and cause you to miss out on income you could have earned, Yarrow says.

4. If you take a vacation, scale it back. Postpone lavish trips and don't rack up more debt by paying for hotel rooms, restaurants and souvenirs on credit cards. Instead, stick closer to home and consider some tourist-in-your-hometown sightseeing or even a camping trip, Yarrow recommends

“There are so many inexpensive ways to vacation,” she says.

Poll methodology
The survey was conducted June 6-9, 2013, on behalf of CreditCardGuide.com by Princeton Survey Research Associates International. Landline and cellphone interviews were completed with a nationally representative sample of 1,004 adults living in the continental United States. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.7 percentage points.


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