TAKE CHARGE OF YOUR MONEY
Travel now, pay later
INQUIRER.net
First Posted 09:56:00 04/01/2008
Question: I came across offers from my credit card company for travel packages, which are perfect summer destinations. The offer does not only promise discounted prices, but also a fly now, pay later option. I’m not comfortable taking on credit for “want” items, but I have to admit this is hard to resist. And at 0% installment plan, I am truly hooked. Take it, or take it? — Albert C.
Answer: There is some truth to the old proverb, “All work and no play makes Jack a dull boy.” Most of us do need to work to earn a living to live our lives well, but if we all turn workaholic and just live to work, there won’t be much sense to life. Time and again, scientists and medical practitioners have also cautioned us on the perils of working too hard: We’ll be stressed, and this will affect our health, our relationships, and even our character.
So a wise person will work hard during the week, but make time for leisure at the end of the weekday or on weekends. Such times are used for me-time, or for bonding with family and friends.
After-work hours and weekends are not enough, though, so vacations are necessary to one’s sanity. There is nothing like being in a new place, away from work deadlines and other responsibilities, where you can recharge and come back to work refreshed and ready to tackle all that’s needed.
You don’t need to go abroad for a vacation. Even short vacations in nearby provinces can do wonders to your health and mindset. Some families even check in at a hotel for the weekend within the city just to get away from their everyday surroundings.
Given all these, we advise you to consider availing of the Fly Now, Pay Later offer being made to you. True, a vacation is not as basic a need as food, but it is a need nonetheless.
Here are some tips for you:
1. Book early. It’s mid-summer, and most people would like to head out of town, if they haven’t done so already. Pick a vacation spot you and your family will enjoy then book flights and hotel rooms as soon as possible. This will make sure you’ll still have a summer getaway in comfort. Find out too, if the airline and hotel you’re looking at will give added points for your credit card company’s rewards program. Extra points will mean extra rewards later on. Plus, paying with a credit card may entitle you to free travel insurance.
2. Compare costs. Not only should you compare hotel room rates and air fares; compare costs between destinations as well. For instance, there may not be much difference between traveling to Hong Kong or Macau and traveling to Palawan and Davao. The weak US dollar has made reasonable travel packages abroad possible.
3. Budget the monthly installments. The Travel Now, Pay Later scheme is an installment plan which you should treat in the same way you would treat an appliance purchase. Find out how much the monthly installments for your vacation would be, then calendar it in your budget and planner. This scheme is easy on the pocket, enabling you to enjoy a big-ticket item (your vacation) without taxing your bank account.
4. Don’t forget transfer arrangements. Transfers between airport to hotel and vice versa may be arranged beforehand; so do city guided tours. Take advantage of these offers as these will enhance your travel experience.
5. Charge only what you can afford to pay. Just because you can use your credit card for the Travel Now, Pay Later scheme doesn’t mean you should get the most expensive travel package offered. Take only what you can afford to pay in the next three or six months (depending on the terms of the scheme). Don’t be saddled with debt with the vacation of your dreams. That will come in later in life, when you can afford to do so.
In relation to the last tip, we’d like to remind you of an important thing you should save up for: your emergency fund and retirement fund. Every month, set aside a fixed amount of money for an emergency fund which should tide you over six months should anything happen to you or your family (such as a job loss or critical illness). This is an absolute necessity. Also start shoring up money for your retirement as doing so this early will help your fund grow faster through compound interest.
While you do make time and set aside money for a vacation every year, make it a habit to build up your emergency and retirement funds regularly as well. Strike a balance between what’s necessary (saving for your nest egg) and what’s recharging (enjoying life).
(INQUIRER.net and Citibank invite readers to ask questions regarding financial matters. Send your questions to personal_finance@inquirer.net or comment through our personal finance blog called MoneySmarts)
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net receives no compensation of any kind from companies or industries or funds that are mentioned here.
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