You're home from vacation and ready to dive back into everyday life — including facing your bank account balance. Whether travel simply cost more than you budgeted for or unforeseen circumstances drove up the price, overspending on vacation can happen to the best of us.
Use these debt repayment tips to help you take control and begin your journey toward financial recovery.
Read more: Keep your expenses on track with Ally Bank's spending buckets.
Understanding your debt
To make a plan to pay down the cost of your travels, you have to know exactly how much you owe.
Assess the amount: After all the charges have been processed, take a close look at the transactions to see how much you spent.
Identify the sources: Whether you used your credit card, debit card or cash during your trip, make sure the final amount factors in each method of payment.
Determine the interest rates: Knowing which payment sources have interest can help you decide which to pay off first.
Creating a repayment plan
How you approach paying down your vacation debt depends on your overall financial goals and personal preferences.
Review your budget
You can either create a budget or review your current one to determine how much you can reasonably afford to put toward your vacation debt each month in addition to your other expenses.
Debt prioritization
While there’s no “right way” to reduce debt, using one of these methods can be a good place to start:
Avalanche: Pay the minimum balances on each debt and put any extra income toward the balance with the highest interest rate. Once that’s paid off, you’ll direct those payments to the balance with the next highest interest rate — and so on.
Snowball: Make all your minimum payments, then put any funds leftover in your budget toward your smallest balance. As each debt gets crossed off the list, those funds now go toward paying off the next lowest debt.
Whichever strategy you choose, you can utilize smart tools like Ally Bank's Savings Account buckets and boosters to help you get back on track.
Set realistic goals
While debt repayment can feel daunting, establishing achievable payment targets and creating a timeline can make the process feel more manageable and keep you motivated.
Strategies for accelerating debt repayment
Once you’ve gotten into a good rhythm for paying down your debt, you can start to find ways to accelerate your repayment schedule. For example, if you've recently been promoted or received a tax refund, you could put that extra cash toward your debt. Another option is consolidation, which can simplify your debt into one monthly payment and even help you secure a lower interest rate. If you’re interested in really speeding things up, starting a side hustle like freelancing or pet sitting could help you earn some extra income.
Avoid future vacation debt
The good news is you can always learn from the past to avoid similar situations on future trips.
Plan and budget
As you scope out the itinerary for your next vacation, take into account more expenses than just transportation and accommodations. Including meals and souvenirs into your travel budget can help you stay more in control while out of town.
Tip: Divvy up your savings into different categories without the need for multiple bank accounts or complicated spreadsheets with Ally Bank's savings buckets.
Set realistic expectations
It’s okay to splurge here and there while on vacation, but it’s also important to make sure the majority of your experience and activities stay within your budget. By setting realistic expectations on what you can and can’t afford, you can plan a trip you will enjoy without breaking the bank.
Consider alternatives
Not every vacation needs to be an international extravaganza. Staycations, camping and road trips are all budget-friendly alternatives that still allow you to get some much-needed rest and relaxation.
Put vacation debt behind you
We all go overboard from time to time. Whether it was travel delays, unexpected hotel fees or too many souvenirs, overspending on vacation happens. But you can find your financial footing again by making a plan to pay off any travel-related debt.
