How to 'Spend' Summer Vacations Wisely Finance guru Alvin Hall says the key to a great vacation is preparation. This week, he gives listeners advice on how to properly plan, and pay, for that hard-earned getaway.
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How to 'Spend' Summer Vacations Wisely

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How to 'Spend' Summer Vacations Wisely

How to 'Spend' Summer Vacations Wisely

How to 'Spend' Summer Vacations Wisely

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  • <iframe src="https://www.npr.org/player/embed/11689710/11689711" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Finance guru Alvin Hall says the key to a great vacation is preparation. This week, he gives listeners advice on how to properly plan, and pay, for that hard-earned getaway.

MICHEL MARTIN, host:

And now, it's time for the Money Coach, where we check in with personal finance guru, Alvin Hall. It's nearly Fourth of July, the unofficial start of the summer vacation season. Of course, the key to a great vacation is preparation. So today, we thought we would ask Alvin to help you plan and pay for that hard-earned time off. He joins us now from our New York bureau. Hi, Alvin.

Mr. ALVIN HALL (Finance Guru): Hello.

MARTIN: So what's the biggest financial mistake people make when planning a vacation?

Mr. HALL: Deciding to charge the vacation on a credit card and coming back from the vacation in more debt than they were before they left.

MARTIN: But aren't there good reasons to charge things like airline tickets and things like that? Don't you get some protections that you wouldn't get otherwise?

Mr. HALL: I have no problem with people charging the hotel, the airline tickets, but they should have the money in the bank.

MARTIN: You know what? It seems to me that things like vacation savings accounts - especially at a credit union - used to be fairly common. You know, like they had things like…

Mr. HALL: Yeah.

MARTIN: …the Christmas Club, the Vacation Club…

Mr. HALL: Absolutely.

MARTIN: …where you'd put aside a special part - but that didn't seem to be the custom anymore. Is that right that, that seems to have gone by the wayside?

Mr. HALL: That's gone by the wayside, because most people feel they can just charge it now rather than save up for it in advance, but the same principles can apply. People can open their own savings accounts. They can put money away for vacation throughout the year and then select a vacation that sticks within that budget.

MARTIN: You know, it seems to me that there are guidelines for some things like for housing or for mortgages.

Mr. HALL: Yes.

MARTIN: You should only pay x percent of your monthly budget for housing and things of that sort (unintelligible).

Mr. HALL: Yes. Thirty percent. It's generally the norm.

MARTIN: Right. So do you have a rule of thumb for how much you should pay for a vacation?

Mr. HALL: No, I really don't. I think vacations depend upon your income level. The key thing is to look at your money and see how much extra money you have that you can afford to allocate to this. If it's only, you know, 10 percent of what you earn or even less, then that's what you spend. But you don't go over that, under no circumstances.

MARTIN: How do you start planning for a vacation?

Mr. HALL: Well, I start always in January. I think, in January, I look at all my expenses, and I understand what things I have to pay for - health insurance, other types of insurance in my life, my retirement plan. And then, once I've covered all those bases in terms of my budgeting, then I look at the vacation. I tend to go away for about 10 days to two weeks. I typically will fly to where I'm going to go, and I buy very few gifts when I'm on holiday. My biggest expense is always food, because that's important to me. That's a relaxation.

MARTIN: How did you come to this? Because I don't know about you, but I didn't grow up going on vacation. I didn't know, I mean, we went to see family. That was like vacation - what's that? So…

Mr. HALL: Same with me. As I've grown over the years, I sort of become aware that you need that psychological break from your life in order to renew yourself, in order to feel fresh when you come back to work. So I choose to go off into some place totally different. Now, I have a little secret. I tend to go on vacation where the currency rate is good for the dollar. Therefore, I feel my money goes farther.

MARTIN: Where would that be? Queens?

(Soundbite of laughter)

Mr. HALL: No, Argentina.

(Soundbite of laughter)

MARTIN: Excuse me.

(Soundbite of laughter)

Mr. HALL: I do tend to fly along ways to where the dollar is pretty weak, and therefore I get to make my money go a lot farther. And for a big family, this would be much more problematic, but I think you look at areas of the country where maybe things are a little cheaper. For many years that I was a high school teacher, I would go to Maine on holiday, because Maine in those days was really inexpensive. You could have a really nice meal, stay at a little bed and breakfast, and it was just fun.

And I enjoyed taking long walks. I think today, too much a vacation of vacation is centered around, oh, we have to go shopping or we have to go to a theme park where we have to spend money. Choose a vacation that fits your economic situation and your need for relaxation. And also, set limits if you have children. Friends of mine just left to go to London on holiday, and they have been very good about this. I was really impressed. They told each of their two children that they could only buy one thing for the entire week that they are there.

MARTIN: Souvenirs. So are…

Mr. HALL: Yeah.

MARTIN: …souvenirs a big budget buster, do you find, when people go on vacation?

Mr. HALL: Absolutely. Especially for kids. They want their kids to be able to buy what they want to. There should be no limits on our vacation. We're here to relax. You should always view these trinkets as something that's going to cost you money. And the more of them you buy, the more you're spending money that you could use for something more significant.

MARTIN: Stay away from the mini bar, right?

Mr. HALL: Oh, absolutely.

(Soundbite of laughter)

MARTIN: Okay. And finally, Alvin, do you find that it's best to use a travel plan or travel agent, or do you find that you get better deals when you do the Internet or do the planning yourself?

Mr. HALL: When I'm traveling internationally, I tend use a travel agent, just because I don't always know the place where I'm going to or the location of the hotel. But in this day and age with the Internet, if you've traveled a lot and you know a little bit about the area where you're going, you can do it on the Internet.

I've been to Paris so many times that I almost always book my trip now in the Internet. It's - I can get - I know the hotels in the area. I know where I want to stay. I know how much I'm willing to spend. I know where the restaurants are in that area that are inexpensive, and I come home, often, with money in my pocket.

MARTIN: So no empty suitcase to stuff for you.

Mr. HALL: No.

MARTIN: None of that happens?

Mr. HALL: Unless you're planning a shopping holiday, which I don't encourage people to do. In this day and age, anyone who goes on holiday to shop needs therapy.

(Soundbite of laughter)

MARTIN: Okay. Well, on that note, Alvin Hall is our financial expert. He joined us from our NPR New York bureau. You can find out more information about Alvin at our Web site, npr.org/tellmemore.

Alvin, have a great holiday.

Mr. HALL: Thank you. And you, too. And stay close to home.

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