6 Ways to Avoid Vacation Debt

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Vacation is meant to be fun and relaxing. With no office to go into and no stove to slave over, you can enjoy some peace and quiet and forget about life for a while. Unfortunately, many Americans return home to a rude awakening in the form of a big, fat vacation bill. Nearly three-quarters of Americans have gone into debt to pay for a vacation, racking up an average balance of $1,108, according to LearnVest's 2017 Money Habits and Confessions Survey.

Fortunately, there are plenty of ways to avoid vacation debt and the havoc it creates. If you're gearing up for a trip but don't want to return home to a nasty bill, here are some steps you can take in advance. (See also: 7 Fool-Proof Ways to Stay Within Your Travel Budget)

1. Start a travel savings account

One possible reason Americans wind up with vacation debt could be the fact that more than half of us don't have a travel budget. The LearnVest survey shows that 55 percent of Americans don't factor vacations into their annual spending plans.

One of the best ways to ensure you have vacation funds saved in advance of your holiday is to create a targeted savings account just for travel. A travel account allows you to see exactly how much you have to spend on vacation without digging into your regular budget, or worse, going into debt. (See also: How to Build Your Best Travel Budget)

2. Carve out some travel savings in your monthly budget

Once you have a travel account, you need to save regularly if you want your funds to grow. Make it easy on yourself by budgeting for travel expenses monthly — as in, set aside a few hundred dollars (or whatever you can afford) each month as if you were paying a regular bill. By stashing this money in your travel savings account, you help make sure it doesn't get spent elsewhere. (See also: 7 Easy Ways to Budget for Summer Vacation)

3. Find ways to save on travel

Part of our problem with vacation debt could stem from the fact that we're spending too much on travel compared to our incomes. LearnVest's survey showed that the average American spends around 10 percent of their income on vacations — meaning an individual who earns $50,000 is spending $5,000 a year on holiday travel. Worse, 39 percent of millennials spend 15 percent or more of their annual income on vacations. (See also: 5 Steps to Getting a Free Vacation in 9 Months or Less With Credit Cards)

While there's no one-size-fits all way to save on travel, we could all stand to dig a little deeper to find savings. Consider searching for package deals that include both airfare and hotels, for example. Or, vacation closer to home so you can avoid flying altogether. Also check out the many useful travel deals websites that can help you save money on nearly any trip. (See also: 40 Most Useful Travel Websites That Can Save You a Fortune)

4. Leverage credit card rewards (but only if you're debt-free)

Travel credit cards can serve as a valuable money-saving tool, as long as you don't run a balance on them. If you plan ahead to earn airline miles or hotel points, and pay your bill in full before your due date every month, you can use rewards to supplement your travel budget and save money. (See also: How to Use Miles and Points for a Big Award Trip)

For example, if you cash in frequent flyer miles to pay for your airfare, you can focus on saving for your hotels and food separately. Or, consider driving to a hotel you paid for with points. In that case, you would only be on the hook for travel expenses, activities, and food.

Of course, travel rewards are not a good option for people struggling with debt. The key to using credit card rewards for travel is to never carry a balance. Instead, consider your cards as a thoughtful extension of a planned out monthly budget.

5. Cut your expenses, or try a "spending freeze"

The LearnVest survey found that the most common ways Americans save money for travel are avoiding restaurants, shopping less often, and spending less on entertainment. This is all good news, as "extra" spending categories like dining out and entertainment are often the easiest to cut. But, that doesn't mean you can't look for more ways to save money over time.

As you save up for a vacation, you can even try a spending "freeze" — an exercise in which you only spend money on absolute essentials for several weeks or months. If you can avoid extra spending for short bursts of time, you can reach your vacation budget goal much quicker.

6. Pick up a side gig

Not everyone has enough wiggle room in their budget to cut out enough to pay for a vacation. Maybe you live in a high-cost area, or perhaps your monthly expenses are unusually high due to debt, child support, or other factors. Either way, it's hard to save for vacation when you're barely making ends meet.

If you're struggling to come up with the cash to travel, consider picking up a side hustle or part-time job that leads to additional income. Since the extra cash you earn is in addition to the money you earn at your job, you should theoretically be able to save it for anything you want. (See also: 14 Best Side Jobs for Fast Cash)

Your side hustle can be anything, although you'll probably earn more if you align it with your career or some skill you already have. If not, you can always try something like baby-sitting, dog-sitting, or housesitting. Mow lawns, drive for Uber, or tutor kids online. Start hustling, and by the time your next vacation rolls around, you'll be ready.

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