Put your vacation on layway

Now that credit has been blamed for everything from the mortgage crisis to personal debt, layaway seems to be making a stylish comeback.

It makes sense.  Put a jacket on hold, make monthly payments and then it's yours to keep.  You're also much more motivated to continue payments, otherwise you're losing out on the entire investment halfway through.  Who's going to put down enough money for just a sleeve?

With a credit card, it's easy to buy and then realize the jacket isn't as cute as you thought, so you charge another one.  Then the ugly one just sits in the back of your closet until everything else has been sent to the cleaners.  You end up sort of just glancing over your credit card bill that month, and after being annoyed for a few minutes about the jacket charge, you get over it and let the bill roll over to the next month and accrue interest and penalty fees. 

So layaway might just offer a crutch to get off the credit cycle. Eventually, we might actually start paying for what we buy upfront. But instead of looking at Christmas gifts and new appliances as a layaway option, consider using it for your next vacation.

I'd like to think I'm a budget savvy traveler, but even I put airfare, hotels, and travel recreation on my credit card.  It seems safer. (That's my justification anyway).  I can just call up my credit card company if I see any suspicious charges and have them removed or put under investigation immediately. I can also cancel a credit card at any time if things go awry.  If I lost a wad of cash on the street, I can't exactly cancel that and have it back in my financial resources the same business day.

And while putting some charges on my credit card has benefits, even I succumb to that shockingly large bill and wonder if I should pay it off in two or more payments. It really shouldn't be a shock, I'm the one who swiped my card and then later wondered how I spent $50 at a restaurant in Budapest I can hardly remember being at.  Was it the potato balls and sour cream and Dreher? Or maybe veal stew with small noodles?

Instead, putting a vacation on layaway might be a better option. If you're disciplined, create your own version of a personal layaway plan by setting a vacation goal.  First, research the high and low season of your destination, determine the best time of finding an airfare bargain, and locate a hotel that fits your budget. 

Once you've determined where you want to go, let's say St. Lucia, then determine how much you can put aside each month to pay for it.  If you can put aside $250 a month, and the airfare and hotel are going to cost in the neighborhood of $1,500 for your stay, then you have to plan approximately 6 to 7 months in advance to when you want to book your trip.  Don't forget to factor in meals, recreation, and souvenirs.

You'll also find that once you've set your personal layaway goal and are very clear about what you want, the saving results will come faster.  You'll be less likely to drop $100 at that new restaurant on the Upper West Side or splurge on a pair of Kenneth Cole boots with your trip in mind.  Instead, you'll find yourself increasing what you're saving each month.  To stay motivated, keep pictures of your vacation around the apartment and post a running tab of how much you've earned towards it. Remember to put your savings into a high-yield interest account or CD that earns while you save.  This will also make it a little harder to dip into when you're having a moment of financial weakness. 

While I'm an advocate of the personal layaway plan, it's not always practical.  You may not be able to plan 6-months to a year in advance for a vacation.  Or you might find a great bargain online that you need to book sooner than later.  This is when I end up putting a trip on my credit card and then suffering through a bout of stress and leftovers at the end of the month in an attempt to pay it off.

You can also consider using a professional travel layaway service.  For a fee, they can help you book the vacation you want now and then pay it off over the next several months to a year.  After doing some research, I found that www.personaltravelonline.com offers layaway vacations for a $99 fee and no interest. 

Clients choose a vacation with a specialist and are required to make a deposit within 24-hours to lock in the rate and hold the reservation.  Afterwards, travelers choose what they pay each month, or make a one-time balloon payment.  You can start paying for a vacation up to 18 months in advance and are usually required to make the final payment approximately 6-weeks before the trip.

When researching travel layaway companies, be sure that your rate can be locked in at your first payment.  There's really no point in paying for a service if your travel tab is just going to keep increasing once high season hits. I discovered several travel companies work this way, and offer little benefit.  Other travel layaway companies require you to book a vacation, usually one they sponsor to an all-inclusive or a cruise, through them directly. This might not result in the savings your looking for, so be thorough with your research.

Keep in mind that the sooner you pay off a vacation, whether on layaway or credit, the cheaper and less problematic it will be.  Recurring fees on a credit card and the stress of having outstanding payments contribute to more than just bills.  Stress eating, stress shopping, and stress arguments with your loved ones aren't worth the sacrifice.

Regardless of how you choose to pay for your next trip, make a conscious decision to follow through with a detailed plan of action. Blindly charging a vacation doesn't bring an adventure of a lifetime, it brings chaos and resentment instead. Save, pay, and travel. It works.

Email me your budget travel questions and challenges at travelexaminer@yahoo.com.  I'll post them here and help you get on the open road.