If you’re in a lot of debt and trying to get out, you don’t deserve a vacation. You deserve to eat, have a life, and even treat yourself to something special every once in a while, but you don’t deserve a vacation. Why? Because vacations are getting ridiculously expensive, especially when you have a family. And because when you go into vacation mode, you loosen up the budget strings, meaning you’ll set yourself back months in your quest to reduce debt. But if have been good about saving, here are some tips to get the best vacation deals.
You Don’t Deserve a Vacation
According to American Express, the average cost of a vacation is $1,145 per person. For a family of four, this means it’ll cost on average $4,580! This survey was done in 2013, meaning that the cost of a vacation has likely gone up since then. The average US household income is just over $50k, so $4,500 is almost 10% of a family’s annual pre-tax earnings! Considering most vacations only last 1-2 weeks, it doesn’t make sense to spend that much if you’re trying to get out of debt. You’re better off staying at home, playing video games or binge-watching on Netflix (I know from experience). Or drowning your sorrows with store-bought alcohol (again, I know this from experience).
How to Find Vacation Deals
If you’re not drowning in debt and can afford to take a vacation, then by all means, your highness. Vacations are expensive, but here are three tips on how to get the best vacation deals.
1. Book Through Costco
I never understood the appeal of Costco when I was younger. Parking was horrible on the weekends. It takes forever to go through the massive store. Everything was sold in huge packages, and after all that, you were stuck waiting in line just to check out. Then I had kids. Now, all the pain is worth it, and the kids can practically get full off the samples alone!
Not many people know this, but if you’re a Costco member, you can book travel here. Prices are usually better than you’ll find anywhere else. When I booked a car rental through Costco, I saved about 10% vs. booking directly with the car company.
I also booked a cruise through Costco and the savings were even larger. I booked a Disney cruise through Costco. No matter where you book, the price will be the same. However, when you go through a travel agent, they’ll provide on-board credits, depending on how much you spend. Instead of on-board credits, Costco will give you a Costco gift card. It worked out to around 5-6% of what I spent, which was higher than any travel agent I saw.
On top of finding vacation deals through Costco, you can combine rewards and credit cards to increase how much you save. As a Costco Executive member ($120 annual membership instead of the standard $60), you’ll get a 2% reward on Costco Travel purchases. If you have the Costco Citi Visa card, you’ll get 3% cash back on travel purchases. So if you spent $4,500 on a cruise, you’d get around $270 back for the cruise, $90 more if you’re a Executive member, and then another $135 for using your Costco Visa card. That’s almost $500 back!
2. Travel During Off-Peak Times
Airlines, hotels, car rental companies, and anybody else related to travel knows that there are some times that are much busier when it comes to vacations, and some times are much less busy. During those times when it’s not as busy, they still need to stay open and make money, so they charge less to drive demand. During busy times, there’s a lot of interest so they jack up (gouge?) the rates.
I’ve seen instances where the cost of a flight, hotel, or cruise is less than half the price if you go during off-peak times. When you have kids, it can be really tough to go during these times, but if you’re single, you can save thousands of dollars, and also have a more pleasant experience because you won’t have to deal with the crowds either.
3. Book Early or Book Last Minute
Companies, like investors, want certainty. If you book early, you’re giving them certainty because they know to expect some revenue from you in the future. This helps them plan and this is why you get a discount for booking early. As the time gets closer to your trip, the airline or hotel or cruise will have fewer open spots available, so they’re able to increase pricing to maximize profit. They’ll also increase prices to price discriminate.
Pricing should go up right until the last minute. Then, if the company has any spots open, they’ll offer the spots at a discount. Why? Because all of these are fixed cost businesses. The cost of flying a plane is the same whether you have 95 people on a flight or 100. The cost of running a hotel is the same whether it’s full or empty. So it makes sense for these companies to fill up to capacity, even if they sell the spots at a substantial discount, because all of it will be incremental revenue with no incremental costs.
According to this logic, hotels could sell last-minute empty rooms for $1 because that’s an extra dollar they wouldn’t have gotten otherwise. But they don’t, because selling it for a dollar would cheapen the brand and it would make all consumers want to wait until the last minute to book.
Again, taking advantage of last-minute deal is hard when you have kids, but if you’re single, you could have thousands of dollars on vacation deals!