We’d been saving up for our trip around the world for nearly 10 months. Our goals was $60,000, and the half-way mark was in sight—albeit a tiny dot on the horizon. We’d started planning how we were going to spend that money, trips to Iceland, Paris, Rome. A place on the beach in Thailand. A safari in South Africa. So, when I took my new job in June, things changed a bit.
It was the right decision to make. Our plan was to start our trip around Christmas this year, but we would not have met our savings goal. We were stressed about it, and thinking about postponing anyway. And then there was the fact that I really wanted to take this new job—and I’m so glad I did. It bought us a lot more time, and a new experience for me.
With our apartment in Venice back to a dream off in the somewhat-distant future, we took a look at our travel savings… and then our student loans. We’d paid off two of the three loans we had together over the past couple of years, throwing tax returns and bonuses their way. But that last pesky loan—the largest of them all—the $15,000+ doozy that helped put Kyle through college—was still hanging over our heads. We’d planned to make the minimum monthly payment during our travels—something ridiculous like $250 a month, but we thought we could manage. We had always been nervous to calculate the interest, but finally we brought ourselves to do it and were staggered to learn we’d be paying an extra $8K over the life of the loan if we didn’t pay it now. I shutter to think how much we paid over the few years we’ve been making payments already.
So, with the slightest bit of reluctance, we spent an impressive chunk of our travel savings with one click of a button. It was a painful thing to do, but it was almost as if a weight lifted off our shoulders immediately. We realized we were finally debt-free, not saddled down with student loans, car payments or mortgages. All our money—aside from monthly bills and rent—was completely our own.
We have this tradition: pay off a student loan, take a trip. When we paid off my $7,000 loan I took to do my study abroad, we booked our trip to Alaska. When we paid off Kyle’s first, smaller student loan, we went to Hawaii. This time, we booked Christmas in Costa Rica. We’ve always seen it as our reward for being responsible adults. We always know that once we spend the money on our loans, it’s time to start saving again for our larger travel goals, but we believe you have to reward yourself in order to stay motivated.
We’d done a lot of reading before deciding to travel long term with debt. Some call student loans the “good kind of debt.” I’m a strong believe that no debt is good debt. If you’re thinking about traveling with massive amounts of credit card payments and private loans, I suggest you reevaluate. That’s probably not the smartest thing to do. Those are high-interest loans, and you should probably whittle those down before you jet set around the world. I know a lot of people that travel with student debt, though, so if you can’t pay off those low-interest loans before you set out on your adventure, there are worse things in the world. Just make sure you can meet that monthly payment.
Here’s a little info on good debt vs. bad debt from CNN Money.