Vacation affordability
Get away without compounding your debt burden
Prices for travel remain stubbornly high. Yet costlier travel is not deterring younger Americans who are eager to hit the road (and the skies) this year.
Still, ignoring broader economic trends could mean stormy financial waters ahead for these vacationers. On top of inflation, savings are down, debt is up and the economy could be headed for a recession.
Could this be the year that pandemic-related “revenge travel” turns into “regret travel”?
Ballooning debt As 1
savings that built up during the pandemic begin to dwindle, vacationers facing high travel costs have two choices: cut costs or turn to debt. And it seems that younger Americans are opting for the latter.
Generation Z accrued 6% more credit card debt between the first and second halves of 2022, according to a January 2023 report from Credit Karma, while millennials racked up 5% more.
“Since people don’t budget, they underestimate how big their debt will be,” says financial coach Dylan Snowden.
And younger Americans are struggling to pay these debts off. The rate of credit card delinquencies has risen significantly for Americans in their 20s and 30s, surpassing pre-pandemic rates, according to a 2023 report from The
Federal Reserve Bank of New York.
Student loans loom The average student loan
2
debt for borrowers ages 35-49 is $43,280 and $32,750 for the 25-34 age range, according to 2023 data from the U.S. Department of Education’s Federal Student Aid Office. Yet these loans have not had a major impact on finances because the pandemic-era pause on payments remains in effect.
Yet those payments could resume soon — possibly by late summer. This could create a perfect storm of financial pressure, as mounting debt mixes with a weak economy and increased student loan payments.
Save now, vacation later 3
Is it all doom and gloom for young travelers? Not necessarily. Some may still be working through savings surpluses. And the labor market remains strong.
Experts suggest young travelers take a hard look at their finances before booking another vacation this year and potentially accruing more debt.
“Save now, vacation later,” implores Snowden. “You’ll enjoy every minute of that vacation and not stress when you come home to a big bill.”