Is It Okay to Travel with Debt?

That’s a yes and a no to both questions. I’ve actually done both.

You know from our story that we traveled and lived for 5 years with debt.

But, it was good debt based on appreciating assets, and we had tenants paying off the debt via renting. We had a very clear management plan in place and were disciplined in sticking to it.

There’s nothing wrong with traveling with good debt, or even bad, if you have income streams to help you manage it. You have to be honest, otherwise you’ll screw yourself over.

When I first left to go overseas, I was 21 and had just graduated from University. I was impatient and knew I could earn money while I was gone. I did not have a lot of money in savings to leave with. I decided to get a personal loan.

Stupid? Maybe.

Actually, I don’t recommend it, but I don’t regret it either. It started my travel life. And the return on that investment is infinite.

My ROI in growth and opportunity is way more than any stocks or property could match. It made me a better person and completely changed my life direction. Here I am 18 years later still traveling and I’ve created a business around my travel passion.

I had a very strict management plan in place for my personal loan.

I did not over borrow; my interest repayment was low, and the term of my loan small.

I knew once I started working I could pay it off. I had work teaching in the UK pre-arranged on a working holiday visa and I knew what my average wage would be. I’d researched carefully to know how I could afford to live, travel and manage the debt.

Teaching in London
Teaching 4th grade in London, 1997

I also had my parents go as guarantors. Therefore there was no way I was going to mess up. They took a risk to support me and I would never let them down. You have to have that same certainty for yourself. Ensure you might not use this as an backup to allow for sloppiness.

I put enough money aside to cover the repayments for the first 5 months of my travels, which brought me to my first London pay check. I was earning British Pounds, so each month I sent home the balance owing in pounds, which at the time gave me triple the amount in Australian dollars. I paid that debt off super-fast.

I also worked in bars at night in London just to cover myself and to give me play and travel money. If I didn’t have a guaranteed teaching job in London, I wouldn’t have done this. (Yet another benefit to following the working holiday strategy – it gives you more options).

If you don’t have a guaranteed way to repay the loan, I do not recommend this strategy!

You can see the total commitment and discipline you would need if you were to take that path. If you do not want the hassle when you are traveling then please travel debt free. It is a big risk.

I know Americans, in particular, tend to have large student loans. I don’t know what the terms are in regards to paying those down, but the same principles apply.

How can you travel with that debt? What is your management plan? What’s your back up plan if you can’t pay off the debt?

Be honest with yourself, arrange a plan and bring on someone to hold you accountable.

Can I still afford to travel if I own property?

Congratulations on owning property.

There are plenty of people traveling who own property. Property ownership does not have to be a shackle. We traveled for five years successfully with two properties. Again, you have to have a very disciplined management plan in place.

Know your risks and your ability to cover them.

We had tenants in both properties covering the majority of our mortgage. We only had to cover an extra $20 a week, which we could manage. We also had to put aside money for taxes and possible maintenance. We knew we’d be working on our travels so would continue to have that income flowing in.

Consider the following:

  • Can you rent out the property while you are gone?
  • What are the total property costs for the year?
  • How much of that will the rent cover?
  • How much extra do you need to put in each month?
  • Do you have a savings buffer for things that go wrong (maintenance/interest rate rises)?
  • Can you lock in your interest rate?
  • Do you have a great management company to take care of all the rentals, repairs and bills?
  • Is there someone you trust at home who can sign documents on your behalf while you are gone?
  • Can you follow a strategy like house swapping?

Have a smart and strategic plan in place and then celebrate that you can have the most amazing experiences traveling while someone else pays your mortgage? Isn’t that the ultimate?

So you can see, debt doesn’t have to stop you from traveling. You can make it work. But, you must be very disciplined and focused.

(Btw, just in case. You know you’re responsible for all your choices and I am not recommending you get into debt so you can travel. Just showing you how we’ve done things to give you some extra insights. The choice is ultimately yours.)

Here are a few posts to help you learn ways to save and create more money.

Yay. This money thing is so much fun.

Aren’t you just loving money now? Give us a high-five for more money and more choices in our life.

Let’s go travel!

10 thoughts on “Is It Okay to Travel with Debt?”

  1. Hey Guys Love Your News Letter. You’ve Got guts Ha Ha And I admire you .It takes a special type of person to do what your doing , I know Because I am One ha ha ha. I have Lived and worked in many places, Moscow Amsterdam, Domenic Republic Cuba Bermuda. I was a Construction Consultant field supervisor for many international projects,and many more. I then Became a teacher of Trades and Technology I retired early too much political bullshit. I am On My way To Cancun Thursday Feb 26 To go Sailing with a friend of mine who’s Docked there . From There to Belize, From There to Columbia, and Ecuador. My Home Post is Halifax Canada. Adventure is what I live for , martni Stirred but not Shaken Ha ha ha James, I do Have my online Marketing Business also . No need for Debt. like To join you also .Long as you don’t cost me an arm and a leg ha ha. Thanks for letting me Rant
    Randy

  2. Hi there!

    Nice blog! I travel alot and once in my life I have got loan to travel to South America from the UK. I do not recommend doing so as after the holidays you keep this thought in mind that you have to pay the vacation bill 😉 So, now I travel only when I have enough money to enjoy my vacations

  3. I actually took a bit away from this. As someone who saves and doesn’t loan money I have never had this experience so can’t really advise people about it.

    However, I do have student loans (I’m an Aussie too so it’s govornment and I don’t need to pay them off until I have a decent income). Asside from that though…

    Thank you for sharing.

  4. Traveling is not usually expensive. You can plan your trip yourself and spend minimum amount of money visiting most interesting places without paying for guide. For those who like to travel independently we opened new site http://www.itouristmaps.com/ where most interesting places already placed on map. Plan your journey as you want and visit top attractions of selected city.

  5. I had tried once when I travelled to Dubai, UAE. But sharing this from my personal experience.!! This is good for the starting days when you are really overwhelmed with the locations and beauty of the place. But, slowly you start feeling like you have done some kind of mistake.!! Its not at all a good feeling trust me.!
    Its better to travel debt free and with more mental freedom.!!
    Though thanks for sharing the same for others.!!

  6. My philosophy in life is to not borrow money for things that don’t appreciate in value. It’s been a hard lesson to learn. When I was younger (and stupider), I had a holiday to the States planned. At the last minute, my boss talked me into getting personal loan with the company credit union — I had enough money saved but she kept saying get it, just in case something happens. Of course, having that extra cash meant that I spent it. It wasn’t a huge debt or hard to pay off but I was paying interest on things that were just fripperies.

    I’d never borrow money to travel now. People sometimes tell me I need a credit card in case something absolutely dire happens but I figure I have family for that 🙂

  7. Completely not advisable.!! This could even ruin the entire life. I think you should travel when you have money in your pocket enough to fulfil all your needs.
    or either save for an year and then travel, at least that will give freedom to your mind and hence you will experience the travel more..!!!

    Though Great Post.

  8. Actually I also got a loan to travel to Dubai from the UK but I recommended to you that if you have enough money to enjoy your vacations then go for it but don’t get the loan.

  9. For me, I think travel with dept is a huge mistake , traveling is great way to enjoy your time and free your mind and relieve your stress , if you traveling with dept, or you just got a loan to travel , you will spend your holiday thinking and worrying about this loan you got for this vacation , I totally recommended that you settle your financial problems first, but if you decide to get the loan, you should check how this loan gonna effect your spending lifestyle after that , you can use some online calculator for that , you can try ” Home Loan Eligibility Report ” Tool such as this https://loanstreet.com.my/home-loan-eligibility-check

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