The Real Cost of Summer Debt (and How You Can Avoid It)
Every year, Americans take on summer debt.
According to NerdWallet’s 2024 summer travel survey, “Nearly half of Americans (45%) plan to take a trip that requires a flight or hotel stay this summer, and they’ll spend $3,594, on average, on these expenses. That’s over 118 million Americans spending a total of more than $424 billion on airfare and hotel stays in summer 2024.”¹
Summer fun is great, but summer debt is not.
If you have the money to enjoy some summer luxuries, go for it!
The problem is that many people are not in the right place financially to splurge during the summer.
In fact, “More than half of all Americans – 52% – tend to overspend in the summertime.”²
One survey found that “34% of respondents don’t feel they have the financial security to enjoy the summer fun.”³
Plus, Bankrate stats show, “38% of adults said they plan to take on more debt to travel, dine out and see live entertainment in the months ahead.”⁴
A little bit of summer debt may seem worth it in the moment, but it may cost you some necessities in the future.
Keep reading for 6 tips to avoid summer debt.
The Real Cost of Summer Debt
Summer is the second most expensive season – with Christmas being the first.⁵
The costs of summer vacations, travel, camps, souvenirs, and entertainment add up.
This has been especially true in the years since the pandemic.
Matt Schulz, chief credit analyst at LendingTree, explains, “It’s hard to overstate the impact of the pandemic. It changed the way so many people view their spending, and the result is that people are more focused on the ‘right now’ than thinking about 40 years from now.”⁶
And summer costs are on the rise.
Admission prices for sporting events jumped 21.7% in May 2024 from a year earlier.⁷
It’s not just events. Hotels are more expensive, too.
According to Bankrate, “The price of booking a hotel or motel has gone up by 1.7 percent since last year and is now over 15 percent more expensive compared to pre-pandemic prices.”⁸
We don’t even want to talk about plane tickets. It’s painful.
How This Summer’s Debt May Hurt Future Fun
Whether it is an earnest desire to give your children fantastic Disney World experiences or FOMO brought on by social media, you may need to rein in your summer plans.
Several years ago, I heard the best piece of wisdom. Someone said, “Every yes is a no to something else.”
This is typically true for how we spend our time and our money.
When we say yes to attending this event, we are saying no to downtime at home.
When we say yes to the luxury summer vacation, we are saying no to a different purchase.
In the long run, summer debt may cost you.
Saying yes to expensive summer splurges may mean less money to spend on the holidays.
It may also become a pattern that winds up affecting your entire financial future.
Think of it this way – if you go into credit card debt every summer, you are wasting money paying interest.
If you spend responsibly during the summer, the extra money you save by avoiding interest could be put toward your retirement goals.
Moreover, these summer choices could come back to haunt you.
For instance, will your grown kids be happy that all your Disney debt means they have to financially support you because you can’t afford retirement?
It may sound harsh and blown out of proportion, but it is a truth you should consider.
[Related Read: More Parents Are Financially Supporting Adult Children: Why It’s a Problem]
6 Tips for Avoiding Summer Debt
Here are some things you can do to have a fun, fiscally responsible summer.
- Create a realistic budget. Look over your savings and income and determine how much you can responsibly spend over the summer. Be sure to factor in all the summer expenses – vacations, food, entertainment, etc. While you may be tempted to book a luxury vacation, use your budget to guide you.
- Set vacation spending limits. Within your budget, set limits for specific summer activities, such as vacations. For example, if you plan to allow your children to purchase a souvenir, give them a spending limit beforehand.
- Plan ahead. Last-minute plans tend to be financially damaging unless you have set aside money in your budget for spontaneous adventures. Instead, make plans ahead of time. Do your research, compare prices, and make the best financial decisions.
- Make financial compromises. Look for opportunities to save money while splurging on summer fun. For instance, if you are going to an expensive vacation destination, cut costs by choosing to cook for yourself rather than eating out.
- Enjoy old-fashioned summer fun. Summer should be fun, but you spend money to have fun. Invite friends over for a potluck cookout. Sit on the porch and play card games. Let the kids run through the sprinklers.
- Seek out low-cost activities. While there are plenty of ways to go into summer debt, summer also offers lots of free or low-cost activities. Communities tend to offer free or cheap entertainment, such as free music concerts and outdoor movies. Your local library likely offers summer reading programs that include free activities for children and adults.
While it may be too late to save for summer this year, go ahead and start saving for next summer.
This may be the best way to ensure you have the money to create lasting summer memories without going into summer debt.
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SOURCES
- https://www.nerdwallet.com/article/travel/2024-summer-travel-report
- https://lanehipple.com/seasonal-spending-why-we-overspend-in-the-summer/
- https://www.courier-journal.com/story/news/2024/06/05/study-reveals-average-american-will-spend-1600-dollars-during-summer-months-2024/73969937007/
- https://www.cnbc.com/2024/06/26/funflation-why-consumers-are-spending-so-much-this-summer.html
- https://finance.yahoo.com/news/4-things-americans-spend-most-200009356.html
- https://www.cnbc.com/2024/06/26/funflation-why-consumers-are-spending-so-much-this-summer.html
- https://www.cnbc.com/2024/06/26/funflation-why-consumers-are-spending-so-much-this-summer.html
- https://www.bankrate.com/credit-cards/news/survey-summer-vacation/#too-expensive
