Chinese New Year is nearing and that means a long weekend. You certainly could do with a break, and if at all possible someplace abroad. In the current times, stress at work and ruthless competition can be reason enough for you to want to take that trip to the corner of the world to unwind. But before you jump in there are a number of factors that you need to weigh before making your financial decision. It is worth noting that such trips do not come cheap. That is why you will need to have a substantial amount of money to make the vacation worth your while.
In the ideal setting, taking a vacation would not be a problem since money wouldn’t be the issue. But the reality is not so, even with months of savings, the money may not yet be enough to cover the whole costs for that expensive vacation you so desire.
When planning a holiday travel and not having to go broke or max out your credit card is possible with a personal loan for vacation. There are moneylender in singapore who would be ready to assist you. But before you make this call here are some tips to help you decide.
The Amount Of Money Left In Savings When You Pay For The Trip All At Once
This consideration is the most important when budgeting for your vacation. Given that you pay for the whole vacation all in one go, look at the amount of savings that remains in your account. You need to do your best to have at least an amount that can cover 3-month expenses left in savings. If paying for your holiday will leave with a figure below that, then you will be walking on thin ice, financially. You need to bear in mind that accidents can and do happen at all times, it could be kitchen pipes bursting, or the laptop you urgently need breaking.
Make sure you make a cautious financial decision consider what is more important and urgent and what can be delayed. When what you have saved isn’t enough, it could be better for you to take out a personal loan from a licensed moneylender. This you can repay monthly for a given time, and you get to retain your savings.
Of importance is you make sure that you make comparisons between the different personal loans, to help reduce the interest you will pay. For instance, HSBC will lend you a personal loan for your holiday of about $5,000; the monthly instalments are a low of $436 and run for a year and an interest of 4.49% per year.
Consider Your Expense Ratio After You Have Taken The Loan; It Shouldn’t Go Above 30%
Always check your ability to manage the stated loan obligations before you take out a personal loan for your vacation. One guiding rule for you follow is keeping the expense ratio at 30% and below at all times.
For instance, assuming that your monthly income is $4,000, a 30% expense ratio will mean your total cost of every one of your expenses (phone bills, utility bills, personal loans, etc.) should not go above $1,200.
At this point what you will need to carefully consider is when the personal loan for your vacation will make your expenses go above this threshold. In such a case you may have to either make use of your savings or postpone your trip until you have reduced your existing debts.
Whether You Able To Settle A Specific Vacation Cost Using The Loan
As far as loans are concerned, you need to try and work out a balance. Since you are able to borrow enough money to cover the whole vacation, doesn’t imply you need to. As an option you may consider paying for some of the expenses using a loan, to help you save money and get more disposable ready money on the vacation.
For instance, if the most important r cost is $200 per night hotel accommodation, then think about taking a loan specifically to cover this. You can pay for the other areas of your vacation in cash.
The important reason behind mentally compartmentalizing the loan this way is because it will stop you from excessiveness. If not, you may end up getting the full loan (possibly more than you will need), and end up spending it all on impulse buying (thinking that since you will be paying for it anyway, why not spend it all as well!)
Where You Are Sourcing Your Loan From
Whether you will be getting the loan from a line of credit or a personal loan. It is advisable to not take your loan off your credit card. One point to keep in mind is to never take a loan on your card of credit when you are able to access a moneylender personal loan. This is simply because their interest is much higher at about 26% each year compared to the average 6% interest rate per year charged on personal loans.
Credit cards should only be viewed as modes of payment, and then you repay the whole amount right away. This way you will get rewards and money back and not pay any interest.
Any real borrowing needs to be limited to taking out a personal loan.
Consider Whether You Will Have A Decent Spending Budget Left When You Don’t Use a Loan
Another aspect of your planning that you need to be keen about is whether when you pay for the vacation in cash, you will have some reasonable amount left for you to spend. It wouldn’t be ideal for you to go abroad with little amounts of money, only to end up spending the whole vacation in cheap motels and skipping lunch any other day.
Considering the rather high prices on accommodations as well as flight tickets, you could as well use a little more money and have a great trip, than spend something small for a terrible one. If the loan can make it happen for you and is within your expenses, then it will all be worth it.