I just returned from my annual girls Memorial Day trip/vacation and want to share a bit about how to plan a debt-free vacation.
(1) I have an automated transfer into a vacation/travel fund in the amount of $50.00 per pay-period or $100 a month. Obviously, this is not enough money to fund a full vacation, but it is generally enough to pay for a flight. While we don't normally use credit cards, I do use them when I book a flight, a hotel and a rental car. So I book a flight and pay for it using my credit card, but I normally have more than enough to pay for the flight in our ING travel/vacation account.
(2) I book the hotel, again I use my credit card, but I also find out if there is a charge to the card or whether or not I can pay for the hotel upon check out. I add the cost of the hotel to my travel spending plan.
(3) I think about what I'll be doing on my travels: spa, tour and entry fees, shows, etc. And I sketch out a spending plan for expenses I'm pretty sure I'm going to incur (these are planned expenses).
(4) I also think about daily expenses: dining, shopping and misc. expenses like tips, cab and bus fares. I normally plan for a $100 a day in food, dining, cocktails, shopping and misc. for just me ($200 a day when I travel with Mr. Sam). These are what I call unplanned expenses.
(5) I add up the flight, hotel, planned and unplanned expenses for my total. I deduct the amount already in the travel fund and come up with my unfunded travel/vacation amount. Then I take my unfunded amount and fund it by setting up an auto transfer to my travel fund for the weeks between when I plan my travel and when I leave. Since I normally plan travel at least a few months in advance this works pretty well for me.
(6) Finally, at the end of my travel I either leave the expenses like hotel and rental car on my credit card and immediately pay from my travel fund or I pay for the hotel and rental car upon check out/return using my Visa debit card. During my travel, depending on where I am, access to bank ATMs, safety issues, I use a combination of cash and Visa debit.
While I use a spending plan for my vacation/travel (what some would call a budget), I don't normally skimp when I travel, I like to stay at very nice hotels (and did so on this last trip), and I normally partake of fine wine and great dining, etc. But, I plan out those expenses and allocate funds before I depart. End result, a stress free and basically pre-paid vacation.