backyard tent

A Smarter Summer Vacation

Your family vacation does not have to break the bank. It takes creativity but the satisfaction of taking a rewarding vacation within your means is well worth it.

By: Pamela Yellen

It’s that time again. Time for eating watermelon, chasing down popsicle trucks and catching fire flies. School’s out and days are longer. In our hectic, non-stop lives, we’re really ready for some quality R & R. We’re ready for vacation!

Looking back as adults, many of our fondest childhood memories were summer road trips, family excursions to theme parks, camping trips or visiting relatives in far-off places. As parents, we want our children to have those same memories, and we want to spend some quality time with our children without the interruptions of our normal busy schedules. So the question on everybody’s mind is, “What shall we do for vacation?”

But from my perspective, as a financial literacy educator for many years, I’d tell you that the better question is, “What shall we do and how shall we pay for vacation?” Because, honestly, a wonderful vacation that puts you in hock, adding stress to your already stress-filled lives isn’t all that wonderful, is it?

The solution is not to deny yourself and your children some well-deserved fun and relaxation. It’s now common knowledge that vacations are not just self-indulgent luxuries but actually contribute to our overall health and well-being. A recent Psychology Today article* cites several studies that prove this point:

* A 2009 Canadian study of 900 attorneys showed that those who took vacation reported reduced job-related stress.

* British researcher, Scott McCabe, concluded that vacations not only have recuperative benefits but also general well-being advantages such as broadening intellectual and cultural horizons, deepening personal relationships, and enhancing social development.

* Purdue University’s Xinran Lehto’s research specifically focused on the benefits of vacations to families. He concluded that vacations contribute to family bonding, relationships, solidarity and communication.

But to get all of these benefits, your family vacation this summer does not have to break the bank. It takes a little creativity and some planning, but the satisfaction of taking a rewarding vacation within your means and without sabotaging your financial goals is well worth it.

To give you some inspiration on how to do this, I surveyed my community to get their best tips. This is a group of families who have committed themselves to applying a time-tested financial concept and tool that can grow your money safely and predictably even when real estate, stocks and other investments are falling apart. Here are some of the ideas the Bank On Yourself community suggested:

Pay with Credit and Pay It Off

This strategy starts with a wise choice in credit cards. Find one that pays you in airline miles or cash back, or both. Also make sure that your credit card does not charge interest or finance fees if you pay it off every month. Next, save up for the trip before booking it, charge it on your card then pay it off immediately – preferably before you leave! Here’s how one Bank On Yourself Community member, Barry Levy, did it:

“I am planning a trip to Costa Rica to see the rain forest, turtles, zip line and enjoy the tropical splendor of the area. It took two months to put aside the vacation funds so I had no problems putting it on a credit card. That way I get cash back, miles back and if a credit card is paid each month in full, it has no interest costs to me or finance charges.”

Barry had thought about going to the Great Barrier Reef. When he priced that trip out, he realized he needed more time to save for it. So rather than over-extending himself, he chose to put the Australian trip off until next year, and will use the same strategy. Also, by “playing his credit cards right” this year, he should have enough airline miles to cover his flight to Queensland!

Take a Stay-cation

Several Bank On Yourself members talked about the fun of a well-planned “stay-cation.” Of course, staying home rather than going somewhere saves beaucoup bucks in travel, accommodations and food expense. But to get the real benefits of a great vacation, you can’t just stay home doing the same-old, same-old. You need to get creative and make it special for everyone.

For example, I heard of one family who held a three-day “summer camp” for their kids. They invited a few other children over and pitched tents in the backyard. Other parents rotated in to play camp counselor, bringing crafts or games during the day. The family set up a small barbeque to roast marshmallows, and all the moms and dads joined in to sing and tell stories around the “campfire” at night.

Another family chose to explore their own community for a week. Each family member got to choose the excursion or event for the day that was within a 20 mile radius. They ended up visiting a local candy factory, a nearby dairy farm, and the local theme park (twice!). They hiked a local nature trail and took a picnic along. One day, the family split up with mom going to a local spa, dad playing golf, and the children swimming at a friend’s pool with a caregiver. What fun excursions are right in your backyard?

As Bank On Yourself member John Starcevich puts it: “My wife and I go on a “vacation” a couple of times a week. We are lucky to have a great backyard and we enjoy it often. We love our lives and have no need to get away and take a traditional vacation. It saves a lot of money when you are satisfied and thankful for what you have.”

Plan Ahead with Spare Change

It may be a little late to implement this particular strategy for this summer’s vacation. But summer comes every year, doesn’t it? How about starting your vacation planning for 2014 now like our Bank On Yourself superstar Brenda?

Brenda said, “I decided that for my 50th birthday I was doing something special. So I will be flying to Rockland, Maine and getting on a schooner for a cruise up and down the coastline. I have already purchased my plane tickets and my cruise package. Buying them early saved me a lot of money and booking my cruise for my birthday saved me 25% off my price.”

Brenda has also saved all the change in tips she earned as a waitress for the past two years. “I didn’t miss it. I never counted on that money to help pay the bills.” Now that she has her trip completely paid for, she’s saving that “spare change” tip money for spending money for the trip. By pre-planning and consistently putting aside little bits, Brenda is giving herself the vacation of a lifetime. “This is something that I’ve wanted to do for years. I’m afraid of water and told myself that I could either get over my fear enough to do it or just forget about ever doing it. I decided that I could do it.” It’s worth the small sacrifice, isn’t it?

Make this a family project. What dream vacation would you and your family love to take? If the children are old enough, let them help figure out the trip and how much it will cost. Then put your heads together as a family and decide what “spare change” you’re willing to commit to the effort. Chart your progress and get the satisfaction out of creating this dream vacation as a team.

Borrow from Yourself

One of the favorite ways our Bank On Yourself community pays for vacations is by borrowing from their Bank On Yourself plan. These are specially designed dividend-paying whole life policies with additional little-known features that make your money in the policy grow up to 40 times faster than the kind of policies most financial experts know about. When set up correctly using the right companies, these policies allow you to borrow from your policy – and your policy continues growing as though you never touched a dime of it!

Alan Twelkemeier and his wife used this strategy to take their first real vacation in eight years! “The first way we used Bank On Yourself was to take a vacation to Mexico. This allowed us to do it guilt-free.” Unlike borrowing from a 401K or depleting savings, the Twelkemiers continued to earn interest and dividends on the money they borrowed from his whole life insurance policy. He and his wife set up a plan to repay their policy loan over a one-year period.  At the end of the year, that money will all be back in their plan, allowing them to recycle those dollars and take guilt-free vacations every year for the rest of their lives.

To fund their Bank On Yourself policy initially, Alan had cashed out a 401K plan from his former company. “Then the market went south. The losses I would have had are staggering. I’m analytical and I examined this thoroughly.” Definitely a win-win!

As comedian Milton Berle said, “Laughter is an instant vacation.” And when you take that great vacation you can really afford and fund wisely, you and your family will be laughing all the way to the bank – your “bank” – in your flip flops!

About the Author:
 Financial security expert Pamela Yellen is author of the New York Times best-selling book, THE BANK ON YOURSELF REVOLUTION: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future. Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Visit

Photo: Michael Coghlan