Jim and I have learned how to budget our money and use credit cards properly the hard way.   We were once in a load of debt between student loans, credit cards, and car loans.  We finally took out a second mortgage on the house to pay off the credit cards and paid more on that loan than the minimum.  We cut all the credit cards up to boot.  We paid off the first car and then added that car payment to that of the second car payment.  Once the second car was also paid off, we added all the money from the car payments to the second mortgage and got that paid off too.  I vowed that I would never again let a credit card company use us or end up in debt.  After all, how much traveling can you do without funds?

I remembered my mother, Rosemary Barton, always having a cardboard box with envelopes to budget her money.  She had envelopes for all her bills, one for savings, and one for going out.  Mom and Dad weren’t rich, but damned smart in the way they managed their money.  They had funds to send my sister and me to private colleges, finance a thirty-foot sloop and travel.  As we speak, they are touring the Netherlands and will soon board a Viking Cruise.  So, how to modernize Mom’s envelope system that worked so well?  Jim pays all the bills online right away.  We then have separate bank accounts that serve different purposes.  Money is taken directly out of Jim’s paycheck and sent to those accounts.  (Can’t spend what’s not burning a hole in our pocket.)  We have one account that is our vacation/Christmas account and the funds in that account are used at Christmas time as needed.  The rest of those funds then pay for vacations.  We don’t exceed what is in that account when we plan for a vacation.  Ever.  We also have a savings account for house/car emergencies, a flexible medical spending account with pre-tax funds, a savings account to put money away for a new car, and of course, retirement accounts.  Now we didn’t start out being able to put much into the Christmas/vacation account.  It was only $50 a month at first, but over a year’s time, that starts to add up.

After learning to divert money into a vacation fund, we also figured out how to use the credit card companies instead of them using us.  Credit cards, if used the right way, can help travelers.  So far, we really like the Southwest card for in-country and Caribbean flights.  We love Southwest because we have always had good flights with them and they don’t charge for baggage.  God knows, this little diva can’t pack light when going to Vegas!  If you qualify for the Southwest card, you get enough points for two, yes two, free flights.  Each year you renew your card, you get more free points.  It’s a $60 fee per year, but well worth it.  Everything you purchase on the Southwest card earns points, so we put all our normal purchases such as gas and groceries, clothes, whatever, on the Southwest card.  We’ve been able to fly free quite a few times to Vegas, Houston, Jamaica, and Rochester.  The only issue with Southwest is that they don’t fly overseas yet.  (I wish!)  After we went to Europe almost to years ago, we decided that we needed a card that would help us get back to Europe.  We heard good things about the Capital One Venture card, so now, we put all of our purchases on that.  I flew to Cozumel on points from that last year, and we have enough points for one ticket to Europe.  When we have enough to fly us both, we’re going to go back.  After all, one of the biggest traveling expenses is airfare.  Now, be warned.  Using your credit card for airline points doesn’t mean going wild.  Obviously, it’s never a good idea to buy things you don’t have the cash for, and as soon as you charge more than you can pay a month, you’re back to them using you because you’re paying interest.  Why do that?  Use those credit card companies to help you travel!  I would love to hear back from you.  How do you fund your vacations?