Smart Money Podcast: Lifestyle Creep, and Booking Cheap Travel

Sean Pyles: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles.

Sara Rathner: And I'm Sara Rathner, filling in for Liz Weston, at least for the start of this episode. To contact the Nerds, call or text us on the hotline at 901-730-6373. That's 901-730-NERD, or email us at [email protected], and hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, leave us a review.

Sean: This episode, Liz and I answer a listener's question about how to find the best deals when booking travel, whether that is sometime coming up or whenever this whole delta variant thing goes away. But first, in our This Week In Your Money segment, Sara and I are talking about lifestyle creep, aka how a bigger income can translate to living beyond your means.

Sara: Aka mo' money, mo' problems.

Sean: Yes, exactly. I think it's important to start off by understanding what lifestyle creep is, really, and how to diagnose it, and they’re kind of two sides of the same coin. One signal that you are succumbing to lifestyle creep is that at the end of the month you don't really know where your money went, but it sure as heck is not in your checking or savings account. Another sign is that you're spending more money on luxury wants, and that those have actually become a necessity in your mind. Like maybe you're suddenly accustomed to spending $20 on a salad for lunch, whereas a few years ago, the idea of doing that was absurd. Another sign is that a lot of these expenses are not easy to drop anymore, like you've gotten yourself into an expensive lease or an apartment that you can't really afford.

Sara: That $20 lunch is a one-time thing. Buying a luxury item that involves a monthly payment is a multiyear commitment.

Sean: Right.

Sara: You can backtrack from the lunch pretty easily and kind of cut back for a couple weeks and make up for it. It's hard to cut back from leasing an expensive car and getting in over your head.

Sean: That brings us to some of the perils of lifestyle creep, and one is that your budget can just slip away from you, and you end up not really being able to save or invest as much as you could. And this next one is the biggest one for me, is losing an intentionality about how you're spending your money. You don't really account for all of your dollars because you're just spending whatever you want whenever, wherever.

Sara: Oh, yeah. I definitely fall into that trap of "well, it's just money. I'll throw money at a problem to solve it."

Sean: Right.

Sara: I mean, that's certainly a nice mindset to be able to work toward in your life, to be able to just throw money at a problem. It makes a lot of problems go away. You throw money at fixing something you don't want to have to do yourself. But at the same time, we talk about attaining wealth, which is absolutely something a lot of people have as a goal. Wealth isn't what you earn, it's what you keep. You're not going to become wealthy if you earn a lot of money but it all slips through your fingers.

Sean: There are so many ways you can fall into this trap, whether it's going out a lot more than you maybe ought to. It's really a reflection of your wants and desires and how you can create your life for yourself, and we all want to have these luxurious lives. At least, I know I kind of do, but it's expensive. I realize, at the end of the day, after I've had a month of maybe spending more than I should have, that I don't really feel that much more fulfilled, but my savings account especially doesn't feel more fulfilled.

Sara: I think looking at social media and looking at influencers really warps your view of what's attainable on your budget, because you have these people who are buying — they're not really buying, they are receiving — expensive clothing. They're not necessarily paying for all these things, they're being compensated to plug these products, these high-end products and experiences. You think, "Well, I need to do that too." It's important to remember they are not buying these items; they're getting them for free. They're not living a typical life. What you're seeing on Instagram doesn't really match reality for them or for you.

Sean: This isn't to say that people should be living bare-bones lifestyles. I am a huge advocate for enjoying today, spending money on what you want today, while also planning financially for the future. But it's a matter of, again, going back to that word, intentionality. I also wanted to talk about a time when each of us has succumbed to lifestyle creep and how we acknowledged it and maybe beat it back. Sara, what about you? When have you had this happen to you?

Sara: Oh God, maybe the 13 years I lived in Washington, D.C. I mean, going out is really expensive in a major city. I live in Richmond, Virginia, now, which is a smaller city, and the cost of living is noticeably less — going out is noticeably less expensive. But I lived in D.C. during my prime going-out years, when there was so much pressure to join the $100-a-month gym that all your friends belong to. I know I did that. They had towel service; it was fancy. Going out for brunch every weekend, going out for drinks, going out for dinner. You spend so much money on food, and then you live in a place with this tiny, sad apartment kitchen, so you don't want to cook much, so you just don't. For me, it was just going out less and eventually, frankly, upgrading my life to homes with bigger kitchens with space for all the different kitchen gadgets and stuff. I do cook a lot more than I used to. It definitely costs money to buy the nice toaster, buy the nice blender, all that stuff.

Sean: But then you're going to use it more often.

Sara: Yeah, so that's a different form of lifestyle creep too. It's like, "Well, I'm not going to go out as much, so I'm going to buy all of these gadgets, and I know I'm going to cook more." There's an investment there too.

Sean: Then you're spending less on going out.

Sara: Yeah, but then you're sort of spreading out the cost of the appliance over however many times you use it. If you buy the $500 blender — or whatever, I don't know, I don't have that — or the KitchenAid stand mixer, but it sits on your counter collecting dust, then you've also wasted money. But if you use it all the time, then you have bought yourself the ability to cook more elaborate meals at home.

Sean: You talking about your time living in D.C. really reminded me a lot of when I was in my early and mid-20s living in San Francisco. I had never really had any money before, and then suddenly I was living in an expensive city making a decent salary, and I just spent pretty much every dollar I could. Man, I had a lot of fun. I had a lot of nice clothes. I was traveling a whole bunch and I loved it. Then, a few years of me doing that, I realized I can't really sustain this. So I began to get a better grip on my spending and I totally kept the lifestyle creep at bay for a while. Now I'm at a point where my expenses are a lot more manageable and intentionally managed, and so I'm beginning to let myself spend a little more on categories that are important to me, but I know I can afford this. One recent example of this is that last year I bought a used luxury vehicle. This was in part because growing up I always drove really crappy Honda Civics, one of which had a rusted-out muffler that dragged on the road behind me.

Sara: Oh my God.

Sean: R.I.P., Speed Racer — actually was a great car. But when I went to buy a car last year, I wanted something kind of cushier. I work really hard, I make an OK amount of money, and I did a lot of research and I found a nice car that had a really reasonable price and low mileage. I said, "I'm just going to treat myself to some leather seats and a sunroof." I felt pretty comfortable about doing that, because it wasn't an issue of not knowing what I'm spending, and I think that is how people fall into this trap. Which brings us to how to prevent lifestyle creep. Sara, what are your thoughts on this?

Sara: If you are at a point in your career where your income is going up, whether that's through a raise or a promotion or a new job that offers you a higher salary, it's really tempting to just start spending money on all the things you've always wanted that you've been depriving yourself of all this time. "You know what? I deserve it. I worked really hard for this raise, and I'm going to get all the stuff." OK, stop. Don't get all the stuff. If you get some sort of income increase, maybe set aside 25% of it for instant gratification. Give yourself the fun, give yourself the dream.

Sean: Buy that new pair of shoes that you've been looking at. Then you can put the other 75% into maybe your retirement account or toward other financial goals that you have.

Sara: Right. Maybe you were putting money into your kid's 529, or you have this goal of paying your mortgage down more quickly so you start overpaying your mortgage every month, applying a little extra to the principal. That's an investment in yourself too. In that way, you're still scratching that itch. You're still getting the nice thing that you've always wanted, that you've told yourself for years that you would give yourself. You're still getting that.

Sean: But you're maintaining that intentionality about where you're funneling your money. Another tip that can help is to reverse-budget. Basically, you pay your bills and automatically transfer money into savings first, and then you can spend whatever's left because you know that you're meeting your obligations for savings and investing goals.

Sara: I am such a fan of this, because to do the opposite, to spend, spend, spend, and then at the end of the month, be like, "OK, whatever's left is going into my savings account," you're not going to have anything left.

Sean: Right.

Sara: By taking the money out before you can even see it in your checking account — whisk it away into your savings or investing accounts, and you don't have to feel like you're depriving yourself, because you know you're hitting those savings goals.

Sean: I think that there is a lot to be said about the power of restraint, and it making you be able to have more options than you would think. On the flip side of this, I think it's also important for people to know their weaknesses, know the areas where they're likely to spend more money than they really should, whether that is going out or travel or whatever. But know what your triggers are. That way, if you're in that setting where you're out with your friends and you're about to go to your third bar of the night, you can say, "Hm, maybe I shouldn't be spending another 30 bucks at another bar so I have more money for my other financial goals."

Sara: Exactly. You can do things like make every other drink a glass of water at a bar, because ...

Sean: Yes, your body will thank you in the morning.

Sara: You can't party like you used to, and so you'll sleep better, you'll feel better, and you'll spend half as much money. Impulse spending — it's just triggered by so many automatic emotions like boredom, or like a hole you're trying to fill in your heart, so you spend money to try and fill it and it never works. But much like that, when you're at a bar, it's so easy to buy a drink just so you could have something in your hand while you're standing there talking to people. That something in your hand could also be club soda with lime.

Sean: Yeah, or a Shirley Temple.

Sara: Yeah. Just something that costs a lot less or is free, and then you can go back to another drink. That way, you'll spend less money.

Sean: Again, it all comes down to being intentional — as I've said a million times in this segment so far — about your budget and your financial plan, so you can be very proactively directing all of your money whenever you get a raise.

Sara: Picking and choosing the luxurious items or experiences you add to your life, rather than just spending without thinking, you still get that sense of "I'm giving myself this thing because I earned it. I worked for this, I earned it. I earned the nice purse. I earned the adult braces. I earned the extra night out a week or the extra takeout. I don't feel like cooking because I work really hard." You're still getting the thing that you earned, but you're also earning yourself additional savings and investing and allowing your wealth to grow. There's that acronym HENRYs: high earning, not rich yet.

Sean: I have not heard this before.

Sara: A lot of people who are sort of reaching this time in their career where they've been working for 15 years or so, they're starting to reach this point, and it's just that they haven't been working long enough to amass wealth because that takes time. It takes time and consistent saving, but they are earning more. You can ease up on the brakes a little bit with your spending and have a little bit more fun and get a little bit more of what you've always wanted, but it's still really important to make space in your life for saving that money toward what you need, saving for emergencies. You can lose your job. You can face an unexpected, massive bill. You still want to have money in the bank for when those things happen, but you are also intentionally saving money for the things that are nice to have.

Sean: Right?

Sara: We talk about retirement, and save for retirement, save for retirement, save for retirement. That's 30 years off. There's a lot of life to live before you retire. You might as well enjoy that too.

Sean: Before we move on, I’ve got to give a shoutout to NerdWallet writer Chris Davis, whose article inspired this segment. With that, I think we can get on to this episode's money question.

Liz Weston: Our money question this episode comes from Megan in Seattle, who actually has three questions. Here they are: "Hey Sean and Liz. Over the course of the pandemic and student loans being paused, I have been able to save up enough to pay off my student loans, about $9,000. Is there anything I should do to get the most out of that money between now and when payments resume? It's in a high-yield savings account. Is there a reason not to pay off the lump sum? I'm also planning a vacation to Iceland with my boyfriend, and was wondering if you guys have any tips with bundling versus getting everything separately. The airline has some packages with rental car and admissions to some attractions. Seems like the prices are similar, but I haven't clicked through to see all the final prices. Thank you, Megan."

Sean: To answer Megan's question, on this episode of the podcast, we are joined by travel Nerd Sam Kemmis. Hey Sam, welcome to the podcast.

Sam Kemmis: Hey Sean and Liz, great to be here.

Sean: You are a travel pro, but I first want to touch on Megan's first two questions, which are about paying off student loans. Liz, what are your thoughts on their situation?

Liz: OK, I have a lot of sympathy for Megan. She wants to pay off this debt, get it out of her life, celebrate, dance naked in the backyard, whatever. But before you do any of that, you’ve got to make sure that your other financial ducks are in a row. What I mean by that is, student loan debt, once you send the student lender that money, you can't get it back. If you have an emergency, if you don't have enough of an emergency fund, if anything goes wrong, you might be up against a hard place. In general, we don't want people to pay off their student loans until they have a real good emergency fund and they are on track saving for retirement.

Sean: Yes, I'm with you in that. Although some people would disagree, especially those who hate debt with a passion, but that's just not how you and I tend to see things. We could disagree, but we don't, which is nice because it makes our jobs a little bit easier to not have to be feuding about this. But I think that you're very right. I think it's important to make sure that other bases are covered, like saving for emergencies, retirement, etc. I think this money could go a lot further if those bases are covered.

That said, if they are, I don't really see an issue with knocking this out if it gives Megan peace of mind, it helps them sleep at night. That's fine. That's their prerogative. But I also want to touch on the first part of their question, whether there's anything they should be doing to get the most out of that money between now and when payments resume. I think having it in that high-yield savings account is about as good as they're going to get, because you don't want to gamble with this money when you're going to need it in just a few weeks.

Liz: That's not a good idea. Generally, we say if you want to use the money in, say, three years — within three years — it should be sitting in a nice, safe, high-yield savings account, something that's FDIC-insured. You want it sitting there on the porch waiting for you, not running around trying to earn more interest or better returns.

Sean: Right. Don't go out and buy a bunch of dogecoin hoping that it's going to turn into a bunch more money, because it's probably going to crash.

Liz: Exactly.

Sean: I think Megan has this pretty well planned out. What you're planning on doing is pretty smart. Make sure your bases are covered, and if you want to knock out that debt, go for it. But in the meantime, keep it in that high-yield savings account.

Liz: I would just add one thing, is that it sounds like she's in a pretty good place. If she was able to save up $9,000 and plan a trip to Iceland, I'm guessing that she has a pretty good income, that her expenses are under control, so hopefully she is in a great position to go ahead and pay it off. However, she probably has the opportunity to stick at least some of that money into a Roth IRA.

When you are young and your tax rate is relatively low, that is the best time to put money into a Roth, because you don't get that upfront tax deduction, but the money grows tax-deferred. In retirement, it is tax-free. On top of that, you can always pull out your contributions. We talk about Roth IRAs all the time, but this might be a really good situation if she hasn't already done that. I know it will take longer to pay off those student loans, but really, those opportunities to fund a Roth, you got to take them while you have them.

Sean: I could see a world where Megan maybe puts half of this amount toward their student loans and then the other half in a Roth to make the most of that money while also knocking out a good chunk of that debt.

Liz: When you don't know what to do, if you got two good options, maybe split the difference. Put it in both places.

Sean: Great.

Sam: I have a potentially dumb question, since this isn't my area of expertise.

Liz: OK.

Sam: Does it make a big difference — is there a wide range of potential interest rates on that debt, and does that make a difference in how you might go about deciding whether to pay it off?

Liz: That's a really good question, Sam. Most federal student loan debt is relatively low-rate. Unless you're talking about double digits, again, that money is gone for good once you use it to pay off a student loan. You want to be very, very sure that you're in a strong position before you do something like that. That means good emergency fund and on-track saving for retirement, and typically paying off all your other debt. We didn't even talk about that section of it. We just sort of assumed she didn't have other debt. But, man, if you got credit card debt, that's where the money should be going.

Sean: Yes.

Liz: Does that make sense, Sam?

Sam: Oh yeah, totally. That's great.

Sean: Well, now let's turn to Megan's question about the most cost-effective way to book travel, specifically whether bundling or booking everything separately is the best. Sam, what say you?

Sam: Yeah, the question is, when you're checking out on an airline and they offer, "Hey, do you want to book your rental car now too? Do you want to book a hotel? Do you want to get travel insurance?" There's a lot of bundles that they offer while you're checking out.

I think a little background might help here, which is, the reason airlines are doing so much of that is basically because there's no money to be made in selling airfare. The competition is so stiff with airfare that they make very little money there, so they're all looking for these little other ways that they can add a little bit of extra revenue to your booking. This is basically an affiliate link that they're doing, that they're getting a little bit of whatever you book through. That's not to say that you can't get a good deal this way. It just means that you're unlikely to save a whole bunch by bundling through the airline, compared to just doing a little comparison shopping.

Sean: It's going to be easier if you go ahead with a bundle. If you're a traveler who doesn't like to click through every single part of your trip and just wants it done for you, this could be a good option.

Sam: Totally. That is kind of what the airlines are offering here. It's basically saying like, "Hey, wouldn't you love to just take care of your entire trip right now?" That's the real hassle that they're taking out of the equation. If you take the travel insurance part, they're offering new travel insurance on your trip right there. You don't have to do any comparison shopping. You can just add it, and there's some peace of mind there. You could go down a rabbit hole of trying to find the best travel insurance for your trip. It could take you two hours, and how much are your two hours worth? I think that's a reasonable thing to keep in mind.

Sean: What you're describing as a hassle, I describe as half the fun of a vacation, is making a big spreadsheet of all the different options, talking with friends, conferring, making sure we have the best price for the best experience.

Sam: Yeah, absolutely, and that's why we have this job, and it's also why we have to remember that not everyone works that way.

Sean: Yeah.

Liz: But if you are a big old nerd like we are and like to get the best deal and like to do that shopping around, what's the best way to do that, Sam?

Sam: This could go on and on, but some basic ideas: If you're talking about bundling rental cars and you want to do some comparison shopping on that, the quickest, easiest way to do that is to find some kind of promotional code when you're booking elsewhere. So if you're booking through the rental car company itself, you can search for those online, they change all the time. There's also a bunch associated with membership services like AAA. Just kind of digging around a little bit and finding a promotional code, and then comparing whatever rate you get there to whatever the airline is offering as part of their bundle.

My quick tip on booking hotels: A lot of people think that booking in advance on hotels is the best way to do it, but that's actually a misconception. Often you save money if you book at the last minute with hotels. We actually just did an analysis of this so it's fresh on my mind, and we found an average of $290 per night on rooms when booking far in advance, and $209 when booking at the last minute.

Liz: Wow.

Sam: That's not to say you're always going to save that much. That's just an average, but it certainly blows up the idea that you should book your hotel as early as possible.

Liz: How last-minute is last-minute?

Sam: That was 15 days before check-in, so not the night of. But actually, in a lot of places you'll get the best deal the night of.

Liz: Interesting.

Sam: Especially in cities. I actually just saw a report that showed that in cities, because competition is so high at the last minute, you can get a really good deal at the last minute. But also, if there's a convention in town or something, that the opposite is going to be true.

Sean: That's what I was going to say, is that I am willing to spend 81 extra dollars for peace of mind.

Liz: Well, I ...

Sam: It comes down to personality type.

Sean: Yeah.

Liz: I actually do both. I make the reservation far in advance, and then about two weeks out I start looking around again, because most hotels don't ding you if you haven't paid for the nonrefundable, which I never, never do. If you just made a normal reservation, you can cancel it and rebook it. Or the way I do it, I book the new price, and then I cancel my old reservation, just to make sure that I'm not left without a room if the site updates and I suddenly lose what I thought was a great opportunity.

Sam: That's a great tip.

Sean: I've been recently falling down travel-hacking TikTok, because the pandemic has made me into a person who uses TikTok now. I've seen a couple of tips that I want to get your thoughts on, Sam. One is that it's typically cheaper to book a hotel directly through that hotel, compared with one of the aggregate sites like Travelocity or something. What is your feel on that?

Sam: It's very rare that you'll get a better deal through Travelocity. I wouldn't say you will often get a better deal booking through the hotel itself, but hotels have done a lot to try to take away the competitive edge of those aggregate services. The other thing that I think is more important, that a lot of people don't know about, is you often won't get points for your stay if you booked through a third party. You have to book directly through the hotel to get those points, and that's different from airlines. You can book a flight through anywhere and get the miles for it, but you can't book a hotel from anywhere and get the points for it.

Sean: That's good to know. The second tip that I've seen circulating on TikTok was, say you have a reservation at a hotel and you have a pretty standard room, nothing special. You can call the day of and ask if they have any free upgrades, and depending on how nice you are and the mood of the person who you're talking with on the phone, they might just give you a free upgrade to a better room for the same price. Have you ever done that?

Sam: I have not. This is a total personality-type thing. My partner's favorite catchphrase is "It's free to ask."

Liz: Yes.

Sam: She's the one that does that with our bookings, but it totally works sometimes. I mean, with anything, you can also go up to the airline counter at the last minute and be like, "Hey, are there any exit rows available?" In that case, the chances that they'll upgrade you are very small, but the chances if you don't ask were zero.

Sean: To your point about it being a personality thing, I am one to front-load all of my research, and then once I've made the decision, I don't want to have to think about it. I'm just going to go with my itinerary and enjoy my experience.

Liz: Sean, I've done this multiple times. In fact, almost every time I check into a hotel, I at least ask. I say more often than not, we get a better room. Part of it is we're elite members of all these different hotel chains, so I'm sure that factors into it. But we had an experience — I'll tell you a little story. We used to go to Disneyland all the time and stay on one of the properties. We love the Grand Californian. It's a high-end hotel, and I had booked a standard room at a great rate. I got to the front, I had my little daughter with me. She was I think, like, 8 at the time. I said, "Do you have anything for us? Could we get a bunk bed room?" Because she loved bunk beds. The guy looked and looked. He says, "I'm so sorry, we are all out of the bunk bed rooms. I've upgraded you to a suite." I want to say it had a bedroom, it had two balconies, it had a bathroom that was bigger than my kitchen. It was stunning. Of course, my daughter walks around and goes, "Where are the bunk beds?"

Sean: Of course.

Liz: But that's what comes from just asking. It could be amazing. As your partner said, Sam, it doesn't hurt to ask.

Sean: You didn't pay any more for that?

Liz: No, that was the standard, and I seem to remember it was less than $200 a night. It was a screaming deal.

Sean: Wow. That's great.

Liz: Yeah.

Sam: Probably, I don't have any data or anything to back this up, but my feeling would be that that is much more likely at a high-end property.

Liz: Yes, yeah.

Sam: If you go to the Holiday Inn Express and ask them for a room upgrade, the front desk is not really optimizing for your most amazing experience. They're just trying to get people through there. But, yeah, if you're staying at the Four Seasons, definitely worth asking.

Sean: So Sam, our listener is wondering about getting a rental car in Iceland for their trip. I'm wondering if you know whether Iceland or other countries are having the same rental car crisis that we are currently experiencing, where it's pretty hard to get one and the ones you get are pretty expensive.

Sam: Yes. I happened to know — actually, I was just talking to someone who was taking a trip to Iceland, and I asked them specifically about this. She said that she's not even renting a car in Iceland, which is kind of unheard of, because she priced it out and I think it was something like $200 a day, or something like that.

Liz: Jeez.

Sam: I mean, they're always expensive in Iceland, but yeah, it's still really bad out there. It seems like we're right at the supply-and-demand crux, where the rental car companies have not been able to get enough cars to meet the huge surge of demand that is going, and that's just going to take some time to sort out, it seems like. I mean, there's a lot of incentive to do that and to get more cars. But yeah, for now, you certainly want to check the rental car prices before you go anywhere to get a sense of what your total budget is going to be.

Sean: That's interesting, because the road trip is such a classic Icelandic vacation. You pop in a Bjork CD and travel the entire country, but that's not so feasible anymore. What are people doing instead?

Sam: Iceland's pretty well set up for this. A lot of the tour companies will take you out of Reykjavik to go to the waterfall or the hike or whatever you want to go to. But, yeah, you certainly can't do the build-your-own-adventure around the island if you don't have a car. Same is true in Hawaii. I've spoken with several people who are visiting Hawaii without a car this summer, which I didn't even know. I mean, maybe Oahu, but people I'm talking to are going to Maui. And you can do it, but it's much more of a hang-out-at-the-resort kind of vibe.

Sean: One of our travel writers, Sally French, recently wrote a piece about the ultimate guide to rental car alternatives. There are services like Turo and Getaround, and Lyft rentals on there. Do you know if those are available abroad too?

Sam: There certainly are alternatives, some car-share sort of options in various countries. It's worth just sort of searching, if you're going abroad, for the country that you're going to and car-sharing or car rental alternatives, or something like that. I mean, unfortunately, they're experiencing the same thing — car rental places are as well — so it's unlikely you're going to get a screaming deal on those rental cars. But, yeah, the more options you consider, the better off you are.

Sean: That might be a good argument for going with the bundle in this case.

Sam: If Megan, who was asking the question, was finding a good deal on rental cars as part of that bundle, definitely go for that. But I have not heard of anyone seeing anything on there that was significantly better than just booking directly through a rental car company.

Sean: That makes sense.

Sam: My whole job is how to beat the system, and the rental car system as it is right now is pretty hard to beat. There's just too many travelers and not enough cars.

Sean: Right.

Liz: I imagine in Iceland that you don't have the option of renting a U-Haul or something like that.

Sam: Yeah, you could probably get creative. But you can rent camper vans and that sort of thing. But yeah, again, the demand sort of seeps into all these little sub-areas pretty quickly.

Liz: Yeah, and I've noticed with RVs, everybody got into RVs over the pandemic. You used to be able to get some pretty cool deals, either on a RV share site or just renting outright, and boy, those are not happening right now. That's something to keep in mind when you're figuring out your destinations. I just wanted to drop in that if you're going abroad for the first time and don't know this, most places have really great public transportation, so you don't necessarily need a car. Keep that in mind. They have great railroads, they have great metros, all that kind of thing to get you around. Like, I would never get a car in Paris. I think that would be insane.

Sean: Right, right.

Liz: Have you seen how those people drive? And I'm from Los Angeles, so that's saying something.

Sam: Yeah, that's the thing. If you're visiting LA, it's tough, but if you're going to New York, you can totally get away with it. But it's absolutely worth baking into your budget at this point, because if you're going on a 10-day trip and your car is going to cost a hundred bucks a day, that really changes things. A hundred bucks a day would actually be a great deal.

Liz: Yeah, I was going to say, where's that bargain?

Sean: Sam, do you have any other tips for people who are planning trips abroad right now? Or maybe I should ask this question too: How do you think people should still factor in that P-word, the pandemic that we're currently still experiencing?

Liz: Oh, yeah, yeah, yeah.

Sam: I totally do. I mean, the most important thing to keep in mind, putting aside your own risk tolerance and your own need for safety, is just to keep a close eye on what's going on with the regulations in wherever you're planning to travel. There was this big "Europe's going to open over the summer," and it has in a lot of ways, but then there's a lot of little rollbacks happening, and little lockdowns. It's very hard to predict anything outside of countries that have done a really good job immunizing their populations. Keep an eye on what's happening, and most importantly, book flexible tickets. I can't imagine anyone at this point who is not aware of this, but most airlines are offering much more flexible tickets these days, so make sure that you can change or cancel your flight without incurring a fee, because you just really don't know.

Sean: Right. And maybe look into getting a good travel insurance policy.

Sam: Yes. Though, make sure that your travel insurance will cover your change if it's COVID-related. Many do not right now, so don't count on your travel insurance, because even if the country is locking down, your travel insurance might see that as outside of its jurisdiction for what it was covering.

Liz: Yeah.

Sam: Do your homework on that. I actually just talked to someone who got in that situation who had to change their ticket, and his travel insurance did not cover it.

Liz: If something happens to you, the travel insurance might cover it. If something is happening to many people, travel insurance probably won't cover it. That's one way to look at it, right, Sam?

Sam: Yeah, totally. You can get cancel for any reason trip insurance, which will do just what it says it will do, but it is much more expensive, so it's a trade-off.

Liz: We've also talked about certain credit cards having travel insurance baked in, and sometimes that's more flexible than the stuff that you could buy on your own, and sometimes not. Again, take a look at your terms and conditions, see how it works before you rely on it to reimburse you if you decide not to go, rather than if you can't go.

Sean: Well, Sam, thank you so much for talking with us.

Sam: Thank you.

Sean: All right, and with that, let's get on to our takeaway tips. Liz, do you want to kick us off?

Liz: I do. First, pin down your priorities when paying off debt. There's nothing wrong with paying off a large loan in a lump sum, but make sure your other financial bases, like an emergency fund and retirement savings, are in a good place too.

Sean: Next up, know what you're paying for when booking a vacation. Vacation bundles probably won't save you a lot of money, but they can make planning your trip easier.

Liz: Finally, search online for discount codes, and check hotel rates when you're a few weeks out to see if prices have dropped.

That's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. Also, visit nerdwallet.com/podcast for more information on this episode, and remember to subscribe, rate and review us wherever you're getting this podcast.

Sean: Here is our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.