Thursday, March 22, 2007

A Vacation From The Freedom Fund?

So one big question I have now is about the Freedom Fund. Suddenly, it doesn't feel so free. Not "free" in either sense. Not free as in free beer because I am "spending" money each month on this Freedom Fund. And not free as in liberty because I feel like I often times finding myself foregoing things that I probably could just get and not even have to pay on credit for them.

I have been using the idea of a freedom fund for months now in budgetting for big, but predictable expenses. The idea of the freedom fund is that you can set aside a small amount of money for these expenses each month in advance of the cost actually coming up. Then when that big car repair bill comes or that "surprise" of your dishwasher breaking happens, you have money saved for it already and it doesn't blow your budget. Since the money is presumably in a high-yield account, it is also making some interest income.

Taking a Vacation from the Freedom Fund

I guess the current debate going on in my little head is the thought of taking a vacation from the freedom fund. The main reason for this is that I am thinking about a vacation to Hawaii. Expensive is not even the word. It will cost about 2x what I had budgetted for a vacation. And even with trying to save more between now and the trip, I think that it would put me over-budget by about 1000 bucks. So, the debate now is, do I just say screw it and go anyway? Or should I just suck it up and go someplace that is nice, but not quite as expensive?

How Much Should You Spend on a Vacation?

Personal finance loves budgetting. It loves rules of thumb when it comes to savings, investing, and 401k matching. It does not, however, talk at all (from what I have seen) about how much you should spend on luxury items. We're not having the debate about whether or not a vacation is a luxury. I've conceded in my brain that a Hawaiian getaway is a luxury. A trip to someplace else that would not require travelling across 50% of the surface of the earth would be considered a necessity though -- since I have not taken a real trip in about 3 years.

Currently, I've expected to spend about 2 weeks pay (net) + spending money on my vacation. Hawaii would be more like 3-4 weeks pay + spending money. So I am curious to think about how much other people are spending either in dollars or in percentages. It might give me some sense of whether or not I was just in plain old denial about how much vacations really cost.

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