For an audio version of this post, please click on the speaker icon (top left).
Welcome to this episode of The Doctor’s Bill (Can You Afford It?).
Wonder if you should buy that big ticket item or not?
Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.
[Johanna and I have no current financial relationship]
Disclaimer: This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.
The following are the details from our submission form:
Item/Experience Desired:
Maui Family Vacation
Approximate Cost:
$7,000
On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:
A) 10 B) 7
Age:
32
How Many Years Till Planned Retirement?
Haha- Let’s go with 33
What is your total household income?
$225,000
What is your % Annual Savings Rate? (savings/gross income)
6%
Primary Home Equity (Market Value-Debt) [For Renter =$ 0]
$101,000
Additional Real Estate Holdings Equity (Market Value-Debt):
$0
Current Liquid Asset Value (Savings, Checking, Etc.):
$35,000
Retirement/HSA Combined Value:
$62,000
Miscellaneous Asset Value:
$10,000
Mortgage Balance:
$242,000
Student Loan Balance:
$154,000
Additional Liabilities:
$350,000
Future College Plan Funding Needed (Today’s Dollars):
$0 (To Be Determined)
Future Parental Support Funding Needed (Today’s Dollars):
$0 (To Be Determined)
Additional Future Obligation Support (Today’s Dollars):
$0 (To Be Determined)
How do you plan on paying for this item/experience?
Cash money
Any other pertinent information not addressed?
The additional liability is our business
The word Aloha means both Hello and Goodbye.
After reviewing the information above, which version do you feel is appropriate for our title: Aloha Maui?
Click on the Doctor’s Bill Image and find out the verdict:
Open the Bill And Find Out If Can Afford It or Not
After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)
If you would like to submit your own Doctor’s Bill request please fill out the submission form (and remember email subscribers to XRAYVSN will get priority)
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
Unfortunately have to side with no here. A six percent savings rate on that type of income and that much debt, you are one oops away from bankruptcy while the country is at the very top of the good times. A 7k vacation at that income by itself is normally a no brainer, but it seems to me some other things need to be brought under control first. Ie it’s only 7k for this one is nothing. But when there are 10 7k things it becomes a question of priorities.
Appreciate you stopping by and adding to the discussion. Great point about how the current economy is at a all time high but nothing can last forever
Maui is lovely, but a 6% savings rate on a $225k income is not.
Denied until at LEAST all retirement accounts are maxed out. If it were me, I wouldn’t want a vacation to represent 20% of my entire liquid savings either ($35k). This trip could be a recipe for more debt.
Thanks for stopping by FV and adding to the discussion. The 6% savings rate was what made me come up with a similar verdict. For a salary that high it should be much higher.
Also a “no” vote. Beat down the debt in your 30’s and enjoy your 40’s. “live like a resident”-WCI. An option could be a more budget-minded trip now and wait a year or 2 for a likely professional conference in Hawaii and pay for the bloated trip cost with pre-tax dollars. In my experience, ski trips, fishing trips, golf trips are typically the most expensive, because of paying for the activities. A beach and/or hiking trip can be conducted in a much less expensive manner. After 20 years of family vacations, the memories and enjoyment of those has no direct… Read more »
Thank you BTL for your take on this. It was pretty much the same rationale for me when I analyzed the case. High income doesn’t mean an automatic excuse to spend and I too feel that once you are there it is easy to blow the budget even further with unforseen expenses and activities (since we are here in Hawaii we might as well do….). Sometimes the best memories are from experiences that are not expensive. I love the idea of waiting to time it with a conference (Hawaii is a very popular conference destination) and you can write off… Read more »
That’s crazy talk, nobody needs to be going on a vacation that doesn’t involve a tent until those student loans are history! 50% minimum of that income should be going to pay off the loans and they’ll be gone in two years. After that at least 30% of that income should go to retirement and investments. There may be something dumber than making nearly a quarter million and being in debt but it would have to be Darwin award winning dumb. But that’s just my opinion.
I can’t say I followed that plan myself but it would have been amazing to have an aggressive pay down of student loans that quick (I bumbled my way through the years and it took me 17 years to pay them off after I graduated medical school 🙁 ).
Definitely some tough love Steveark but I agree that there is priority to getting rid of student loans and maximizing retirement accounts first before dream getaways should enter the picture.
If it were the only trip like that for 10 years, then I would do it. My wife and I did our honeymoon to Hawaii when we were in similar position. After that, we bucked down, and were frugal for years to come. Sure it would push back on the financial situation for a bit, but if it can motivate you to get where you need to be then it could work. It’s all about the individual.
Thanks GenX FIRE for the comment.
Good point that you not only have to analyze the purchase but what steps in place you have afterwards that could compensate for the increased spending. If indeed this is a one of splurge for quite some time it would be a lot more digestible financially. If however it sparks the travel bug and now becomes more of an expected routine, then you can set yourself up for disaster.
Too true. My wife is a master saver. We also knew we were planning a family, and so we would be down shifting soon. Our vacations since then have been to places where we could stay with family. It’s cheap to go to Ireland for instance when you can stay with (her) family. When we go on beach vacations, we stay with my parents in the Carolinas. (They weathered the storm just fine.)
Hmm, I think my initial reaction is definitely a “no-go.” With that level of income, I’d double (or triple?) down to get rid of that student loan debt first — what a massive reward it would be to have that vacation waiting on you as a prize! HOWEVER, I think it’s really easy for me to say that out of context. There may be some real motivation to going now (going before babies, going while kids are a certain age, going before moving to a new job/state, once in a lifetime opportunity, etc. ). I can’t imagine a situation personally… Read more »
Always appreciate your comments and input and you are right that there could be some background reason that was not mentioned for the reason they want to do it now (I did sort of cover my bases at the end saying if it was something SIGNIFICANT like a 10 yr anniversary then my feelings would change). Thanks again for stopping by.
$7K at 6% for 33 years is $50K. So you’re actually spending $50K to go eat some pineapple in the sun by the beach. Go git ya a can of Dole chill it down make some Sangria and party down. In 12 years the value of your 7K will have doubled and you can proudly look at the benefit of your smart decision.
I would add a definite no myself. I honestly believe that skipping certain luxuries to pay down debt is important and necessary. Get on top of the debt before spending money on something so expensive that is not a necessity. There are more frugal vacations a person could take if they feel a vacation is necessary. These vacations although frugal can still be enjoyable.
Thanks Andrea for adding to the discussion. As the blogger of a PLUTUS finalist website (SavingJoyfully), your words definitely carry some weight 🙂
Thanks Xrayvsn. Your website is looking amazing and I love this feature. Keep up the great work!