Never finance a vacation!
Who doesn’t love a vacation? I think it’s safe to say that most people love to get a break from the daily grind. The thing about vacations is that they are supposed to be relaxing and stress free. One way to eliminate stress is to never go into debt for a vacation. It might be the easiest option at the moment, but not after it is over, and you have to pay for it months to come. (maybe even years ☹)
I am a huge believer in having a vacation sinking fund. Or an account where you contribute specifically for a vacation. My wife and I have done both. We have made payments on vacations we took in the past and it would feel like a never-ending cycle. By the time the vacation is paid off, we would be ready for another one! That is why we contribute to a vacation fund monthly. It is one of the most important categories in the budget for us. It is just one of several specific accounts we have. Car fund, vacation, and house expenses are our main sinking funds.
How you plan and save for a vacation is simple. Estimate how much the trip will cost (always round up!). For example, if you think it will be a $1,200 trip, then divide by the total number of months you plan to save. If that trip was in 6 months, then you would need to save $200/month. Then you can say, vacation is in the budget!