Let me start off by saying that I think that you should ALWAYS pay cash for a vacation. It is silly to finance a luxury. You may feel like you deserve a vacation, but they are still a luxury expense. That being said, I am a huge proponent of living it up when you go on vacation. Vacation is a time of releasing stress, thinking about nothing, and rejuvenating your mind and body. If you try to go cheap on your vacation, it will not feel like much of a vacation.
I wanted to write this post because I read about so many financial people that say to stay away from all-inclusive resorts and vacations. I understand that you will probably pay a little more to have the “all-inclusive” feature to your vacation, but I definitely think they are worth every penny. My wife and I went to an all-inclusive resort and we ate and drank every meal without even thinking about how much it was going to cost us. It was a beautiful thing. We did not have to shop 20 different discount travel sites for the best airline ticket, nor did we have to arrange our own transportation to and from the airport. We just paid a flat fee and everything else was taken care of.
Another thing to consider is your purpose of the vacation. Is your purpose just to escape and relax, or is it to be educated and explore a new area that you have never seen before? If it is just to relax, then I would save enough money up so that you never have to worry about how much money you are spending. If you want to tour Europe or Australia, then you may want to buy groceries and stay in youth hostels. But I think that we should all throw our financial hats in the garbage when it comes to vacations. Again, you don’t need to rack up $5,000 in credit card bills to go to Jamaica, but live a little when you do decide to plan a vacation!