Consumers Expected To Go Into Debt To Finance Labor Day Road Trips
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People Go Into Debt So We Can Travel For Free
I love keeping an eye on the AAA newsroom. AAA often releases expected travel numbers before big holiday weekends and the pre-Labor Day report is out. As has been the case often this year, the number of people who are expected to travel will be at levels not seen since the 2008 recession.
Since most people are too lazy to read the entire report, AAA is nice enough to type up the highlights. Here they are:
- Historically, when Labor Day weekend begins in August, Americans have shown a higher tendency to travel.
- Consumer spending has surpassed income growth, indicating that Americans are willing to take on debt to finance a vacation.
- Automobile travel will increase by 1.4 percent this year, with 29.7 million travelers hitting the road.
- Nearly eight percent of travelers (2.65 million) will travel by air, a one percent increase from last year.
- Travelers will encounter airfares just two percent higher than last year and daily car rental costs that remain consistent at $51.
- Hotel rates at AAA Two Diamond hotels are nine percent higher than last year and Three Diamond hotels are six percent more.
Did you catch it? AAA casually mentions that “Consumer spending has surpassed income growth, indicating that Americans are willing to take on debt to finance a vacation.” Ah good old America. Back to her old ways.
Here is a quote from the full report, “Consumer spending is continuing to rise in spite of stagnant income growth. In the third quarter of this year spending is expected to increase 3.8 percent year-over-year, while disposable personal income is only expected to increase 1.4 percent. Reliance on credit cards, rather than increasing income, is fueling holiday travel spending this year. While economic growth is slow, consumers are feeling more comfortable taking on debt.” Oh the comfort of debt. Like a pile of bricks on your back!
Debt Is Evil
While I am a measured person, I am going to come out and say people are stupid. As I wrote a few weeks ago, Debt Is Evil. Sure there are some key exceptions, but there is no doubt that this kind of debt is evil. Evil. Evil. Evil. Why would you go into debt to go on vacation? Live within your means.
These vacationers, the ones that are going into debt and making the credit card companies a ton of money, are also paying for me to travel. I have earned well north of a million points & miles this year because I am an outlier. The credit card companies dangled the carrot and I bit. Except their trap didn’t work. I will not go into debt or pay a dime of interest, but unfortunately, as evidenced by the AAA report
I am we are unique.
Are You Traveling
The majority of the readers of this site are relatively affluent, have good credit and do not carry credit card debt. With that said, we all know someone who does. Someone who is planning their road trip this weekend and who will not be able to pay off the bill immediately when it comes.
I don’t know what we can do for them. In a selfish way we should want them to go on and carry their debt. They make the credit card companies rich and we get to benefit by eating the carrots without having to pay. Win win. Unfortunately it isn’t that simple. This type of debt is a disease and we all suffer in the end. Or at least most of us do.
There is no doubt that the economy is improving and as a result more jobs are being generated. Perhaps there is an argument that this debt is the driving factor of growth and thus is creating an overall gain for the economy, but is it a net gain? I know too many people trapped under the crippling weight of consumer debt. Is there not a better way?
Either way I suggest heading over to AAA to read the entire report. It is an interesting look into travel patterns and one I love to read before every big travel period. Let me know in the comments your thoughts on this subject! Am I way off base?