Why we spend more on vacation + a student loan forgiveness update
The Supreme Court will soon rule on the legality of Biden's $10k to $20k forgiveness plan.
Hi everyone,
I’m back in New York and back to work. Hope everyone enjoyed a long weekend!
In this week’s issue:
1. Why we spend more money on vacation
2. A student loan forgiveness update
3. Links
Why we spend more money on vacation
It was after my second trip to Target in about 3 days last week that I started to wonder why I felt so much freer to spend money on vacation than I do in my day-to-day life. On a normal day, I wouldn’t touch $12 vitamins until they went on sale. But on vacation, the price didn’t bother me: into the basket they went. Neither did paying full price for some micellar water, or splurging on the fancier rosé for my mom and me to split (pictured above).
In about six days in Florida with my mom and sister, I spent at least $100 more than I do in a normal week (and this is with my mom paying for most meals). Not a ton, but enough to make me reflect on my usual free-spending mentality when I’m on a trip.
I’m sure we’ve all felt similarly while vacationing. We want to relax, have a good time. Maybe we saved specifically for the trip, so the splurges feel earned. I find this is particularly true with groceries: we might get the fancier coffee beans we don’t let ourselves get in routine grocery runs, or shell out for out-of-season fruits.
For me specifically, I think about spending and budgeting and saving so much for my job every day, it’s nice to…let the mind, and wallet, relax a little bit.
I reached out to Ed Coambs, a financial therapist, to get his take. Everyone is different, as is every vacation, but generally speaking, we go into a different state of mind while on vacation, making it easier for us to spend, he says.
“How we want to experience ourselves on vacation is different than in our normal everyday life,” he wrote to me in an email. “For most of us that includes relaxation. I think that relaxation spreads across the boundaries we normally have up around spending.”
As a family therapist, he notes that there might also be underlying anxiety and fretting experienced while on family vacations, which can influence spending. My wine bill for the past week can attest to that (jk! kinda).
“We are also in a different social context, and depending where we vacation, there may be more overt and subtle buying signals that are new to your brain and intrigue you,” he adds. I will admit, I’m a sucker for Publix. Or really any grocery store outside of NYC, with their endless aisles and actual room to move around in.
Whatever the mentality, it felt good—until I checked my credit card bill. It’s nothing I can’t afford, but it was a reality check. I enjoyed the week, and I enjoyed being able to treat my mom to some dinners and Publix runs. Now I’m back to budgeting.
What’s up with student loan forgiveness?
Next week, oral arguments in cases related to President Biden’s widespread student loan forgiveness plan will begin at the U.S. Supreme Court). I’ll be following along, and will send along an update if anything notable happens.
A lot of people wonder what’s going on with the $10,000 to $20,000 in federal student loan forgiveness Biden announced last year. Well, it’s been held up in court by conservative and libertarian groups. Several of the lawsuits have been dismissed, but two have made it to the Supreme Court. We should get a resolution by May or June.
That said…the court is currently comprised of 6 conservative justices and 3 more liberal justices. While legal advocates and activist groups are trying their best to make the case that student loan forgiveness is legal (and legal under the authority used by the Biden administration to implement it), it’s best to operate under the assumption that the Supreme Court will block the forgiveness effort.
What does that mean? Planning your financial future like the debt will not be canceled. Federal payments will resume later this year; if you can make any payments at all right now, while interest rates are still set at 0%, you’ll get a lot more bang for your buck.
I don’t say this because I hope that’s the outcome, I am saying it out of practicality.
“It’s better to be conservative and think this might lose, and then have money to make the payments,” Vaishali Rao, partner at Hinshaw & Culbertson, told me. “And then if the government does win, it’s an added bonus. I worry about people not having a financial plan because they’re counting on forgiveness.”
Remember, if you’re struggling financially and won’t be able to make payments when the federal pause ends, it never hurts to contact your student loan servicer—the company that bills you each month—and see if they can help you work out a repayment plan. It’s better to get that worked out now, with payments still paused, then to wait until the bill actually comes due.
And don’t forget that there are other debt forgiveness plans that will still be available, including Public Service Loan Forgiveness and the standard income-driven repayment plan forgiveness after 20 years.
Links
I profiled a TikTok star who quit his day job because he earns more on the app and wrote about how to negotiate a severance package if you’re laid off. Plus: The IRS warning was right: Tax refunds are already smaller this year than last year, on average.
12 million student-loan borrowers could benefit from Biden's debt cancelation in the districts of the House Republicans who are urging the Supreme Court to strike the relief down.
I enjoyed this conversation between Rick Rubin and Ezra Klein. I’m super interested in Rubin’s new book, which seems to be getting written up everywhere.
“Trials in the U.K. conducted by researchers from the University of Cambridge and Boston College found that the four-day workweek improved employees’ feelings of burnout and stress, and reduced their sick and personal days.”
Everything comes back to the housing market—and the housing shortage.
That’s it for now. Have a great week,
A
P.S. If you know someone who would like this newsletter, please forward it along!
P.S.S. Thanks Christopher Skinner for the illustrations!
On "why we spend more on vacation." In a word: regret. This reminded me of something my dad used to say - "you should always buy something that you want on vacation because you never know if you are coming back." He never traveled outside of being a soldier in WWII (which he said he didn't like because people shot at him). And as a family, we only ever went on vacations to Cape Cod. Travel and vacations were a different thing during his lifetime. That said, regret is one of the saddest words I know. Very rarely (and happily) do I get close to regret in my day-to-day life, but on vacation where time is limited - regret hovers all the time. I'd rather spend more and not have that haunting feeling.