Travel Now, Pay Later

Vacationing is a great form of de-stressing. Visiting historic sights, enjoying a cooler climate, shopping and even just strolling down rural roads for the first time is a great way to relax and minimize the risk of heart disease caused by hypertension…or is it ?

With the creative travel packages being offered nowadays, you could easily travel now and pay later. But how enjoyable will your vacation truly be if you know that as soon as you get home, you will have to start slaving away to pay for your trip? And since it is so easy to overspend when you are travelling, you just hope and pray that you will have enough income and stamina to pay for your whimsical spending.

Humans have a “now na” mentality where we simply want to enjoy things now without much regard for the consequences. Behavioral finance dug deeper into the human psyche and found that two systems in the brain that often battle with each other explain how we easily give in to cravings.

The limbic and analytic systems are the two areas of the brain being referred to. The limbic system is awake only part of the time as opposed to the analytic system, which is awake all the time.

The limbic system is in charge of the emotions, very experiential, and rapid in functioning. Many times, we don’t even know that it is already running. On the other hand, the analytic system is very calculating, future-oriented. We are also conscious of its functioning.

The problem lies in the fact that the limbic system tends to overpower the analytic system whenever the former is awake. Regardless of the logic and rationale that the analytic system presents, it will always be the limbic system that will win out. And what causes the limbic system to awaken? These are temptations to spend.

Frequenting places of spending, holding cash in your hands, keeping a credit card in a wallet or purse, watching or reading eye-popping advertisements, being offered bargain deals, not leaving debit and ATM payroll cards at home all awaken the limbic system.

Marketers know of the limbic system only too well. Here’s a challenge; using Google, try to see if there will be exact results for pay now, buy later offerings. There will be practically none. But imagine this, by paying now and buying later, you will not only be able to buy what your heart desires without the after purchase stress if you bought it through a loan, you will also enjoy interest on your money instead of paying interest.

They say that there are three ways to react when being attacked. You can fight, take flight or avoid. When it comes to keeping the limbic system from being attacked by temptations to spend, the best strategy is to avoid the things mentioned in the previous paragraph. For once temptation enters our realm of consciousness, it will be very difficult to kick it out. Even in the case of taking flight or running away once you see a temptation to spend, your will would have already been weakened with just the sight of the temptation.

Take the case of travelling. If you are always watching out for the great deals of the airlines, you will most likely end up buying them than one who is oblivious to such deals.

I am not saying that you shouldn’t go on vacation. If you plan on doing so, try the more difficult but no after-purchase stress way of paying now and travelling later.

To know more about managing your cash, debt, risk and wealth well, call (632) 216-1541, email info@personalfinance.ph or visit our web site at www.personalfinance.ph. Inquire about our Walk the Talk program where you can avail of our investment advisory services potentially for free.

Efren Ll. Cruz is a registered financial planner with th e RFP Philippines. He is author of the bestselling books, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement & Estate Planning.” He is Chairman and CEO of Personal Finance Advisers Philippines Corporation. Questions about the article may be emailed to efren@personalfinance.ph. Efren may be reached at the same email address for the scheduling of consultations and personal finance seminars or at (+632- 216-1541 / +63917-505-0709). This article does not constitute nor forms part of any offer or solicitation of an offer to buy or sell any securities. The opinion and views expressed herein are solely those of the author’s and do not necessarily reflect those of the Personal Finance Advisers Philippines Corporation.