How to pay for your dream vacation without drowning in credit card debt

You've crunched the numbers, and the only way to pay for your dream vacation is by taking on some credit card debt. Are you doomed? Not even close.

Picture this: your friends have just invited you on a one-of-a-kind vacation. It's got the perfect destination, fun activities, and, now that you're going, the right people to bring it all together. Great! If you budget carefully for the next few months, you just might be able to afford this. The catch? They're leaving in two weeks.

You want to go on this vacation, but the only way to pay for it is to take on some credit card debt. Thinking about finances makes you second-guess every decision you make (and every dollar you spend). What you need is a sign — ideally one that tells you that you should go on that vacation.

Well, here it is.

Even if you don't have a plan to pay the debt off, you officially have permission to enjoy yourself without stressing about whether you'll be bankrupt when you come back.

Of course, there's a right way and a wrong way to pay for a vacation with your credit card. Here's what you need to know to enjoy the beach without wanting to come home and bury your head in the sand.

Follow these three rules to fund your trip with your credit card the smart way.

What's your credit limit? If you don't have the answer, find out. Knowing that number is the key to getting out of this vacation with your financial health intact.

When you're choosing hotels, buying drinks, or deciding whether you should get that souvenir, make sure you don't spend more than a third of your credit limit. Shell out too much of your available credit and it could hurt your credit score.

Keep things simple by choosing one card for all of your vacation expenses. If you don't have a plan to pay off your debt immediately, choose the credit card with the lowest interest rate. Interest on credit cards can be steep, so the lower the interest rate, the better.

If all of your credit cards have the same interest rate, or if you have a plan to pay off your vacation debt quickly, choose a card that lets you earn rewards like cash back or travel points. This way, the money you spend on a pricey dessert after dinner will actually go toward your future trips.

Once you return from your dream vacation, you can get down to business and pay off your credit card debt. It's OK if you don't have a solid plan for paying it back the moment you touch down. You have two options: you can tackle the debt right away, or you can pay it off over a number of months.

Tackling your debt right away is smart because it limits the interest you'll pay. Say you put a $3,000 vacation on a credit card that charges 19.99 percent interest. If you cut midnight food runs and new clothes out of your budget and manage to pay the debt off over the course of two months, your total interest charges will be less than $100. Not ideal, but also not bad for a spontaneous vacation you thought was out of range.

If you wait to pay it off (or if cutting down on spending still isn't enough to cover the bill), then you'll pay more in interest. Make $200 payments every month, and you'll still be paying this vacation off when you're planning the next one. To boot, you'll end up paying an extra $500 in interest charges.

That's a big difference, and it's driven by your card's interest rate. If you don't have the funds to pay off your credit card debt right away, consider moving your debt to a line of credit, which will have a lower interest rate.

Some money pundits will compare putting your vacation on a credit card to committing a cardinal sin. It's not. If your dream vacation comes along and your only choice is to use a credit card, don't sweat it. That's what credit cards are for — taking advantage of opportunities. As long as you're smart about it, there's no reason to stay home while your friends soak up the sun.

That said, now that you've put a vacation on credit and paid it off, the wise thing to do is start setting aside a small amount of cash every month in a rainy day fund. That money will be there for you when your next unforgettable opportunity comes up, so you can say yes without worrying about how you'll pay for it.