And more importantly, how much time and effort does it take?
Fergus and I try to have a balanced view of financial planning – we’re not about to spend all our evenings and weekends working just to reach retirement a little sooner. At the same time, we’re not going to spend hard earned money on a fancy car or house that really won’t improve our lives when all is said and done. Most of our decisions seem easy. Do we need a new couch? No, ours is just fine and Fluffster loves it. Should I buy that dress? No, I already have three dresses, and that shade of green reminds me of pea soup in a bad way.
Some questions are a little more nuanced, like what is travel hacking and what’s the cost/benefit analysis?
Enter “Does it work?” a series where we analyze different methods for saving and/or earning money. In this vein, we’re starting a journey into travel hacking, by taking the free Travel Miles 101 Course from Alexi of Miles Dividend MD and Brad of Richmond Savers. It is a 15 day course, and we’re currently on day 8.
It’s a pretty fantastic business model, as they offer a beginner’s course to travel hacking (keeping all techniques and products up to date), and they earn referral bonuses on at least some of the cards they mention. Each day, there’s at least one new lesson/post, so the material is spread out and does not seem too intimidating. The downside to this is being slightly frustrated with pressing questions, like concerns about credit scores (Answer: long-term might be positive, short-term not so much) or expiration of points (Answer: lots of ways around this). At any rate, listening to the Mad FIentist’s podcast finally pushed us to sign up, after initially hearing about the course on the Mr. Money Mustache Forums.
The course mainly revolves around (1) continuously opening credit cards for the bonus points on signup, (2) manufactured spending (optional), and (3) creative redemption options (also technically optional). One of the great things about this course is that they don’t preach one method over all others. They give the information you need to find the method that works best for you and your family. Brad’s style is to open one card at a time, putting daily expenses on just that one card. When he redeems points, he gets big returns, mainly by practicing flexible travel planning.
Alexi’s style is to open multiple cards at once in a given “churn,” and then manufacture spending to reach all of the minimum spends. This could be by buying Visa gift cards at the grocery store on a credit card, then using those gift cards to buy money orders made out to himself, for example. Alexi’s method takes more time (estimated at 3-4 hours a month by him), but he also earns an estimated $40,000 in travel rewards each year, compared to the ~ $10,000 you can get for “Brad-style” hacking.
Fergus and I are more “Brad-style,” and we aren’t looking to travel a lot in the near future, what with Fluffster and all. We fly out to family about once a year, and down the line will want to do more international travel. Now…we’re skeptical about these reward numbers.
When we travel now, we try to root out the best deals possible, paying less than what we would consider “sticker price.” It’s one reason we’re not into couponing – we don’t care if the box of granola bars are now $2 now instead of the usual $4 since we can make a tastier equivalent for $1 anyway.
Still…$10,000 gives a lot of wiggle room. Even if that value was halved or quartered, that would still be a worthwhile investment of time (assuming the time estimates are accurate). Free airfare and hotels also make for guilt free travel, as sometimes it can also be difficult to feel okay with spending money on travel when working towards financial independence. Plus these rewards aren’t income, and thus aren’t taxed.
Well, this will be a long experiment, but we’ll be excited to get the results.
|International family visit:||$800-1,200/person|
|Domestic family visit:||$200-400/person|
|Average spent on hotels/AirBnB:||$60-$120/night|
Current credit card rewards: ~$600/year
Right now we primarily use Google Flights to track airfare, using the calendar and price graph feature to see the lowest prices. There’s often a sweet spot for time before departure, and instead of guessing or going by common wisdom like “one month for domestic flights” or “three months for international,” you can see on the calendar itself!
Unless you’re buying around holidays, you get a sense of when prices change, and generally what the lowest possible price is for your destination. Also, instead of buying through sites like Travelocity or Orbitz, Google Flights links you directly to the airlines to buy your tickets, giving some added flexibility and benefits.
For hotels, we shop around and will be using AirBnB for our next mini vacation, where apartments are renting out for roughly one half the price of hotels in the area. We’ll report back in mid April about our trip, of course!
For credit cards, we’ve been using exclusively cash back cards, mainly Blue Cash Preferred AmEx (6% cash back on groceries, or, you know, anything else you buy at a grocery store – $75 annual fee) and the Citi Double Cash (2% back on all purchases). We also use Amazon Rewards (3% back at Amazon) for anything purchased at Amazon, and Chase Freedom (5% cash back on rotating categories) when the categories make sense for our spending. None of these are referral links – just what we currently have in our wallets and generally good cards for strictly cash back. We’re going to downgrade the Blue Cash Preferred to the plebeian Blue Cash Everyday to get rid of the annual fee, since the benefit of new card bonuses will theoretically be much higher than 6%.