- in Savings
I enjoyed this post about making travel fun again by Paula Pant at AffordAnything.com. (I need to get some of those earphones!) Paula highlights her unique way to enjoy frequent flying and offers some advice on using frequent flyer miles as well. Her post prompted me to write up my own suggested tweaks to locking in frequent flyer miles without wasting insane amounts of time in the process.
First, it is helpful to look at the points game as just that–a game, in which for relatively little amounts of time, you can lock in thousands of dollars in cash or flight benefits. My personal goal is to lock in about $4000 in cash or points benefits per year just through sign-up bonuses and cashback on spending (details to follow). Depending on your tax bracket, that’s the equivalent of making an extra $5000 per year when you factor in taxes.
Also, there is some sort of psychological phenomenon at work when you cash in frequent flyer miles or hotel points for a trip. The whole thing feels kind of…..FREEEEEEE!!!!! Which is fun. Particularly for those tempted towards the Scrooge Mindset, which a lot of people who pursue FI have to guard against, the points game might get you out there in the world having more fun than you might otherwise….. Another great framework is to look at the points game as a lucrative part-time job that pays insanely well.
I have a couple of suggested tweaks when it comes to the miles/points game. First, be careful about losing yourself down the points rabbit hole and wasting a ton of time with small maximizations.
Playing The Points Game Without Wasting Your Life Away Trying To Figure Out The Best Deals…
- Apply for three or four cards per year to lock in the bonus miles. I just go to the Points Guy website and take their top recommendations. (Someday Mighty Investor may make recommendations directly, but not for the time being). Note: you don’t want to play the points game right before you apply for any type of loan such as a mortgage because you don’t want your credit rating to drop temporarily due to applying for a card.
- Beyond locking in the massive sign-on bonuses, which in some cases can be worth a thousand dollars or more per card, just go with a solid cash back card. There are Chase and Cap One cards that pay 2% back on all purchases. I focus on cashback because this allows me to just use Google Flights when I travel and book whatever is cheapest. I skip the entire process of obsessing over which points to use for trip. If you haven’t checked out Google Flights, I suggest you go play with it right now. It’s way better than Travelocity and others. Go ahead. I don’t mind. I’ll wait…..;) The best cashback cards usually come with an annual fee that is waived during the first year. However, for three years running, Capital One has reimbursed the fee for me after a quick phone call. Just call and ask.
- When you do redeem points, just use them for international flights. You will usually get a much better return.
- One exception to my suggestion that you save your points for international flights: if you live where Southwest Airlines flies, use their points for domestic flights. They are an insane deal–about half the points that United, American or others require for the same trips. Also, you can reserve flights with Southwest points, but then cancel up to 10 min before the flight with no charge. So you can lock flights in early but maintain flexibility.
Keep It Simple, To Maximize The Return On Your Time–And Save Your Sanity!
Here’s the key point of this entire blog post: don’t obsess over the points game beyond the above unless it’s a hobby you enjoy. The ROI on your time will plummet if you spend hours trying to maximize how you deploy the rewards you earn. Just lock in the sign-up bonuses and get 2% cash back on everything else.