A Financial Plan For More Travel

What would you do with more money? What do you most want to do when you retire? For a huge number of us, that answer would be, Travel! Even for those of us with a lot of mileage already on us, the lure of faraway places remains strong. So what’s stopping us? The usual suspects—time and money. Employees in the U.S. get the lowest amount of vacation days in the western world. Even if you run a small business and could theoretically set your own hours, well, we know how that goes. But I think that even that time issue is a function of the money travel costs—if it costs a small fortune when you’re paying for it yourself, we tend to think it has to be a major trip, maybe several weeks, and we never go. But what if money were no object?—long weekend getaways would seem easier to fit in. As with all luxuries, we need a surplus in order to really relax.

Similarly, frequent flyer programs haven’t worked that well for me. For example, my kid is flying back and forth Philadelphia/Chicago five times this year. On US Airways flights (which we can’t always get) she might rack up enough frequent flyer miles to get one free ticket during her college career. But using it at a time when she actually has to fly given her breaks and vacations, well, I’m not booking it just yet.

It’s seemed to me that I’m going to get that fabulous tour to India (fill in your own bucket list destination) just about the time I win the lottery, or start collecting on that long-term care insurance. Yet I do hear rumors from time to time about adventurous types who traipse all over the globe for cents on the dollar. How?

Like Archimedes, my Eureka moment hit me in the bathtub (actually, the shower). I’ve been getting a blog feed from Chris Guillebeau, who writes, for years. I originally subscribed because I liked his free e-books and he is embarked upon a quest to visit every country in the world. It was great armchair travel fantasy. But suddenly it hit me that I should actually pay attention to some of this stuff—not just the travelogue, but the tips.

Chris has an e-book, Frequent Flyer Master, which pretty much lays out the techniques for you. The book is somewhat outdated (this field changes FAST), but Chris promises two things—that you’ll find a way to get at least 25,000 more miles (a free domestic ticket or thereabouts) and that he’ll send you the new copy when it comes out (in the next few months, apparently). The principles are available if you do enough web searching, but Chris puts them together in a succinct 101 course. It’s pretty complex, and he lays it out well. So, how do people do it?

Sign up all over the place for frequent flier airline programs—some of these can be transferred to partner airlines, so if you fly on airlines in the same “alliance”, you can consolidate.

Apply for a bunch of credit cards. Sign up bonuses can offer startling amounts of miles (like 50,000)—your credit has to be superior and there’s generally a required spending in a specific time period.

Also, these points can sometimes be transferred to other programs, consolidated, or used as cash to pay for non-covered portions of your travels. Some of these are airlines cards, some hotels, some just with big guys like American Express, Chase, and Capital One;

Never buy anything, especially on-line, without checking through the card and airline programs—many of them will give you double or triple points (on some things, 5x) for anything you buy, from flowers to electronics to duck boots.

Keep watch for specific promotions that offer multiple points—like 5x on office supplies, or restaurants, or companion tickets.

Use credit cards strategically depending on multiple points offers.

Obviously, this is a game of big and little wins adding up to serious travel awards. Chris advises that the way to get there is to figure out your goals (just as in the rest of life!) If you know you want to go to India or Rome, you can organize your acquisition strategy for the best deal to that place. There are even software programs (some free on-line) to help you keep track of what you’ve amassed.

Is it worth it? Well, just like other effective financial strategies, if it were easy everyone would be doing it. It does require some research time and a fair head for sorting details. You’ll probably stick with it if you enjoy it as a hobby, feel you’re getting something significant for free, or really want to do more traveling. For me, I figure it’s worth a moderate investment of time considering the available rewards—much more worthwhile than clipping coupons out of the paper (and then forgetting them when going to the grocery store).

One caution—you must have a great credit score. Do not attempt this if you have debt or trouble controlling spending. And, your credit score will take a hit initially, so don’t start numerous credit applications if you’re going to buy a house (or maybe an auto) in the next six months. However, having a lot of credit power that mostly you don’t use can actually help your credit score over time—it’s the ratio of use:availability that matters. One number that floats around is that the amount you use each month should be less than 7% of your total available credit—so if you have $20,000 as a credit limit, you shouldn’t charge much more than $1,400/month, which you pay off each month. Other advice I’ve come across: apply for the cards all at once, double dip by using airline mileage cards and charging on credit cards that offer points, and keep on top of your credit score. (I’ve used Quizzle.com for a free score, but there are many others).

As with income tax and college financial aid strategies, you can go broke “saving” money, so be careful to confine this travel hacking of amassing points to money you would be spending anyway. Once you dip a toe into this you’re going to feel really stupid for all the points you’ve missed (ugh, money wasted). It’s complicated—if I still had a teenager at home, I’d put her onboard to keep track of this and figure it out—they’re always on the internet anyway, right? If you have one, you might ask a grandkid to do this as a gift to you—and make ‘em a deal on sharing the benefits.

My personal goals? India within two years, mostly paid for by benefits, London, and either a warm long weekend in the winter or a great city visit. I’ve scored 135,000 miles/points so far. I’ll update this from time to time to illustrate how I’m actually doing, what benefits I’ve landed, and how I used them. We’ll see if it’s worth it. And I can’t resist: warning, your mileage may vary.

About the author

Danielle L. Schultz, CFP®, CDFA

Danielle L. Schultz, the principal financial planner of Haven Financial Solutions, is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a NAPFA-registered Financial Advisor, and a Registered Investment Advisor in the State of Illinois. She studied financial planning at Northwestern University’s Certified Financial Planner™ certification program. She also holds a Series 65 license (Registered Investment Advisor Representative) and a CCPS (Certified College Planning Specialist).

She writes a regular column for Better Investing magazine and is currently working on a revision of their mutual funds handbook. In addition to academic training and professional experience, Ms. Schultz has personally managed Social Security, Medicare, retirement and long-term care issues; college funding concerns; and cash flow and transition planning in self-employment and divorce situations. Her social work background gives her an innovative perspective on financial planning issues; for her, financial planning is not only about money, but also a key component in a satisfying and well-lived life.

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