Travel Hacking: My First (Almost) Free Trip

I’ve been an advocate of letting Credit Card companies pay me to use their cards rather than the other way around for years.  Why pay interest on credit cards when you can have the credit cards pay you “interest” in the form of points and miles for the things you spend money on anyway?

I’ve used cash back rewards cards for the past 10 years to earn a few hundred dollars a year.  With the low interest rates being offered in savings accounts lately, the “interest” that I’ve earned by using my credit cards for everyday purchases has far exceeded what I’m earning in my savings accounts.

Until recently I didn’t dive into the world of Travel rewards card because I thought it was too complicated.  I thought you had to jump through hoops to use the rewards because of airline “blackout dates” and such, but I’m learning that this isn’t always the case.  The thousands of dollars you can save if you do this right are totally worth the little bit of extra effort to maximize the value of your rewards.

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Smart Wealth Hacks is all about helping you get your financial shit together so you can stop worrying about your money & start living your life.  I’m here to help you fix past financial mistakes, get out of debt, and provide smart “hacks” to increase your wealth.  This post is more in line with the living your life part of the equation, so I feel obligated to issue a warning…

Warning:  Do not get into this game if you have credit card debt.  Travel hacking is a dangerous game to play if you don’t have your financial shit together.  Credit card companies are in this business to make money, but they are willing to fork over huge sign up bonuses because they are betting that they will make much more from you in interest when you get yourself into trouble.  Don’t fall victim to credit card companies!

Ok, now that that’s out of the way, on to the fun stuff.

There are some really extreme travel hackers out there, taking trips in the range of $20 – $30,000 or more for pennies on the dollar.  Like this 35K+ honeymoon trip to Thialand for less than $1000 (shout out to my buddy Bryce Conway @ 10xtravel.com for turning me on to this new hobby), but for my first trip I wanted to keep it simple.  A weekend trip to Boston for my birthday and to celebrate my fiancé finishing her first semester in the PTA program.

 

How I booked a $700 weekend trip to Boston for $22.53

Flights – Citi Preferred Rewards Card

I’ve had my Citi Preferred rewards card since 2007 when I was shopping around for the lowest interest rate card I could find right out of college (that was before I learned that interest rates really don’t matter if you never pay interest).  I was also just racking up a few hundred $s for each cash back sign up bonus.  There’s nothing like using your good credit to make you money!

I’ve used this card for every day spending for years and mostly used the reward points for statement credits (really low value) or gift cards to cover planned spending or the occasional treat for myself.  A few years ago I cashed in my rewards for Cabela’s gift certificates to buy kayaks.  Something I’ve been wanting, but was too cheap to buy for myself.

When I started getting interested in the world of travel hacking I had about a year’s worth of points racked up from everyday spending on this card.  A little over 39,000 points with this particular card = about $390 in travel rewards at a $.01 per point value (pretty common value for many rewards cards, but far from the best value available).

I booked 2 round trip Jet Blue flights for $21.53 by cashing in my total point value for the flights. This was surprisingly easy compared to my preconceived idea of how difficult it was to use travel rewards.

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Accommodations – Chase Sapphire Reserve (Currently THE ultimate travel reward card)

The Chase Sapphire Reserve (CSR) card just became available a few months ago, and it’s has taken the travel hacking scene by storm because of its hefty 100,000 point sign up bonus (conservatively valued at $1,500 in travel rewards if booked through the Chase portal) and $300 annual travel credit among many other perks.

I’ve become a huge fan of Airbnb rather than hotels.  That may change now that I’ve gotten into this travel hacking game, but we’ve used Airbnb in the past and loved it for the value and for seeing a city from a different perspective.  I’m banking my 100,000 point sign up bonus for a massive trip later, but I used my $300 travel credit to pay for our Airbnb for the weekend.

Our cute, 1 bedroom apartment was $301.00 for the weekend.

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I charged both the $21.53 for my flight & the $301 for our Airbnb using my CSR & received the travel credits automatically as soon as the charges cleared.  After the $300 credit and flights paid for with points, the total cost of our trip was $22.53

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There is one major drawback to the CSR card, it comes with a serious annual fee of $450 which is not waived the first year like many other cards.  Most of the good travel reward cards out there charge an annual fee, but the beauty of this game is that many of the cards offer sign up bonuses once you meet a certain minimum spending amount and waive the annual fee for the first year.  So you can get your sign up bonus & cancel the card before the annual fee hits.

Now, I HATE fees with a passion, but here is why this makes sense if you can afford to come out of pocket $450 up front for this card.  The CSR offeres a $300.00 Annual travel credit like I showed you above.  As soon as you spend any money on travel related expeses (rental cars, flights, trains, Ubers, taxies, etc.) whether it’s $5 or $500, if it codes to travel, your credit will appear in your account as soon as the transaction clears automatically (up to a maximum of $300 per year).  Easy, you don’t have to call to ask for the credit.

So the travel credit works on a calendar year basis.  I signed up for the card in October so I had to use my travel credit for 2016 by the closing date of my December statement. Done!

But the Annual Fee is charged on your first statement & then again on the anniversary date of your card opening date each year (not by calendar year).  So before your next $450 annual fee hits you have the opportunity to use another $300 travel credit for the next year.

Here’s how the math works out in my case.

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Just make sure to cancel the card before the second annual fee hits for a total value of at least $1,650 in travel rewards (100K sign up ~ $1500 value + $600 in travel credits – $450 annual fee = $1,650 in value).  This is a conservative estimate because the Chase Ultimate reward points can also be transferred directly to many airlines for an even better points valuation, but that is beyond my current level of knowledge.

Debt = Bad (Absolutely True!) – BUT – Using Your Good Credit to Make (or Save) you Money without taking on Debt = Awesome!

This is a personal finance site, so why would I be encouraging you to use Credit Cards?  I sincerely want you to “live within your means” and avoid debt at all cost, but there are instances when having good credit and using it responsibly can pay huge dividends.

Many personal finance enthusiasts swear off credit cards for good, but they can actually be a great way to hack your wealth.

I’ve seen many hard core debt free advocates shout from the rooftops to never use a credit card.  “Credit cards are evil!” they say. “You don’t need a good credit score if you vow to never take on debt,” but the reality is that good credit is important and swearing off credit cards is not the answer.

Many employers require a credit check for employment, getting a lease on an apartment requires a credit check, and chances are you will need to lean on your good credit history at some point in the future.  Most people don’t buy houses with cash, and you may have paid off your current mortgage, but what if you have to move for a job opportunity or have to opportunity to invest in real estate?  Circumstances, and financial goals change.  Credit cards can be a great tool to maintain or improve your credit score when used properly over time.

This knee jerk reaction is typically because they’ve been burned by credit cards in the past and swear to never go down that path again.

Let’s be clear, I am not advocating for you to take on debt to earn rewards for travel.  If you currently have any credit card debt, personal loans, or have struggled with keeping your finances on track, don’t get involved with this hobby.

Only use a credit card for expenses you would have paid for with your debit card anyway, and always pay your entire statement balance off before the due date to avoid interest charges.  If you can’t afford to pay off your entire balance each month, you can’t afford to play this game.

If you are interested in learning more about travel rewards and how to get started, head over to 10xtravel.com and sign up for the email list to get your free intro to free flights ebook.

If you have any questions on how to get started, have your own story to share, or need help getting out of debt or improving your credit score, shoot me an email Ashley@smartwealthhacks.com

 

How Budgeting is Like Dieting (They Usually Fail), and How to make Saving Suck Less

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We’ve all been there right? the freshman 15, the dirty 30, ”I just can’t lose this baby weight,” [insert your favorite cliché here].

We go on one crash diet or another, try this pill & that wrap, and every Jan. 1 we vow never to eat another cupcake, ever. It just doesn’t work and it really, REALLY SUCKS! each time.

It’s the same way with money. We all know that we should start saving, start investing for retirement, pay down our debt, budget (ughhhh), and watch our calories, cut out soft drinks, not eat fast food, exercise more, blah, blah, blah. But just because we know we SHOULD be doing these things doesn’t make them any easier to do…unless you’ve got systems in place to make them seamless.

Common Budgeting and Diet Pitfalls

“I don’t know where to Start”

Everything seems so overwhelming.

There’s the paleo diet, slow carb diet, low-fat diet, high-fat diet (my fave ), primal, low cal, fat free, sugar free, weight watchers, vegan, vegetarian, Zone, Atkins, etc.

On the financial side, there are savings accounts, money market accounts, credit cards, debit cards, 401(k)s, 403(b)s, IRA’s, taxable brokerage accounts, HSAs, fixed vs. adjustable rate mortgages, ARMs, car loans, personal loans, and 839 billion investment options.

If you are not an absolute nerd like me that likes to read about this stuff, it can seem overwhelming, but you don’t have to know exactly what all of these things are, just like you don’t have to find the perfect diet to lose weight.

What’s important is to find what works for you and what you can stick with long term. You don’t have to have all of the answers and you don’t have to get it perfect all of the time. If you get just a few of the big things right regarding both diet and money you are 90% there, and for most people 90% is enough. If it’s not sustainable, it’ll never work.

The important thing is to start, and adjust as you go. Start small and as you learn more along the way you can fine tune your strategy.

“I just don’t have the Willpower”

Contrary to popular belief, success in dieting is not solely based on willpower. Success on any diet (food/caloric based, financial, or otherwise) does take some willpower, but this is not actually the biggest determining factor in whether a diet fails or not.

Key’s to Saving (and Diet) success:

1. Start with WHY – Most of the time the surface answers we give ourselves for wanting to accomplish a goal, whether it be losing weight, saving money, or starting a new career, don’t keep us motivated for very long. Dig deep. This can get uncomfortable, but it is crucial to maintaining your motivation when times get tough.

There is absolutely nothing wrong with wanting to look good naked, but is that motivation going to be enough to sustain your resolve when someone walks in the office with cake.

What do you value? This is the big question. How will changing your spending habits to be more in line with your values benefit you in the long term? Do you want to pay down debt so you can quit your second job and have more time to spend with your kids, or just have enough money saved up to take a family vacation? Focus on the way you will feel once you have met your goals rather than the short term surface benefits.

2. Decide – No wishy washy, “I’ll try” BS. Decide now that you are going to make a change. Wishing things were different is never going to get you there. If you want things to change, you have to decide that you are going to do what it takes to make a change.

P.S. You are going to screw up sometimes.  The important thing is to make the decision and do something about it. I’ve been telling myself for years that ONE DAY I would start this website. I never had the courage to put my thoughts out there for fear of judgement (and I’m still not sure that I do), but I made the decision that NOW is the time. Once you’ve actually made a concrete decision to make a change, things get easier. It’s all the worrying and excuses we give ourselves beforehand that are the most difficult to overcome.

3. Pick a Target– What are your goals? What do you hope to accomplish?

I hate the goal setting mantra as much as the next guy, because you actually have to sit down, make a solid plan, and risk failure. Nobody wants to fail, so many times we don’t even try. We’ve all got excuses we tell ourselves to justify our decisions, but what they really all boil down to is fear. What have you been putting off because you are scared to fail? (this website was one of those things for me)

We also expect that things should be easy. We want the quick fix.  A pill that makes you lose 40 pounds over night, or we hope for some long lost relative to leave a fortune to us like so many spam emails promise, but it just doesn’t happen that way.

You know why you hear over & over, “Set SMART goals”? Because they actually freaking work. A goal to “lose weight” or “Save more” is that wishy washy, “I’ll try” BS I was talking about earlier. Make it concrete. What do you want? Who do you want to become? How will your life be different 6 months from now when you’ve accomplished your goal?

You don’t want to just pay off debt, you want to pay off $x,xxx.xx of credit card debt by the end of next year by paying $100.00 more than the minimum payment each month. You know this is possible because if you cut out eating out twice per month you will have an extra $100 to pay toward your debt. What will you do with that extra money each month once you’ve eliminated those debt payments?

4. Plan ahead – How will you deal with setbacks or roadblocks along the way? The best laid plans often crumble because we don’t have a backup plan and . Decide ahead of time how you will deal with these setbacks.

How Planning/Automation takes Willpower out of the equation and can Make or Break your goals

I don’t actually keep a strict budget, and I don’t really advocate for others to either. It can feel too limiting, and honestly, most of the time it kinda sucks. It can feel demoralizing when you feel like a failure at the end of the month when you spend more than your strict targets. Just like when you feel demoralized looking at your bathroom scale that JUST. WON’T. MOVE.

Making a plan for your money up front, and automatically directing a certain amount to savings each paycheck (before any spending) is your best bet. Take the guesswork out of your finances. Don’t wait until the end of the month to realize there is nothing left over. Making savings automatic will provide certain spending limits, but you don’t have that sense of failure when nothing is left over because you’ve already met your savings targets automatically. You can spend the remainder guilt free.

The same can be said for dieting. It doesn’t have to be so restrictive when you’ve planned out your meals and work things that you love into your meal plan. You don’t have to eat rabbit food every day of the week to lose weight, but salads are an easy go to when you don’t have a plan for what to eat and all of your other options are unhealthy. Make a plan, take the daily decisions on what you are going to eat for each meal out of the equation.  You diet will be much less restrictive and you’ve taken willpower out of the equation. You already made the decision at the beginning of the week when you made your meal plan & cooked your meals ahead of time.

Don’t let an unexpected expense derail your savings plans or let your diet be derailed when something comes up and you don’t have time to cook. Make the decision ahead of time. Be prepared for the worst case scenario. No willpower required.

Saving/Dieting = Deprivation

We dread dealing with our money just like we dread dieting because it can feel so restrictive, but saving money has just as much to do with enjoying life as it does with restricting spending.

So many of us fight over money issues in relationships, feel crushed by the pressure of debt, and worry about what would happen if the car breaks down or we lose our jobs.

What I feel when I’ve met a savings goal, or max out my 401(k) is not restriction. I feel both accomplishment and a sense of Peace.

If you are having trouble saving money, or don’t even want to think about your finances, think about this… How would you feel if you had no financial worries? How much happier would you be if you weren’t stressed out about your finances? How many fights would it save with your spouse if you had some emergency savings socked away and didn’t have to worry about the car breaking down? What would it be like to NOT have hundreds or even thousands of dollars paid toward debt every month? What else could you do with that money?

Could you have more “fun” and less restriction if you didn’t have those debt payments to worry about?

Having a healthy savings account feels more like freedom than deprivation.

How “Cheat days” can work for your money – Set up seperate accounts for specific goals (Even the fun stuff)

We can’t all be perfect all the time. Planned cheat days or cheat meals can be a great way to break up the monotony of dieting. Cheat days shouldn’t be used too often, but they can help you to indulge in some of your guilty pleasures without derailing your diet goals.

All of the experts say you should have an emergency fund with a few months of living expenses socked away (and I agree), but you also need to have some FUN money set aside. If you’ve always wanted to visit Europe, set up a specific savings account to start saving for your trip. Once you get in the habit of saving, you are closer to your goal than you could ever imagine.

Keep these accounts separate. This is important! Don’t just leave all of your money sitting in your checking account, it will usually get spent. My favorite savings account is Capital One 360 (formerly ING). You can set up multiple accounts and give each one a name.

Saving for a Down payment on a house? Have a “Down payment” account or “Dream Home” account specifically for that goal. Have a major purchase you want to make? You could have a “new kayak” account or a “Star Trek Memorabilia” account…no judgement. What’s your fun money “cheat meal” account going to be?

Saving money is not about being responsible or restricting your spending, it’s about planning ahead for the life you want.

The important thing to remember is to keep these accounts separate and make your contributions automatic through a payroll direct deposit or an automatic savings plans that can be set up to reoccur at certain times (ideally on each payday). If you need help setting these up, shoot me an email at Ashley@smartwealthhacks.com.

I’ll talk more about why having separate savings “buckets” is important in another post.

For today: sign up for a Capital One 360 and set up at least 2 accounts, an emergency fund and a FUN money account.  If you’re really feeling frisky, go ahead and open that account for whatever other weird shit you are into.

 

Think “living for today” is More Sexy than Saving? Change Your Savings Mindset

How would your life change if you the ability to do all of the things you truly enjoy simply by cutting back on the things that aren’t important to YOU and sacrificing many of the little things people spend money on without even thinking?

Debt has become an epidemic.  More than ever, people spend freely without regard to the long term cost, but live enslaved by debt.

Beyond extreme cases, you don’t have to scrimp and save on everything, go into extreme coupon mode, or even forego your most coveted guilty pleasures to save money and live debt-free.

What you DO have to do, is decide what things are most important to you, what you value over anything else, and then cut back on the rest.

According to the current standard, I live what some would consider a restrictive lifestyle because I don’t just buy whatever I want on a whim, and I value saving over spending.

Even most of my friends don’t understand why I wouldn’t buy a new car or a bigger house just because I can afford it, or (ghasp!!!) forego a cable subscription because… “who doesn’t have cable.”  

The truth is…none of those things are important to me.

What I value, above all, is FREEDOM.

  Freedom to spend extravagantly on the things that mean the most to you without anxiety or restriction

  Freedom to choose what type of work to pursue without regard to income and to choose where your money goes each month

  Freedom from worry about what would happen in the event of a job loss or major expense

  Freedom to escape the Rat Race early while you are still able to enjoy it.

 

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Debt Slavery vs. Debt Freedom

Freedom to Spend  – Working for the Man vs. Working for yourself

Do you ever get tired of forking over your hard earned money each month to someone else or wonder when you’ll have something left over for yourself?

When you are in debt, or buy most major purchases on credit, you are constantly working for someone else. Each paycheck you are stuck sending your money to lenders, leaving very little to live off of day to day.

Being a slave to debt has caused many people to constantly look for ways to trade more hours for dollars until they’ve barely got any time left to enjoy life.

Paying off debt and keeping your monthly expenses low allows you to put your money to work for you in any way you want. You are able to save, pay yourself first, and spend your hard earned money how you see fit to build the life that you want.

Do you really want to pay a credit card company for years for purchases you’ve long since forgotten, or would you rather decide how to spend your time and money to bring the most happiness to you and your family?

 

Freedom to Choose – One Paycheck away from Disaster vs. Doing what you love

It’s estimated that one third of Americans are 1 paycheck away from homelessness.   There are cases where low incomes are to blame for this, but low incomes are not the only cause.  An injury or job loss could bring complete devastation to a family with high incomes but also high debt.  It’s not only the “poor” who are barely scraping by.

Many people are stuck in jobs they hate but are unable to leave due to financial obligations. They are stuck with a bad boss or horrible working conditions because they feel like they could never afford to leave.

When you leverage your lifestyle and have to make a certain amount of money every month to make ends meet, you limit your options when looking for work.

Being debt free could allow you to leave a high pressure/high paying job to take on a career that brings more happiness & fulfillment. It’s difficult to even think of taking a pay cut (even when you are miserable) if you are barely getting by.  Keeping your monthly expenses low leaves you more options to do something you truly enjoy.

 

Freedom from Worry – Constant Worry vs. PEACE OF MIND

I’ve read that most Americans have less than $1,000 saved and would have a hard time coming up with $2,000 for a major expense within a month’s time. This leaves many people in a constant state of worry about whether or not they will be able to pay all of their bills from month to month. One unexpected expense could mean late or missed payments, late fees, overdraft fees, not being able to put food on the table, or the risk of having assets repossessed.

Freedom from debt allows you to have the peace of mind that everything you’ve worked so hard for can never be taken away. When everything you own is paid off, you never have to worry about losing what you’ve worked so hard for.

Even if you’ve still got a mortgage on your home, when you have no other large bills to pay, it’s much easier to weather a job loss or other financial setback to make sure that your most important asset is secure.

 

Freedom to escape – Keeping up with the Kardashians vs. Early Retirement????

The Joneses may have moved out of the neighborhood, but the Kardashians have upped the ante.

Do you think you are not good with money because you are not good at math?  Being good with money is not about math or spreadsheets & graphs.  It’s hard to even consider saving for retirement when there are so many cool things to buy today, but most of it is just marketing.

Money is emotional, not rational.  It’s not usually about what we need or what we really want.  It’s about the feeling we think we will get, the life that we think we will have by buying what the advertisers tell us we need.

Getting stuck in the never-ending cycle of keeping up with the Kardashians, trying to impress friends, or trying to buy your happiness is a losing game.

Do you really need a new car to get you from point A to point B, or do you want the feeling of excitement, prestige, and exclusivity portrayed in the car commercial?  Are you really looking for the big, expensive, smart TV because it’s what you need…or are you looking for the experiences of time spent with friends watching the game or the movie night on the couch with the kids?

The truth is, we can’t buy any of the things we are really looking for when make impulse purchases.  How could you use that money to improve your quality of life instead of the quality of your “stuff”?

Beyond money, what we all really want is more time.  

Time to spend with family & friends, time to spend on hobbies we enjoy, and time to relax and unwind.  We can always make more money, but we can never make more time.

I don’t know about you, but I want to spend as little time working as possible.

Most retirement calculators estimate that you need to replace 80% of your income from investments to retire, but when you are able to save a larger portion of your income and live reasonably frugally, you don’t need nearly as much to retire as the financial gurus will tell you.  

 

With my current savings, I’m buying my future time.  Don’t get me wrong, I want to enjoy life now…and I do, but I am willing to forgo some small pleasures that most people take for granted now to buy my freedom, sooner rather than later.

The freedom and peace of mind that comes with saving and being debt free is far more valuable than anything money can buy!

That’s not to say that spending extravagantly is never justified.  When your spending is in line with what you truly value and you are saving money elsewhere, spend away!   I’m not immune to the occasional splurge, and with a little foresight, saving, and planning I will spend lavishly on something that is important to me.

Conscious spending is far from restrictive if done right. Saving money and living frugally doesn’t have to mean extreme sacrifice.

Strategic savings brings freedom.

What is important to you? What do you truly value and is your spending in line with those values?  How would your life change if you didn’t have consumer debt?  Leave your ideas in the comments below.

Have a question about how to start saving money or paying off debt, shoot me an email.