{"id":2896,"date":"2014-12-11T15:33:28","date_gmt":"2014-12-11T15:33:28","guid":{"rendered":"http:\/\/www.travelingthieles.com\/?p=2896"},"modified":"2014-12-16T14:58:39","modified_gmt":"2014-12-16T14:58:39","slug":"how-we-earned-1-1-million-air-miles-and-saved-6000-this-year-in-travel","status":"publish","type":"post","link":"http:\/\/www.travelingthieles.com\/?p=2896","title":{"rendered":"How We Earned 1.1 Million Air Miles and Saved $6,000 This Year in Travel"},"content":{"rendered":"

Knowing that we had some big travel aspirations in the next couple years, back in late 2013 I started researching ways to travel more and spend less while doing so.\u00a0 My epiphany came in December of 2013, when I listened to the Zero to Travel podcast <\/a>episode here<\/a> on the subject of \u201cTravel Hacking<\/em>\u201d.\u00a0 More specifically, it talked about a system of management for how to maximize credit card signup bonuses and create lots of spending on credit cards, racking up tons of airline miles in order to travel around the world for darn near free.\u00a0\u00a0 While I had applied for a couple airline and hotel cards in the past \u2013 and put them to good use on free flights to Asia and some very luxurious Marriott properties in SE Asia and India \u2013 I was always limited by the ideas that 1) to earn travel points you have to spend lots of $$ and 2) having a lot of credit cards was, in general, a bad thing.\u00a0 Hearing the techniques in this podcast turned that understanding on its head and started the ball rolling for me in terms of researching the many sides of an Internet sub-culture of Travel Hacking.\u00a0 The key techniques I learned about were:<\/p>\n

\u00a0\"\"<\/p>\n

1) Credit card signup bonuses can be earned more than once for the same card<\/strong>.\u00a0 Simply apply for credit cards that offer large signup bonuses and annual fees that are waived for the first year.\u00a0 If you receive the signup bonus in the first couple months, you can usually cancel the card before the second year and then reapply for it later, repeating the process of collecting lucrative signup bonuses.<\/p>\n

2) Most cards require a minimum spend of $1,000 -$5,000 before signup points post.\u00a0 Instead of having to actually spend this amount of money, you can \u201cmanufacture\u201d the minimum spending requirements<\/strong> by purchasing AMEX, VISA and Mastercard gift cards for a small fee, and then deposit those gift cards into an online bank account which can be used just like any other funds in a bank account<\/p>\n

3) There are ways to pay for things that you wouldn\u2019t normally be able to use a card to pay for<\/strong> \u2013 think mortgages, student loans, bills, etc \u2013 and all of these transactions earn points if you use a points earning credit card<\/p>\n

4) Airlines points are a commodity and can be assigned a $ value.\u00a0 You can use the manufactured spending technique discussed above (and others) to spend a little bit on fees but earn a lot more in value of points<\/strong>.\u00a0 Economists would probably define this as arbitrage, and isn\u2019t much different in theory than what investment traders do daily all over the world.<\/p>\n

5) If you track things closely and handle the credit given to you with the respect it deserves (pay off your balance in full each month, don\u2019t take cash loans, etc), your credit score will not be impacted <\/strong>(and might even improve over the long term) if apply and are accepted for additional credit.<\/p>\n

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After a couple days of research, I developed and plan and put it into action in January of 2014.\u00a0 Here are the results for the first year for both Elisa and I:<\/p>\n

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The Statistics:<\/strong><\/p>\n

Cards applied for: 26<\/p>\n

Cards approved: 23 (Elisa denied for Barclay Arrival card and both of us denied for US Bank Club Carlson hotel card)<\/p>\n

Total airline miles earned: 1,099,905 (includes bank points which transfer 1:1 to airlines)<\/p>\n

Calculated value of miles earned: $18,809<\/strong> (using actual redemption rate of $0.17\/mile)<\/p>\n

Cost of earning: $2,352<\/strong> (includes CC fees, gift card purchases, and $200 in southwest airlines points purchased)<\/p>\n

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Divide the $18k earnings by the cost and that\u2019s an 800%<\/strong> return on investment, which is a lot better than we are getting in our IRAs right now!!\u00a0 In fact, that\u2019s almost like a part-time job!\u00a0 True, you could factor in the time I have personally spent doing research, buying gift cards, etc.\u00a0 However, I can say that it\u2019s been a really fun hobby for me and I consider those hours spent more fun than work (for sake of argument though, I\u2019d say I spend around 5 hours a week on it).\u00a0 At least I wasn\u2019t just \u201cworking for the man\u201d.<\/p>\n

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Redemptions This Year: <\/strong><\/p>\n

We\u2019ve also put a good number of miles to use this year:<\/p>\n

\"miles<\/a><\/p>\n

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Analyzing the above, we earned $525 for the Barclay Arrival card, and $3,709 alone from two Southwest Airlines cards (which qualified us for the companion pass and allowed Elisa to fly for free every time I fly, even when I also flew for free with miles).\u00a0 \u00a0The Delta miles were kind of a throw-away since they are comparatively worth so little and we don\u2019t plan to earn anymore.\u00a0 We still have about 60k SW points in my balance and expect to get another $2,000 or so of value from them combined with the companion pass next year \u2013 overall, that\u2019s a pretty good deal!<\/p>\n

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Miles Balance and Plans for Them:<\/strong><\/p>\n

After all the redemptions, we still have about 860,000 airline miles in our accounts at the moment.\u00a0 Although we haven\u2019t booked anything yet, we expect to take a number of international flights over the next couple years.\u00a0 If we take our travel destination wish list, the furthest distance we are expecting to fly is to New Zealand, which runs around 80k miles roundtrip.\u00a0 Most of the other places we\u2019re looking at are in the 60k range, so we\u2019ll be conservative and say a roundtrip tickets internationally should average 70k points.\u00a0 Divide by our balance and that\u2019s at least 12 roundtrip international flights<\/strong>!\u00a0 \u00a0\u00a0Since we don\u2019t have plans to stop the credit card game anytime in the future – and therefore we fully expect to earn many more points in 2015 – we might splurge and get some upgrades to business or first class, or fly some family out to join us somewhere.<\/p>\n

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Credit Score Impact:<\/strong><\/p>\n

I\u2019ve been tracking our credit scores since we started using the free services of creditkarma.com and creditsesame.com.\u00a0 We both started with excellent credit and you can see that after a year and 26 credit card applications, Elisa now has near perfect credit score and, while mine has gone down some, I still have good credit:<\/p>\n

\"credit<\/a><\/p>\n

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I should point out too that our card applications were in a series of rounds every 90 days or so. \u00a0The pattern I saw in my score was that each time I did an application round (representing 3-5 card applications), my score would drop around 30 points and then rebound over the next couple months.\u00a0 Therefore, since my last round was in late November, and was at 750 in October, I suspect my score is lower right now because it is still in the rebound phase.<\/p>\n

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Credit Inquiries Impact:<\/strong><\/p>\n

The other main concern I hear from people whom I talk to about this \u201ccraziness\u201d we are doing centers around the perceived negative impact that all those inquiries has on the ability to obtain a loan.\u00a0 While I don\u2019t have proof, I do have anecdotal evidence that says otherwise.\u00a0 Specifically, last month I called around looking to obtain an rates for a mortgage on an investment property. In each case, I explained that while I knew I had a good score and excellent history of timely payments, my concern was that I had a lot of inquiries from credit card companies.\u00a0 In each case, I was told by the credit analyst that these were not an issue.\u00a0 Funny enough, I even talked to a Chase bank analyst who said he plays the travel hacking game too and he explained to me that the worst only bad outcome is that I would have to write a boiler-plate type letter for each inquiry to go alongside my loan application that explained why the inquiry was there, that I only applied for the signup bonus, I did not carry a balance, etc. \u00a0Seemed simple enough!<\/p>\n

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How Travel Hacking Changed Our Travels and Lifestyle:<\/strong><\/p>\n

This all probably sounds like some get-rich quick scheme or just big numbers on paper, but the reality for us is that it is helping us to lead the sort of lifestyle \u2013 with travel an integral part of our lives<\/em> \u2013 that we have always wanted.<\/p>\n

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