A belated 2015 end-of-year accounting

For the last two years, I've shared an accounting of my year in earning and burning miles and points (2013 and 2014). A reader recently reached out and asked whether I would do something similar for 2015.

The more volume I've pushed through my credit cards and loyalty accounts, the more difficult it's become to track the precise number of miles and points I earn each year. This isn't because of a lack of attention to detail; I actually maintain an unnecessarily-meticulous record of all the fees I incur while manufacturing spend.

The problem is simply that loyalty programs make it terribly obnoxious to track this kind of activity, so unless you track it throughout the year, you're left flailing at the end of the year to figure out the final score.

For example, if you have an American Airlines AAdvantage or IHG co-branded credit card, every time you redeem miles or points you get a 10% rebate. Barclaycard Arrival+ cardholders get a 5% rebate on all their redeemed miles. Should those points be reported as "earned," or deducted from "redeemed" miles?

Likewise, if I redeem Ultimate Rewards points by transferring them to United or Hyatt, and then redeem those United and Hyatt points for travel, where are the appropriate columns to debit and credit the transactions?

Nonetheless, as your humble servant, I did go through all the accounts I've previously reported on and calculated the total number of points I redeemed in 2015. So without further ado, here are my total redeemed mile and point totals for calendar year 2015:

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As you can see, my total redeemed balances come to 1,678,000 miles and points. This is more or less meaningless for the reasons I explained above (Hyatt, United, and British Airways redemptions are counted twice, both above and below the central line), but hopefully it gives the curious an idea of the rewards currencies I choose to focus on.

How much do you charge friends and family for travel?

Travel hacking is a specialized combination of knowledge, skills, and opportunities, plus of course making the time to take advantage of them. For those willing to invest in this world, the payoff is tremendous: the ability to pay for travel at a steep discount, whether you're buying luxury accommodations for the price of a Motel 6, or getting a Motel 6 for the price of a youth hostel.

Once you've invested the time and attention to learning those skills, it's natural to want to share the rewards with friends and family who, at least in my case, treat travel hacking as a curious combination of magic and fraud.

While I'm always eager to help out, being both a businessman and a poor person means I like to look for mutually beneficial arrangements when booking travel for my loved ones. In that spirit I think there are basically three models one can use when trying to help people save money on travel.

Offer a fixed discount off retail

This strategy makes the most sense for "arm's length" transactions. If you have more miles and points than you have near-term plans for, you can offer to book travel for friends and family at a fixed discount off the price they're already planning to pay.

If someone wants to book a $600 domestic flight, and you discover there's low-level award availability (or, better yet, discounted award availability like that offered to Citi AAdvantage credit cardholders), you can offer to book the flights for a mere $450. This is a classic win-win situation: the traveler gets a 75% discount off retail, and you get 1.8 cents or more per mile in cash — a pretty good redemption!

The drawback of this method is that there are situations where it simply doesn't apply: if a flight is cheap enough, or the mileage cost is high enough, there may simply not be a middle ground in which the booker and traveler can meet to mutual benefit.

Charge the opportunity cost of earning (or redeeming for cash) your points

This is the strategy I usually follow when offering to book travel for my close friends and family. If a hotel room costs 40,000 HHonors points, I'll offer to book it for $141, since that's the amount of cash back I could have earned manufacturing the same $6,667 on a 2.105% cash back card. In other words, I want to be "made whole," but I'm not interested in extracting any profit out of the transaction. If that's a discount off retail they'll usually be interested, and if not, there's no harm done.

But there are two pitfalls here. The first is figuring out what your actual opportunity cost is. In the case of hotel points or airline miles earned with a credit card (at the expense of cash back), the calculation is simple, as shown above. But if you're redeeming Ultimate Rewards points for a friend's Hyatt stay, the relevant cost isn't how much cash you could have earned instead of earning Ultimate Rewards points, it's how much the Ultimate Rewards points are worth if redeemed for cash. The same is true of any rewards currency that can be directly redeemed for cash, like US Bank Flexpoints.

The second wrinkle is valuing instruments that are, due to price compression, worth manifestly less than their face value to the travel hacker. For example, a $400 American Airlines voluntary denied boarding voucher is worth much less than $400 to me, since I can redeem 20,000 US Bank Flexpoints, worth $200 if redeemed for cash, for the same flight (in reality it's not quite that bad since the voucher has the added flexibility of being combinable with cash for flights at the bottom of a Flexperks redemption band).

When deciding the opportunity cost of something like that, you could either think about the actual delay that earned you the voucher in the first place (how much is 5 hours in a Chicago airport worth? Did you have to buy lunch?), or simply assign it the value of the points you would use to book a flight of the same value. In the above example, that could be the $200 cash value of 20,000 Flexpoints.

Travel is free (for other people)

The third option, of course, is to just give travel away! What are you, some kind of cheapskate?

For children, grandchildren, nieces, nephews, parents, grandparents, and anyone you're about to propose to, the best option is not to charge them anything for their travel. Your miles and points didn't cost you much, you have too many of them, and it'll mean the world to them to get to see the world.

This is the strategy I use when booking vacations for my partner and I, and it's fun. I heartily recommend occasionally splurging on your loved ones, the operative word being "occasionally."

I don't mean to get all philosophical this close to the end of the post, but people basically don't value stuff they get for free. Or, to put a slightly finer point on it, people quickly get used to getting stuff for free and quickly come to accept it as the natural order of things, rather than a gift or treat for a special occasion.

That's why I think for kids or siblings it's probably better in the long run to offer a big discount off retail rather than spread free trips around like gelt at Hanukkah.

Conclusion

So, what did I miss? Do you charge your loved ones for "free" travel, and if so, how much?

Personal finance digression: Robinhood is a pretty good app

Every once in a while I take a break from blogging about travel hacking and write about whatever personal finance topics are on my mind. For the past few weeks I've been playing around with an app called Robinhood, and thought I'd share my impressions.

Robinhood is a mobile-only trading platform

I don't exactly understand why mobile-only applications are so popular at the moment, but Robinhood is a good example of one. As far as I can tell, there is no way to log into your Robinhood account on their website to view past trades, deposits, withdrawals, dividends, etc.

Fortunately, the app is pretty good! The main page of the app shows the current value of your account, including cash and the market value of all the shares you currently own. Below that, there's a newsfeed that shows headlines based on general market events and news specific to the shares you're tracking. Finally, the main page shows your current share positions and any ticker symbols you've saved for the app to track.

That latter functionality works even if you don't have any shares deposited with Robinhood. In other words, you can use the app to simply track the price of any stocks and ETF's you're interested in.

I've always been curious why most brokerages report share prices with a 20-minute delay, which doesn't seem particularly consumer-friendly. In any case, it's cool that Robinhood reports share prices in real-time.

Buried slightly deeper in the app's menus are the options to view past transactions, make deposits to and withdrawals from your Robinhood account, cancel pending orders, and all the other things you might want to do with a brokerage account. They even show you all your scheduled dividend payouts on a single screen, which I've never seen in a brokerage account before (although my experience with them is limited).

Robinhood executes commission-free trades of US stocks and ETF's

Now we come to the real point of the app: Robinhood doesn't charge any commission to buy or sell US stocks and exchange-traded funds.

Most brokerage firms will charge you $7 or more to execute simple trades. If you want to buy or sell a single share, that commission can easily dwarf any paper profits you made on the underlying security.

There's not much else to say: Robinhood doesn't charge those commissions. They do list a number of fees for trading listed foreign securities, "Euroclear," and "Canadian." Those situations haven't come up for me yet.

Robinhood makes deposits from a bank account immediately available

This is a neat gimmick: in order to get you trading as soon as possible, Robinhood makes funds available immediately when you initiate a deposit from your linked bank account.

When I initiated a purchase in my Vanguard brokerage account the other day, it took 3 or 4 days for the funds to become available and the price had already moved away from me, so I do appreciate this feature of Robinhood.

Two minor problems and one philosophical grievance

There are two things that will become immediately obvious as soon as you start using Robinhood:

• Robinhood does not service tax-advantaged accounts. You can't set up Robinhood as a traditional IRA, Roth IRA, Health Savings Account, 529 College Savings account, or any other kind of account besides a taxable brokerage account. If you're in a tax bracket where short term and long term capital gains are taxed at different rates from ordinary income, you have to be aware of what kinds of capital gains and losses you create through the app. For my sins I've already earned $15 in short term capital gains which I'm not looking forward to reporting next year.
• Robinhood's newsfeed function is not hosted natively in the app. I think the newsfeed is a sort of silly gimmick, but if a headline does catch your attention you have to wait for your mobile browser to load the website, which more often than not has a paywall keeping you from reading the article that interested you! Note to all app developers: If you're going to have a newsfeed, host the articles on your app!

Still, those are both quibbles. The real problem with Robinhood is that it makes day-trading incredibly easy, and more or less encourages its users to day-trade. It does this in two ways.

First, by not charging fees for each trade, Robinhood removes any disincentive from quickly moving in and out of stocks. Don't get me wrong: I don't think it's good that brokerages charge fees for trades. That's money customers would rather keep. But that basically bad practice does at least discourage people from buying and selling stocks based on minor price changes. It acts as a subtle encouragement to hold securities for the long term.

Second, the newsfeed is, more or less, a stream of constant headlines telling you to buy, sell, or short whatever stocks you happen to have loaded into Robinhood. Their algorithm simply shows all headlines related to your shares from a range of financial websites, blogs, and actual news sources. For ConocoPhilips, my current newsfeed shows:

• ConocoPhilips: Shorts Closing In On The Bottom
• How To Play The Growth In US Oil Exports With Fat Dividends (Part 1)
• Oil Patch: The 'Circle The Drain' Phase Begins
• Short Conoco Philips Now

You can, and should, ignore the newsfeed, but as far as I can tell you can't hide or mute it, and it creates this sensation of light dread whenever I open the app.

Conclusion: Gambling is fun

Robinhood should not be your main brokerage account. That should be some place like Vanguard, where you can buy low-cost mutual funds without paying a commission, and set up tax-advantaged accounts like IRA's.

But if you have some money set aside for fun, Robinhood really does allow you to buy and sell US listed shares and ETF's without paying a commission, leaving you all the upside — and downside — risk from your stock market hunches.

Besides that, Robinhood allows you to buy and sell Vanguard ETF's like VTI (Total Stock Market ETF) and VXUS (Total International Stock ETF). As I like to say, although the personal finance and financial planning industries are obsessed with tax-advantaged accounts, there's no law against holding securities in a normal, taxable brokerage account. So if you'd like to save more money than you're able to in your IRA's and 401(k) accounts, you can buy and hold low-cost Vanguard ETF's in Robinhood without paying any commissions for the trades.

P.S. My top-secret gambling strategy

It seems crazy to write this much about a trading platform without revealing my proprietary gambling strategy. I have a simple rule: always bet the hard ways.

Wait, that's craps.

My proprietary gambling-on-the-stock-market strategy is to buy consistent dividend-paying stocks when they near their 52-week low. If the stock price recovers, I sell it. If it doesn't, I collect the dividend until it does. So I bought Royal Dutch Shell at an average of $38.73 and sold it at $44.86 (for my sins it's now at $45.27). Currently I'm holding BP, International Paper (IP), ConocoPhilips (COP), and the aforementioned VXUS.

I don't recommend this strategy to anybody, since it's based on nothing. But gambling, famously, is pretty fun.

On communities and responsibilities

I try not to get too worked up over other bloggers' behavior. If you want to throw up a generic Wordpress template with a creditcards.com affiliate link, you'll never hear a peep out of me.

Of course, I make an exception for the very small number of credit card affiliate bloggers who dominate the credit card affiliate space, because the nature of the internet tends to concentrate their popularity and wealth far beyond their contributions to the genre. So when a Thought Leader From Behind misbehaves, I'll sometimes throw out some well-deserved snark on Twitter.

Yesterday was interesting

I spent most of the day yesterday in the car, so it wasn't until I got home in the afternoon that I discovered that a minor affiliate blogger had written a post describing how, in the course of manufacturing spend, she was splitting up and concealing money order deposits in order to avoid federal transaction reporting requirements.

The internet being the internet, the comments section of that post exploded with criticism, mockery, and derision. Likewise apparently the entire Twitter travel hacking community chimed in on various sides of both the substantive question of whether what she was describing was the federal crime of structuring and with more emotionally-charged personal attacks.

Individual responsibility is a weird concept

Two sentiments stood out to me in the course of that wide-ranging conversation. First, in two tweets Matt from Saverocity tried to explain to the blogger that she needed to "stop arguing and start thinking if your post can do harm to your readers" and then reiterated "This isn't about you."

The second sentiment that stood out to me was that the blogger wasn't responsible for what her readers did, and that it's everyone's individual responsibility to do their own research to determine if what they're doing is legal or not. That's something I see frequently when larger affiliate bloggers are criticized for peddling bad advice: readers have only themselves to blame if they follow the advice of these jet-setting clowns.

There's an obvious tension between those two sentiments: either we are in a constant war of all against all and answer to no one, or we're responsible for the consequences of our actions — particularly when they cause harm to others.

If you know anything about me, you can guess I fall on the side of taking responsibility for the consequences of our actions.

People have been recording their thoughts, ideas, and experiences for a long time in private and professional journals, diaries, and logs. And a diarist who never publishes a word of her diary really can write anything they want and answer to no one!

But publishing those logs online, and especially doing so for commercial purposes, moves you into the public sphere and embeds you in a community of people. To then suggest that you're not accountable to anyone for anything you write, and placing the onus of judgment entirely on your readers, strikes me as a deeply cynical approach to life.

The blogger's aggressive reaction to criticism treated that criticism as a personal attack on her strong lady blogger identity. But Matt wasn't trying to convince her to get married, pregnant, and join the PTA; he was trying to convince her to take responsibility for correcting her error as quickly as possible, to avoid additional harm to innocent people who might take her advice at face value!

Conclusion

There are as many different approaches to travel hacking as there are travel hackers, and it's not surprising that different bloggers will take a variety of different approaches. In that context I think everyone has responsibilities: bloggers should exercise judgment in putting their readers' interests first, and readers should exercise judgment in both identifying and sharing the blogs they find helpful and steering others away from blogs that are mercenary, unhelpful, or, as in this case, downright dangerous.

Entitlement is only the start of a loyalty conversation

Sometimes travel hacking is about figuring out what you're entitled to and how to get it. It's not unusual to read blog posts about Starwood Preferred Guest elites searching for suites right up until the minute they check in, to make sure that the front desk staff give them the very best room they're entitled to.

Likewise, you're entitled to use Delta voluntary denied boarding vouchers for other passengers, as long as the person the voucher was issued to is one of the passengers on a single reservation. In practice, Delta makes that difficult, but not impossible.

Other times, what you're entitled to is just the starting point of a conversation.

Background: tour of Central Europe, 3 nights at a time

Before the June 1, 2015, Club Carlson devaluation, I booked a 9-night trip through Central Europe, with 3 nights at the Radisson Blu Beke Hotel, Budapest, 3 nights at the Park Inn Danube, Bratislava, and 2 nights at the Radisson Blu Style Hotel, Vienna.

The 3 nights at the Park Inn Danube cost 18,000 Gold Points total, for one 2-night reservation and one 1-night reservation.

The Park Inn Danube closed out from under me!

On Tuesday the manager of the Park Inn Danube e-mailed me to say:

"We hope this mail finds you well and we take this chance to wish you a fantastic start of New Year

We are happy to inform you [editor's note: I have no idea why he's "happy" to inform me of this] that our property, Park Inn Danube Bratislava, will go under full refurbishment from 1st of March 2016 until 1st of September 2016.

Due to this we are, unfortunately, not able to provide you with hotel accommodation as per your reservation...as the hotel operations will be completely ceased for the mentioned period.

We suggest you cancel your reservation trough Club Carlson in order to retrieve your Club Carlson points and we apologize for the short notice.

If you will still be interested to come to Bratislava, we strongly suggest booking the Radisson Blu Carlton that is located in the same area of Park Inn Danube."

How to turn 18,000 Gold Points into 84,000 Gold Points

When I found out my hotel had been closed, I immediately sized up the situation: I had 18,000 Gold Points locked up in my existing reservation. Bratislava doesn't have a ton of hotels in the old city, but as the general manager of the Park Inn Danube pointed out, it does have another Club Carlson property about a block away. Without the last-night-free benefit, three nights at the Radisson Blu Carlton Hotel would cost 84,000 Gold Points.

When I first called the Park Inn reservations line, the best suggestion the representative came up with was to cancel my existing reservations, and use the points for a cash and points reservation at the Radisson Blu. That would have left me out 15,000 Gold Points and $300.

And in fact, that's likely all I was entitled to.

So I took off my travel hacker hat and put on my civilian hat. If a civilian had a 3-night award stay planned a year in advance, and the hotel closed out from under them, they wouldn't agree to replace 3 free nights with a $300 paid stay! Instead, I explained the situation to the phone representative again, and told her I expected Club Carlson to reaccommodate me at the Radisson Blu Carlton Hotel.

She transferred me to their "Customer Care" department, and after a mere 30 minutes on hold, Club Carlson had deposited 66,000 additional Gold Points into my account and made me a 3-night reservation at the Radisson Blu:

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Conclusion

Whenever I get a points windfall like this, I take the opportunity to think through my existing reservations to see if there's any way to optimize them for price or comfort.

For example, I could cancel the new award reservation, rebook the hotel with cash (about $300), then use 70,000 of the Gold Points for a third night at the Radisson Blu Style Hotel, Vienna. But hotels in Vienna aren't that expensive! The Park Hyatt Vienna costs just $250 in Ultimate Rewards points or $269 for a Points + Cash redemption (plus a Diamond suite upgrade, naturally).

In fact what I'm likely to do is cancel my existing 2-night reservation at the Radisson Blu Style Hotel, Vienna, upgrade our stay to a premium award redemption at the Radisson Blu Carlton Hotel, and book all three nights in Vienna at the Park Hyatt.

On false economy

[editor's note: my worthless MacBook Pro has finally stopped working completely, so I'm using an aged clamshell laptop for my blogging this week. Grammar and punctuation will suffer, and pictures will be minimal/nonexistent.]

After dropping off my MacBook Pro at the Apple Store on Sunday, I started poking around the current batch of gadgets and saw the 2 terabyte Time Capsule, currently retailing for a mere $299 before taxes and portal cash back (if you signed up in time to double your Discover cash back, you can get 5% cash back now and another 5% cash back at the end of your doubled year).

My current backup solution is a $54.99, 500 gigabyte external USB hard drive, and it works fine, except for three problems:

1. I have to remember to plug it in;
2. I have to remember to plug it in;
3. and I have to remember to plug it in.

As long as I remember to plug it in, it backs up my hard drive. The longer I forget to plug it in, the more out of date the backup becomes, and the more data I potentially lose.

This got me thinking about the question of false economy, which happens to be very relevant to travel hacking, in several ways.

Thinking critically about false economy

It's easy — and dangerous — to fall into sloppy thinking about false economy, and the best defense is to carefully define our terms. For me, false economy doesn't mean "paying less for an inferior product." That's just economy — we expect things that cost less to be of lesser quality! For me, false economy means specifically saving money upfront in a way that ultimately ends up costing more money, by some order of magnitude, than the amount saved. Further, it helps if the larger, future costs are somehow foreseeable, but irrationally ignored for the sake of saving money upfront.

The best illustrations of my vision of false economy are when amateurs try to make do without the help of professionals. Regular economy is using masking tape to fix a plumbing problem. False economy is leaving town, the masking tape bursting, short-circuiting your refrigerator and causing a devastating fire (it happened to Edward Norton).

It's simply impossible to imagine saving enough money on plumbers in the short term to rationalize losing your home to fire in the longer term.

Think holistically to avoid false economy

There are two popular options college students use to save money when flying from South Central Wisconsin:

• a $46 roundtrip bus to General Mitchell International Airport in Milwaukee, which is served by Southwest Airlines.
• a $60 roundtrip bus to Chicago's Midway (served by Southwest) and O'Hare airports (served by Alaska), which occasionally have lower fares.

You can see the appeal of both options (especially if you're the parents paying to bring your kid home or, worse yet, send them to Cancun for spring break): if a Southwest ticket saves you $47, why not put your munchkin on the bus for an hour and make them fly out of Milwaukee? It's not like you're the one sitting on the bus.

When the travel hacker is the one traveling, the calculus suddenly changes dramatically:

• Flexpoint redemption bands means more expensive local flights may cost you the same number of Flexpoints as flights which require a bus ride;
• Discounted point redemptions mean even more expensive flights don't cost as much as they would when paying cash. For example, to justify paying $60 for a bus trip you'd have to save $75 in airfare if redeeming Ultimate Rewards points out of a Sapphire Preferred or Ink Plus Ultimate Rewards account (1.25 cents each), $85.80 when using "pay with points" in an American Express Business Platinum Membership Rewards account (1.43 cents each), or $96 when redeeming Citi ThankYou points from a ThankYou Prestige card on American Airlines (1.6 cents each).

As a mid-career white collar professional you might find these examples ridiculous: why would anyone take a bus instead of flying out of their local airport? The reason I raise them is that I want to take the idea of economy seriously, because spending tens or hundreds of dollars for "convenience" is really out of the question for a lot of people in this country.

And let me tell you: the busses to Milwaukee and Chicago are full, all day every day, with people doing their best to save a few dollars on airfare.

Avoiding false economy isn't an excuse to splurge

I think it was Matt from Saverocity who quipped on Twitter after reading yet another first class trip report that he couldn't justify paying $1,000 for an $80 bottle of champagne (well, he said "champers").

And that's the way I feel about a lot of so-called "aspirational" travel. It's not that there's anything wrong with getting a good night's sleep on a plane, or flying across the world to spend a week at the beach, it's that the marginal benefit of doing so over a far cheaper vacation (or many, many far cheaper vacations) isn't worth it to me personally.

And I think that's a real risk: once you recognize that false economy is a problem, there's a temptation to err in the opposite direction. If a $299 2-terabyte Apple Time Capsule is a good deal, well it's just $100 more for a 3-terabyte Time Capsule. That's just 33% more money for 50% more storage space (whether you need it or not)!

Yesterday's post on chasing Delta elite status illustrates the point nicely: booking a $350 first class ticket instead of a $250 economy class ticket with Flexpoints is a no-brainer: both tickets cost 20,000 Flexpoints, but one includes free checked bags, making elite status worthless.

But booking a $550 first class ticket instead of a $350 economy class ticket isn't a no-brainer: you're paying $100 (the cash value of 10,000 more Flexpoints) and saving just $50 in roundtrip checked bag fees. $50 in cash isn't a lot of money to pay for a roundtrip first class upgrade, but it's also not free.

You don't have to make rational decisions all the time

One of the advantages of paying such a small fraction of retail for our travel is that mistakes don't have catastrophic consequences. If you forget to book through a cash back portal, you might lose a 4% cash back payout on paid Hilton stays, but your reservation won't be canceled, you won't be arrested, you'll just pay slightly more than you could have if you'd remembered to click through.

But thinking through these questions in advance will help you develop the analytical tools you need to make better decisions, more often, than you would if you approached each decision from scratch each time you have to make a reservation.

I haven't bought a 2-terabyte Apple Time Capsule yet. But I'm thinking about it, and the reason I'm thinking about it is that a 2-terabyte Time Capsule doesn't have to save me very much time, stress, and money to be worth $299.

Miles and points as an (irrational!) commitment mechanism

One of the reasons I started blogging, all the way back in the long long ago, was that I was disillusioned and furious with bloggers who each week or month would run through a whole spectrum of airline or hotel co-branded credit cards, explaining why each in turn was the one readers absolutely had to have.

Of course it can't be the case that the Marriott Rewards Premier credit card (annual Category 1-5 night certificate!), IHG Rewards card (annual night certificate!), Citi Hilton HHonors Reserve (annual weekend night certificate!) are all the best co-branded hotel credit card.

So I build this website and started writing this blog with the goal of providing as much true information as possible, and the truth is the Hilton HHonors Surpass American Express is probably the best co-branded hotel credit card, if you're willing to manufacture spend furiously, with the possible exceptions of the Club Carlson Business Rewards Visa (if you can stand their rundown properties) and the Wyndham Rewards Visa, which earns a free night at any Wyndham Rewards property in the world every time you spend $7,500 with the card.

People really don't like paying for their travel

What I didn't understand when I started writing is that people really don't like to think about the money they spend on travel. For example, when I point out that a 30,000-point Hyatt Gold Passport redemption costs $300 per night, the comments section quickly fills up with people explaining that they paid much less than $300 for their Ultimate Rewards points, so it's not fair to say they're paying $300 for their Hyatt stay.

Ultimate Rewards points are worth 1 cent each when redeemed for cash. A 30,000-point transfer costs $300.

I don't mind paying for travel

I've loved to travel for as long as I can remember. Long before I learned about travel hacking, I was taking the Chinatown bus to Boston, DC, and New York City, spending Spring Break in Ireland, getting an English-language teaching certificate in Prague, and teaching English in Moscow.

And I just paid for it. I searched for the best prices, then I booked tickets, then I traveled.

If you don't like paying for travel, travel hacking is a convenient way to hide the cost

What I've come to realize is that one thing people like about travel hacking is that it gives them permission to travel.

If you earn $250 in cash on some bank account signup bonus, then you treat that $250 like cash, as you should.

But if you manufacture $10,000 in spend on a Hilton HHonors Surpass American Express and earn 60,000 HHonors points, you don't have to think about the $200 you've given up by not using a 2% cash back credit card. Instead, you're stuck with 60,000 HHonors points you have to use on Hilton hotel stays.

If you need a commitment mechanism, then go for it

In the economics literature, a commitment mechanism is a way to "commit" your future self to some action that you're not sure you'll do in the absence of the mechanism. A typical example is the 10% withdrawal penalty on IRA balances as a way to commit your future self to not touch your retirement savings until you reach the penalty-free retirement age.

When deciding between a cash back card and a travel rewards card, you may have legitimate concerns that your future self will use cash back to make mortgage payments, save for retirement, or buy a flat-screen TV, when you know that what your future self will really value is a trip to Italy.

One way to commit your future self to the Italy trip is to make it so unreasonably expensive to convert miles or points to cash that they're compelled to use them to travel instead.

You know yourself better than I do. If that's you, then leave the cash on the table and pay a little more to commit to the travel that's really going to enrich your life.

Conclusion

This post is my way of making peace with people who really do need to "lock up" a certain portion of their earnings in order to give themselves permission to travel.

On the other hand, that will never be the approach I take to travel, or to travel hacking, so I'll keep writing about the cheapest, easiest ways to earn as much value as possible, and I'll leave it up to my readers to decide how much needs to go into a lockbox rather than into a checking account!

My top 10 most popular (and one least popular) posts of 2015

In the spirit of shamelessly ripping off Frequent Miler, I thought it would be interesting to see what my most popular new posts in 2015 were. Since I don't use Google Analytics for, well, anything, it took me a little while to figure out how to assemble this list. In other words, accuracy not guaranteed, but I found it interesting and thought my readers might as well.

Without further ado, here are my 10 most popular posts written in 2015, ranked by total unique pageviews. I've placed an asterisk(*) next to the techniques that are still working or relevant today.

• #10: [updated] Automate Twitter American Express offers the (really) easy way, 2,257 unique pageviews
• *#9: Chase Sapphire Preferred is terrible, get Slate instead, 2,379 unique pageviews
• *#8: Taking a manufactured spend inventory, 2,697 unique pageviews
• #7: Should all manufactured spend go through American Express gift cards?, 3,041 unique pageviews
• *#6: Paying credit card bills with money orders, 3,541 unique pageviews
• #5: Use Amazon Allowance to meet monthly transaction requirements, 3,924 unique pageviews
• *#4: New Staples Visa gift cards got you down? Try these two weird old tricks, 4,452 unique pageviews
• #3: Pro tip: Did Uber turn off "Gifts" in your account? Ask them to turn it back on!, 4,927 unique pageviews
• *#2: Reminder: you can still sign up for Nationwide Visa Buxx cards, 5,157 unique pageviews.
• *#1: Liquidating deeply-discounted $200 Vanilla Visa gift cards, 5,185 unique pageviews.

Any lessons here?

I basically write whatever I feel like writing about, so it's pretty much luck of the draw when that coincides with what readers want to read about. With that in mind, are there any lessons to be learned from this list?

• Lots of people want to read actionable tips for upping their travel hacking game. My post on the Chase Sapphire Preferred is the only popular post that was more analytical than action-oriented. None of my posts on imputed redemption values or other methods of analyzing miles and points redemptions made the cut.
• No one wants to read about my award redemptions. My most popular "Anatomy of an Award Trip" post in 2015 got just 363 unique pageviews.
• The game is always changing. Of my top ten posts of 2015, only 6 are still actionable or relevant: it's become much more difficult to automate American Express offers over Twitter; American Express gift cards are no longer a lucrative method of manufacturing spend; Amazon Allowances now have a minimum of $5, making them less useful for meeting transaction requirements; and Uber no longer allows anyone to purchase gift credit.

What was my least popular post of 2015?

Just for fun, I thought I'd scroll down to find my blog post with the fewest unique pageviews. For whatever reason, that post was:

• #181: Do this now: register for Hyatt's Stay More Play More promotion, 102 unique pageviews.

In fact, 5 of the 10 least-viewed posts were "Do this now" posts about registering for various promotions.

Expect this to have absolutely no effect on the content of my blog in 2016. Old dogs, new tricks, etc.

Use Hipmunk to find positioning flights

There are a lot of websites you can use to search for paid flights. Kayak is one of the most popular, but Orbitz, Expedia and Priceline will all find you tickets as well. If you're booking paid flights with Ultimate Rewards points you'll need to use their internal search engine, and the same is true of US Bank Flexpoints.

All those sites work, and they all have roughly similar search features: you can search for specific dates or flexible dates, you can specify your cabin of service, and you can filter by airline and time of day.

What none of them let you do is filter by different times of day depending on the day of the flight. Let me explain.

Award availability often requires positioning flights before or after the award segments

Award availability is the aspect of travel hacking that we have the least control over. Whether or not an airline makes seats available on the dates we need them is entirely at the discretion of the airline. While much digital ink has been spilled over the best ways to find award seats, ultimately it's not something we can predict in a reliable way.

Further, when award availability does become available, it may not exactly suit our needs. There may be award seats from an alliance hub city, but not on flights from your home airport to the hub. If you're committed to booking the award seats, that means you'll need a positioning flight: either a paid flight or an award on a different carrier that gets you to the airport in time to take your award flight.

Of course, positioning flights can be necessary at the beginning or end of a trip.

Use Hipmunk to find positioning flights

When you search for flights with every other search engine I know of, you can filter by time of departure, but that filter applies to every day searched. For example, on ITA Matrix filtering by "early morning" departures returns early morning departures for every day within the search range:

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HIpmunk is the only flight search engine I know of that lets you filter by departure times across day boundaries. For example, I have an upcoming award flight booked on Air Berlin between Berlin and New York City. But I don't live in New York City, and there's no oneworld award space between New York City and my hometown, which means I need a positioning flight.

Since we don't want to go into the city (we'll be getting back from 17 days in Europe), I'd like to search for the cheapest flight that leaves either the evening we arrive in New York or the next morning. In other words, I'm fine staying overnight at the airport if it saves us some money, but I'm not willing to wait to fly out until the next evening.

Lo and behold, Hipmunk found me the perfect flight:

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We'll stay overnight at JFK, leave early the next morning, and be back home early that afternoon.

"Pop Finance" is a pretty good book

This is a review of "Pop Finance," by Brooke Harrington. You can find all my previous book reviews here. If you're interested in buying a copy, I hope you consider using my Amazon Associates referral link.

I first heard about "investment clubs" from my Italian immigrant barber back in New England. He and some of his business associates and cronies get together once a month and contribute a nominal sum to a common pot. They then vote on which stocks to buy with that month's contributions.

My barber seemed to realize that this was a strange way to invest in the stock market, but explained that the real point wasn't necessarily to pick winning stocks, but as a forced savings vehicle: if you wanted to hang out with your buddies, you needed to find $50 to save each month, which was enough incentive to get people to save money who otherwise wouldn't bother.

With that in mind, I was excited to stumble across "Pop Finance," an ethnography of investment clubs in the San Francisco Bay Area written by Brooke Harrington. The principle research behind the book was conducted over the course of 1998 — in other words, at the peak of the 1990's tech bubble — with followup research in 2004, in the midst of the Bush Administration stock market doldrums.

Mass participation in the stock market is something that requires explanation

Today, popular ownership of publicly-traded shares, either individually or through mutual funds, is so common that it seems part of the natural order of American economic life. So it's worth pointing out that this isn't the only way that it's possible to save money, whether for retirement, health care, or educational expenses.

To this day, it's perfectly legal to simply save half your salary from age 25 to age 65 in FDIC-insured vehicles like savings accounts and certificates of deposit that earn market interest rates on the money saved. That volume of savings would allow you to then continue spending the same amount of money (half your lifetime salary) from age 65 to age 105, with a little left over depending on where market interest rates happen to fall during your lifetime.

Of course, Social Security exists, so you don't need to replace your entire annual consumption through savings — Social Security will replace 18-90% of your income (depending on your lifetime earnings), so you only need to replace the remaining portion, meaning you can spend more than 50% of your income and still spend the same amount during your working life and your retired years.

A private pension replacing even more of your income would mean even less savings would be required to smooth out your consumption over your entire lifetime.

Harrington convincingly argues that mass participation in the stock market, in her case in the form of investment clubs, was the result of two factors that made the above logic fall apart in the 1990's:

• Corporate defined benefit pensions were replaced with defined contribution plans, often self-directed and invested in stocks and bonds;
• Between 1985 and 1995, real wages declined while corporate profits tripled. In other words, for the average American, saving half their salary in FDIC-insured savings vehicles would mean a decline in living standards in retirement, while purchasing "the market" would mean an increase in living standards in retirement, or even early retirement.

Finally, I'll add that obviously the overwhelming majority of Americans today are incapable of or unwilling to live on half their salary. There are many reasons for this: status anxiety, a feeling that they've "earned" the right to enjoy their money, and of course in the case of prosperous coastal cities, the accelerating cost of living.

Ultimately, that means either settling for a much lower standard of living in retirement, or investing in riskier assets with a higher potential rate of return than FDIC-insured savings vehicles.

Day trading is a very intuitive way to invest in the stock market

Once you've decided that the stock market is the only way to secure the lifestyle you envision for yourself in retirement, day trading is the obvious method of doing so: since different stocks move in different directions on a daily basis, by buying stocks before they go up, and selling them before they go down, you can earn more on a daily basis than in a whole year of FDIC-insured interest.

In fact, if your wins are big enough and your losses are small enough, you don't even need to be right a majority of the time! After all, one 10% gain offsets four 2% losses with 2% left over as your profit, not annually, but daily!

Investment clubs are day trading by committee

Investment clubs, like day traders, also purchase individual stocks for short term profits. The problem is that unlike an actual day trader, investment clubs can't react quickly to changes in the prices of their stocks. At the beginning of March a club may vote to buy Pfizer, the stock may peak in mid-March and be lower than where they bought it by the time they get together again in April. And at that point, they have to vote on whether they think it'll do it again!

One club Harrington profiles attempts to deal with this problem by putting stop-loss orders on all their stock holdings: if a stock declines by 20%, they sell the stock — then frequently buy it again at their next meeting, when the price has had time to recover!

This is not a good way to invest

I believe virtually all people should save for retirement in Vanguard target retirement date funds.

But even if you have a different risk tolerance than the ones reflected in Vanguard's target retirement date funds, you probably should implement that risk tolerance through low-cost indexed mutual funds.

But even if you believe that you're preternaturally gifted at predicting the short-term movement of stocks, you should simply act on your gift by buying and selling stocks, not waiting weeks at a time and then spending time convincing your fellow investment club members that you know which direction a stock will move before your next meeting.

But creative forced savings mechanisms are pretty cool!

That brings me back to my Italian barber. He is really convinced that many members of his investment club would save nothing if they weren't saving $50 a month in monthly club contributions.

And at the same time, over a working lifetime, $600 per year invested in the broad stock market really will return more than the same $600 invested in FDIC-insured savings vehicles.

So I'm all in favor of crazy schemes to force yourself to save! Here a few I came up with that make at least as much sense as investment clubs:

• Every time you withdraw money from an ATM, withdraw an extra $20 and set it aside for a monthly retirement savings contribution;
• Deposit your credit card cash back rewards into a designated retirement savings account;
• When you redeem your miles or points for an award trip, deposit the cash value of the trip into a designated retirement account — be your own mileage broker!

A final note on tax-advantaged accounts

It's no secret that I'm a strong advocate for simplifying the US income tax code. Not simplifying it and reducing rates, just simplifying it, full stop.

One reason for that is that the current configuration of tax advantaged savings vehicles (employer-based retirement and health savings accounts, traditional and Roth Individual Retirement Accounts, and the mortgage interest deduction) leads people to spend extraordinary amounts of time gaming the tax code instead of simply saving money.

In other words, once you've maximized your tax advantaged savings vehicles by contributing to a 401(k), IRA, and buying an unnecessarily expensive house, you feel like you've done all the savings necessary (perhaps adding a 529 College Savings Plan as icing on your tax-advantaged cake).

But that's ridiculous: it's perfectly legal to simply buy stocks and bonds. You can invest in a Vanguard target retirement date account in a taxable account, and it will generate the same long-term returns as the identical fund held in your tax-advantaged accounts. You just have to pay long term capital gains on the returns when you eventually sell (although you avoid the 10% early withdrawal penalty on the exact same fund if held in your IRA).