Travel hacking: making money or saving money?
/One question that travel hackers spend a lot of time thinking about is hether, at the end of the day, it's best to think of our hobby as making us money or instead as a way to save money. The question I prefer to ask is, how much of the travel I now do for free would I pay money for if I weren't the Free-quent Flyer ("saving" money on travel I would do anyway) and how much additional travel do I do just because I know I can do it for free ("making" money in the form of more and better vacations)?
If you go to see family in New York City for a week each year, you might expect to spend $400 on a plane ticket, plus $200 per night to stay at a 3-star hotel in Manhattan, for a total of $1,800. If instead you applied for the BarclayCard Arrival World Mastercard or the US Bank Flexperks Travel Rewards Visa, after earning the signup bonus you'd be able to pay for your $400 airline ticket using those cards' fixed-value rewards currencies. Instead of spending $1,400 for a hotel room, you could apply for the Club Carlson Premier Rewards Visa and after manufacturing $43,000 in spending (at a cost of $344, if you can manufacture spending at .78 cents per dollar), you'd have 300,000 Club Carlson points, enough for a 7-night stay at the Radisson Martinique on Broadway (since as a cardholder your last night is free). Now you're paying just $344 for a trip you normally spend $1,800 on, saving $1,456.
On the other hand, let's say you don't normally take a long annual vacation, but now that you've read my book and spent some time here on the website, you've decided you'd like to take a week-long vacation in New York. Using the same techniques as above, you can buy an $1,800 vacation for $344. In this case, you haven't saved any money; indeed you've spent $344 that you wouldn't have spent if you had you decided to stay at home that week instead! On the other hand, at a cost of $344, you've bought a vacation worth $1,800. In this case, it makes more sense to say that you've "made" $1,456 in value.
Of course, those are two extreme examples, and most real-life situations fall somewhere in between. For example, I take at least one trip to Prague in the Czech Republic each summer, and I can usually find a ticket in economy class on Delta for $1,200—$1,400. An economy class award ticket costs 60,000 Delta Skymiles, which I can manufacture at a cost of $400 using the American Express Delta Platinum (you only need to manufacture $50,000 in spending since you'll receive 10,000 bonus miles at the $25,000 and $50,000 spend levels, for a total of 70,000 Skymiles after $50,000 in spending). Now, that's obviously a great deal: a $1,200 plane ticket for $400, a savings of $800! However, for 40,000 more Skymiles, you can fly to Prague in business class instead of economy. You'll spend $240 more if you exclusively manufacture the spending at .78 cents per dollar, so you'll be saving less money versus a paid economy class ticket. On the other hand, you're flying in business class instead of economy, meaning a more spacious, more comfortable seat; better food and service; complimentary alcoholic beverages; and so on. This situation is more ambiguous than the two extreme examples above, and require a judgment call. Since I value the benefits of business class at more than $240, it's worth it for me to pay the additional Skymiles, while it may not be worth it for you, if you prefer to instead spend that money on some delicious Czech beer once you arrive!
