The Second Rule of Travel Hacking

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Is you DON’T talk about travel hacking.

Just kidding ūüėÄ

I actually wanted to write about my experiences with credit card companies while travel hacking.

One of the first things I noticed is the system is designed to get you addicted to the card. After spending my first purchase I got a miles bonus immediately credited to my account. After spending the minimum I got upgraded to a premium card. I can definitely understand why the rewards system would get a lot of people. It’s almost designed like a casino game where the lights flash and make loud noises when you win. The real world doesn’t have a lot of positive reinforcement and it’s rare to be rewarded for your actions as an adult.

The credit card system is based on getting people to overspend and get themselves into a bad financial situation. The credit card company is maximizing its profit when you all your money on a card and have to pay it back with 15-20% interest that’s capitalized every month.

The system is not in favor of the consumer.

I realized that I spent a lot more money than I usually would because I was working toward a goal. Instead of spending $1,000 over 3 months, I spent the limit in 1 month. ¬†I charged clothes and fancy lunches in Midtown because at least it was going toward my travel fund. It was unexpected how easy ¬†it was to waste the money on things I didn’t need. I’m still not sure what I spent the money on to be honest.

Another thing you might already know is that credit card companies are shady.

The card that I signed up for wouldn’t post my transactions instantly. It would take about a week for the budget to update so I was less aware of what I was actually spending. When I checked the account it would say spent- $500 or something and I would think it wasn’t that bad, but then I would notice that there was another $100 charge that hadn’t been processed yet.

It’s bizarre that when you spend money from your bank account the transaction posts almost instantly. Sure is might take a couple days to update fully, but the bank will take the funds out as soon as possible because they don’t benefit if you spend all your money and don’t need an account with them anymore. It’s a completely different set up when you’re working with a credit card.

On top of that it’s very difficult to remember how close to the goal you are. When you pay off part of the balance, it’s easy to forget that it counted toward the reward minimum you had to spend. If you charged and paid off $400 then you only have $600 left. You’re not working toward that neat $1,000 number anymore.

Last off, I’m so surprised how high my credit limit is compared to my salary. If you can get approved for 1 card you can easily get approved for 10. I’ve actually been getting lots of offers in the mail now so I must be on the master credit card mailing list now. If I got approved for $5,000 limit on 10 different cards that’s $50,000 I can spend whenever I want. Just so be clear that’s more than I make in a year. No wonder so many people get themselves into trouble with credit card debt.

I’m still not too concerned about overspending because I know it will get old for me really soon. ¬† Even when I was a kid I tended to save money in the bank. By the time I graduated high school I had a couple grand saved up that went toward my semester abroad trip. I’m glad to have the credit card experience because it’s forced me to think more about what I’m spending my funds on. Would I rather blow money on new shoes or save a little bit every month to spend on a trip in a few months? I know I prefer to travel over buying dumb stuff.

I was doing the math on how much it would cost to go on my top 4 travel destinations and I was surprised how little it would cost. I could easily spend the same amount on shoes over a year.

Here’s an example

Edinburgh

Flight from NYC = $800-$900 (AirLingus)

Hostel ($20/night)= $140

Food ($30-50/fay)= $210-350

Fun Stuff= $200-300

Souvenirs= $100

Total= $1500-1800

Taking out the flight if you travel hack= $600-900

That’s really not that much when you think about how much rent costs or a car payment. It makes my dream of traveling around the world a lot more possible.

Top 4 Travel Spots

Edinburgh= $1800

Paris/Camino de San Tiago= $2395

Machu Picchu= $ 1280

Vietnam/Cambodia= $2790

Total= $8,265

Taking out the flights if you travel hack= $3965

So to comfortably travel for 2 and 1/2 months would be about the same price as living in NYC for a month. That’s so much more possible than I thought! These estimates are actually high because I remember during my semester abroad food in Spain was way cheaper than in the US. You could get a huge meal with drinks for like 7 dollars. In NYC I can barely buy a hot dog for the same price. In Vietnam or Peru I’m sure these costs are even lower. It’s also a lot cheaper to use hostels if you don’t mind sharing a room with other people. Every time I stayed at one before it was always a really good experience. Hostels are full of nice young adventurous people that are excited to meet new people. Usually the hostel sponsors some sort of event at night too so if you’re traveling alone it’s an easy way to make new friends and have a group to go out with.

I’m so excited about this new goal!

I think I would only have to be at my job for a year before they would let me freelance or work from home. I don’t see why they wouldn’t let me. It’s the kind of company that they realize the work is very intense and it’s in their best interest to have as many freelancers as possible. If they have someone that was trained internally it’s a bonus for them.

More updates to follow over the next couple months! I already have enough saved up for 1 trip.  Only 3 more to go!

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The Number One Secret To Travel Hacking

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For a long time, I idolized travel hackers.

They seemed so courageous and adventurous. It was so inspiring the amount of time they spent in exploration of the world. I bought Chris Guillebeau’s Travel Ninja Guide and read it over the next week. The ideas were straightforward so of course I put it away and didn’t look at it again.

One day I finally worked up the nerve to sign up for my first credit card. Even though I agonized about it for months, the process was very simple.

The number 1 secret they never mention¬†about travel hacking is that it isn’t nearly as glamorous as taking pictures of yourself straddling the Great Wall of China. There’s a lot of waiting and planning. To sign up for a credit card takes about 10 minutes and it takes 2 weeks to receive it in the mail. Then it has to be activated (only 5 minutes), but afterward I can’t decide what to spend the money on.

While I was unemployed/underemployed I was living paycheck to paycheck. I had a list of wants and a list of needs. Wants were a new camera or cell phone and needs were contact lenses or groceries, in other words things that are necessary to human survival.

Now that I have a stable income I have no idea what do with all the money. Some of it needs to go to student loans or other expenses yet there’s still some leftover, which throws me off my calculations. When you’re used to stretching 10 dollars for a month or waiting until your phone gets turned off to pay the bill, it seems really strange to have so much flexibility with financial decisions.

Do I need a savings account?

What’s a 401K?

Is travel hacking worth the hassle?

My teenage self would have considered it very “lame” to worry about these things. Now it worries me because I’ve realized how little I know about personal finance or economics.¬†I don’t think I’ve ever heard my parents discuss how to balance an online bank account.

No one uses check books anymore.

Let’s be real.

Maybe the second secret of travel hacking is that I’m actually having a good time learning about personal finance. It’s forcing me to make conscious decisions about how to spend and save money. Instead of dreaming about all the places I’ll visit “one day” I’m working each day to put a bit more money away.

And that’s the exciting part.

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Travel Hacking 101: Choose Your Alliance

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For a while, I’ve wanted to get into travel hacking. It never seemed like a good time or I didn’t have the money. At a certain point, I realized these were all terrible excuses and the only thing preventing me from starting was that I was afraid to get a credit card. After all the horror stories about people spending too much and declaring bankruptcy, I was terrified I would ruin my life. I realized that I don’t have a spending problem and then decided to go for it.

For those people interested in travel hacking that have no idea where to start.

Here it is!

Step 1: Choose Your Alliance

There are 3 main groups of airline reward programs.

1. Sky Team

2. Star Alliance

3. One World

The first step in travel hacking is choosing your alliance because this is Spartaaa.

No, not really.

It is important to choose 1 alliance so that all the points you earn will be counted toward the same program and will be easier to redeem. If you earn 10,000 for Sky Team, 10,000 ¬†Star Alliance and 10,000 for One World, you should have enough points to go anywhere in the world. 30,000 should be more than enough for a one way ticket wherever you want to travel, however because they’re across different programs then you¬†won’t be able to redeem them together. It’s like having tickets from different arcades.

Racking up points toward the same alliance helps you keep better track of them.

There are different airlines grouped together so it mostly depends on where you want to travel or if you prefer any airlines. I chose One World since I’m a fan of British Airlines, Iberia, and American Airlines. Between those three¬†I know I can travel pretty much anywhere in the world so the rest are just a bonus. I’ve also heard great things about Cathay Pacific and would like to travel to Asia in the next year.

Before you even get to step 1, there’s a pre-1 or step 0 in which you mentally need to prepare yourself. If you’ve never gotten a credit card before or have heard horror stories like I did then you need to get in the right mindset to accomplish your goals. ¬†My money habits built up over the years have been if I don’t have the money then I’m not going to spend it. I don’t really have a shopaholic problem so that wasn’t a concern. As long as I only use 1 credit card at a time and meticulously track it then there won’t be any problems.

The first question I would ask new travel hackers is “Are you the kind of person that thinks before spending? Or doesn’t worry until there’s a problem?”

The kind of person that will be good at hacking will remember to cancel things on time or how to balance more than one project without getting overwhelmed. If you hate complexity, deadlines, or can’t remember to pay bills on time, then it might not be for you. The odds are against the consumer with credit cards. They will always make more money the longer you are in debt to them.

If you’re still not sure if this is for you keep reading on to brush up on the basics.

After signing up for an alliance, we get into which credit cards you should use. Personally I like the ones that are upfront about potential for bonuses and don’t have an outrageous minimum you have to spend. The first one I signed up for was the American Advantage Citi Card because I was 100% sure it would transfer to American Airlines and the minimum was $1,000 in 3 months for 30,000 points. I knew for sure I would spend that much money in the next couple months so I wouldn’t overextend myself. I read the agreement and they don’t charge interest for the first month. As long as I’m paying off the balance every month then there shouldn’t be any issues.

I’ve been putting off big ticket items like a new smart phone and camera until I could have it count toward some mileage. The process has been interesting to me since it’s so detail oriented and unfamiliar.

My secret confession is… I love bargain shopping.

Ever since I was a teenager I was at Goodwill or Salvation Army looking for new decorations or weird jackets. Travel hacking is kind of like bigger stakes bargain shopping.

How many different reward systems can I combine?

If I’m waiting until sales, buying online, and paying with a credit card for mileage points that’s the most leverage possible for my money. It’s all a process and I’m sure there’s a lot more to learn, but I’m excited for the process and look forward to writing more about it.

More to come soon!

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