March 9, 2017

Travel Hacking and How its Helping Our Family Save Towards Financial Independence

What’s Travel Hacking?

I’m on a mission. A mission to achieve financial independence by saving one penny at a time and avoiding debt at all cost. Travel hacking is one of the strategies that I used to inch closer and closer to reaching financial independence and an earlier retirement.

Financial independence is the state of being completely free of the time demands of others. I can CHOOSE whether or not I want to work for my current employer or any employer. I can CHOOSE whether or not I have to answer to someone else requiring a demand on my precious time.

But to reach this type of lifestyle you must have enough money in savings and investments to do so. J.L. Collins, the author of a book called “The Simple Path to Wealth”, calls this kind of money “F-You” money.

But you can’t attain this type of money unless you have a mindset change when it comes to your relationship with money.

Anyway, let’s get into what “Travel Hacking” actually is. Don’t worry; it isn’t anything shady or illegal. It’s one way to save massive amounts of money on your travel expenses when you take your yearly family vacation or any kind of travel.

Imagine flying a family of three (the number of people in my family) from Missouri to North Carolina for free on coach. Imagine a 3 night stay at a 3 star hotel in Myrtle Beach for absolutely nothing!

So, before I get into the details of how we used travel hacking to reduce the cost of our vacation travel this year, we should first define the term “travel hacking”. If you visit a website called Travel Miles 101, they define travel hacking as follows:  “opening specific credit cards that offer significant ‘signup bonuses’ of travel rewards points/miles and then turning those miles into nearly free travel”.

Basically, sign up for a credit card or cards that have a very generous signup bonus. Like, 50,000 reward points if you get approved for a Chase Sapphire card and spend $3000 in the first 3 months. When you earn the points, you then use those bonus points to book your hotel stay for example.

Visit Travel Miles 101 and sign up to take their free course on how to use credits cards to earn nearly free travel.

 I’ll jump into the nitty-gritty and explain how we used the strategies we learned from Travel Miles 101 to help reduce the cost of our upcoming vacation.

The Credit Cards

So, now that you know what travel hacking is, you’ll be looking  to open up specific credit cards that have generous signing bonuses.  For instance, the first card that we signed up for was the Chase Sapphire card, which offers 50,000 reward points for spending $3000 in the first 3 months of having the card.

When using this credit card strategy you must be disciplined with your credit card behaviour. It is assumed that you will be paying off your balances in full every month. Racking up debt in an attempt to meet the required spending amount defeats the whole purpose of saving money on travel.

$3000 over three months works out to about $1000 per month. To meet the spending requirement, we started using the credit card to purchase all of our normal monthly expenses such as groceries, gas, eating out at restaurants and any expense that would normally already be in our budget. You could even use the card to pay some of your bills (assuming that you’re paying the balance in full every month).

Many times the annual fee on these cards may be waived for the first year of owning the card. You want to make sure you cancel the card before that annual fee comes due.

If you want a full in debt understanding of this credit card strategy, you can sign-up for the Travel Miles 101 course. Over the course of 15 days, you’ll learn the “ins and outs” of travel hacking using certain types of credit cards.

So after we met the spending requirement for the Chase card, we then opened up a second card. A Chase Southwest business card which had a 60,000 point signing bonus when you spent $4000 within the first 3 months.  We pretty much use Southwest airlines exclusively for domestic travel so I set up my credit card account to automatically transfer the points we earned to my Southwest frequent travel account every month.

So with just these two cards, we piled up enough points to purchase 3 tickets for nearly nothing and enough to pay absolutely nothing on our hotel.  

Check out the table below for all of the points and the spending requirements.

Time to Redeem Points

So 5 months later, after meeting the spending requirements for 2 credit cards, I was ready to book travel.

Airfare Redemptions

We had 60,000+ points in Southwest airline travel rewards plus another 20,000 or so points from previous travel on Southwest. Three travelers, round trip, straight connection from St. Louis, MO to Raleigh, NC.  

We purchased the lower fare “Wanna Get Away” tickets.  We had enough points to redeem for the full price of the tickets. The only fee we paid was the “September 11th Security Fee”.  See the breakdown below in the table.

Where Do We Lay Our Heads? Hotel Redemptions

As far as our hotel stay, we reserved rooms at a Hilton brand property that’s not very far from the beach and near our favorite seafood restaurants. I would use the 50,ooo points we earned from the Chase Sapphire card for our hotel stay. Three heads for 3 nights.  We got a room with one king size bed and a pull out sofa bed.  Room also includes free internet, microwave and mini fridge.

I reserved the room for the Hilton through the Chase travel booking website instead of my Hilton Honors because reserving through Chase required less points. Go figure… Check out the breakdown below.

Final Thoughts

This is going to be the first time that we travel and pay next to nothing for airfare and lodging expenses. We will still have to pay for a rental car and airport parking, but I’m going to get those at a reduced rate.

My AAA membership will save us about $100 on Hertz car rental ($143 instead of $234) and I’ll also use our AAA membership to save at least 10% off of the $80 for three days of airport parking. No, we don’t have nearby relatives to drive us to the airport.

This trip could’ve been at least $1400 just for the airfare and hotel alone. Instead, we get to pocket that money and use towards paying off our student loan debt.

So, if you’re responsible with credit cards and don’t mind going through a few minor hoops to earn travel reward points, this strategy is well worth the effort.

Happy travels!