When we first started discussing Financial Independence several years ago one of the biggest concerns that was expressed was the idea that we were going to have to sacrifice doing anything enjoyable for a long time in order to save as much as possible as quickly as possible. This was problematic because neither of us wanted to give up everything just for the potential that we might be able to do a lot more things in the future. Luckily we quickly realized (thanks to a few books and blogs) that this was not an approach we had to follow. Instead we had control over the priorities in our life and could reorganize our finances to spend on the things that we loved and valued while cutting back on everything else that did not meet this criteria. Once we started to think this way it changed our outlook on the whole process.
One of the biggest priorities in our life, outside of family that I have discussed in prior posts, is our love to travel. We decided early on that both of us wanted to travel the world to see and do things that might be harder when we get older. We also want to do this with our kids and take them with us so that we get to experience all of this as a family. We have had discussions that if we had to choose between traveling now or later in life, we would rather do all of our traveling now, rather than when we are older, although hopefully we can do both. We benefit from having significant flexibility in our careers that allows us to travel while we continue to work which is a huge benefit and privilege. When I say we like to travel, I am not simply stating this as an idea, but something we put into practice. So far in 2019 we have spent 91 nights away from home (all out of state) traveling, and this does not include my personal travel (FinCon and CentsPositive), or one solo work trip. By the end of the year we will have traveled well over 100 days and we expect this will continue for the next several years. During this year we have traveled to England, Spain, France, Portugal, Mexico, Aruba, the Azores, as well as several states including multiple trips to California and Florida. Since I plan to start posting highlights of some of our trips on this blog (including the financial aspects) I thought it would be a good idea to talk about how we are able to travel so much and not completely derail our plans for financial independence…
Spending on Travel
Before I discuss how we maximize our travel while minimizing costs (travel hacking) I want to be upfront that we also spend a significant amount of money on travel. Typically our travel spending is about 10% – 12% of our yearly budget. This year we are on track to spend approximately $13,000 on travel which is a bit higher than usual, but our income is also higher this year! When I account for travel spending in our budget, it includes all costs associated with a trip including food costs, even if some of that spending is getting groceries while in another country. I know some are going to read this and think about how that money could be used for other things or how much quicker we would reach financial independence if we just saved it, but that is missing the point completely. We all choose different paths, the only important thing is that each path is purposeful and you calculate your spending and savings based on your own personal goals and what you value. For us we have a well planned and calculated path that focuses on now as well as the future, and for us we have created the ideal balance. We recognize our privilege and good fortune to even be able to spend this much money on travel while still being able to save a significant amount of our income. In addition to the amount of money we are able to spend on travel, we are also fortunate to have careers (or self-employment) that allows us the opportunity to travel often and in fact actually helps us travel more (more on this below).
Below is a list of some of the things we do to maximize our travel, including how we travel for free at times, little cost at others, and stretch the amount of money we do spend to go as far as possible. I am personally not that big of a fan of the term “travel hacking”, but I will use it since that seems to be a standardized term in media these days. Some of the items on our list below can be replicated by some, others might be harder to replicate unless you are in a similar situation (job, financial, etc.).
- Credit Card Bonuses and Churning – I am hesitant to spend too much time on this topic, but honestly this is one of the ways we maximize free or reduced-cost travel using points and benefits. For example we both applied for and obtained two Chase Southwest cards each at the beginning of this year to earn companion passes for both of our kids. That means that when we fly Southwest (and we do a lot) they fly for free whenever we fly for the next two years.
- We actually do fairly well with credit cards because each of us can get the same card, plus a business card or two as well for each program. The reason I am hesitant to recommend this path to many, like many blogs and websites often do, is that you need to be fully in control of your finances before you ever consider this option. Never carry a balance, and never spend more than you would have if you didn’t have the card, and always consider if there is a large enough benefit after fees to make it worth it. At times this process can get quite complex and we use a shared spreadsheet to keep track of all the requirements and details for each card as well as our overall strategy. There is also a weird quirk in my job situation (more below) that allows us to meet minimum spends pretty easily without having to overspend or do something borderline shady such as manufactured spending.
- To give you an idea of our tactics, we currently have 24 open credit card accounts between the two of us, with 15 of them opened this year alone. A significant number of them will be closed within the next several months. I can’t emphasize enough how dangerous this “game” can be from a spending perspective so I recommend having a detailed plan in place before you even start if you plan to do this more than casually.
- Business Travel – I travel a lot for my job, mostly going to academic conferences, workshops, and symposiums. This provides a couple of unique benefits. First, I am able to accumulate points or miles in several programs that can then be used for personal travel at a later time (it really adds up). Second, I often will bring everyone along with me when I travel to conferences and typically will extend past the work part of the trip to have time for our family to enjoy whatever area the conference is taking place. While I do have to cover the costs of lodging and food when I extend past the conference dates, my flight back is still reimbursed either to the amount I would have spent if I came back on the last day of the conference, or I just simply pay the difference. Since most of the conferences I attend for work are in the U.S. one of our kids will fly for free with me and the other with my wife. That means we only need to pay for one ticket out of pocket to have everyone travel when I go to a work conference. I will also admit that the location of a conference has a large influence on whether I submit papers or presentation proposals to that specific conference.
- Work Expenses – Along with traveling for work, our university has a weird process for paying for travel and, really, any university related expenses. We are expected to pay for everything with our personal cards and then get reimbursed later after we file our receipts. At first this process really bothered me because sometimes I would register for a conference 6 months in advance and then have to wait until the conference was over to get reimbursed. Now I love it because it helps me build points much faster without actually spending “our” money. For longer conferences in pricier locations (especially hotels) this adds up quickly! Of course for this to work you need to be able to wait, sometimes months at a time, to get paid back.
- Brand Loyalty and Indifference – Using the same hotel group (Marriott) has helped us build a lot of points and benefits in their program over the years. This usually results in additional points, free upgrades, free breakfast, and sometimes more. If we are staying in a hotel we will usually stay with Marriott, although sometimes this is not always possible because of a specific conference. For airlines we usually will fly on Southwest domestically and honestly don’t care about what carrier we use for international flights, it depends on price or points.
- Cheapest Fare, we don’t care – When we fly we always go for the cheapest fare and never consider or purchase premium seats, early boarding, extra leg room, or first class. It doesn’t matter if we pay with points or with cash, we are focused on getting to the destination and can tolerate flying in the back of the plane if we need to, or having weird stops, layovers, or ground transportation. We would rather save the money from not buying upgrades or spending on convenience so that we are able to travel more. To be honest, we find that most of the time going for the cheaper fare doesn’t always equal an unpleasant travel experience. One recent example for me personally was flying to Chicago, I flew Southwest into Midway ($90 round trip), and then spent 1 hour and 30 minutes on the train for $3 each way. Honestly it is not as bad as you would think ,and saved me at least $200 on airfare that I would have paid flying into O’Hare. I have a lot more stories about doing things like this I will post later.
- Off-Peak Travel – We are huge fans of traveling to places at off-peak times when possible. We have of course benefited from both kids being in very flexible schools. This has become a little more challenging with the current elementary school our daughter attends, but so far we have been able to make it work. We also can be really flexible because both of us at times are easily able to work from a distance. A large majority of the courses I teach now are online, or meet in person very infrequently. This flexibility also extends to the days we are able to fly. By avoiding Mondays and other busy travel days the costs of airline tickets are usually a lot less.
- Taking advantage of currency exchange rates – We have a fairly high opinion of traveling on Norwegian Airlines to Europe. The rates are already pretty great for international travel, but if you are willing to book in their currency (krone) you can save sometimes 20% more. We do this with other travel as well (flights and hotels). Thank you Google Translate!
- Track Everything and constantly recheck – When it comes to planning large trips if you looked at our spreadsheets and documents where we start planning and tracking costs and itineraries, you will quickly understand why we can find some great deals, or do more with less. I am not going to lie, this takes some time (sometimes a lot of time), but we enjoy it and I think it helps add to the anticipation and excitement about a trip. I can’t even begin to count the number of times I have cancelled a reservation and then rebooked at a lower rate, especially for hotels. In fact as I am writing this I just rebooked a hotel reservation for next week for $211 less than the fourth time I rebooked it a few weeks ago.
These are the main ways we are “travel hacking” right now, but we do have some other situation specific things we do that warrant their own post in the future.
The point is that for us travel is important, and I don’t mean that in the generic way that others sometimes talk about travel. We make it a priority now because we want to explore the world and immerse ourselves and our children in other cultures. We “travel hack” at what I consider an expert level, but we also spend a lot of money on travel as well. I will say that the amount we spend out of pocket on travel each year is almost exactly the amount of extra money I get from teaching off-contract courses during the summer, and this is very intentional. I take on the additional workload for the specific purpose of funding travel for the year, and it is what we use to set the travel category in our budget. This is of course a perfect example of mental accounting (fungible be damned), but if we were not using this money for travel, it is doubtful I would trade my time in the summer and take on these extra courses.
How do you find ways to balance your goals and spending on the things that you value? If traveling is something you love as well, do you do anything similar or different?