How do Miles and Points influence your financial planning strategy?

Financial Planning

Yesterday, I read Noah, who write’s Money Metagame’s 2015 Mid-Year Financial Independence Report Card, and it got me thinking about my own financial planning strategy, and what influences that strategy. In a nut shell, this is the strategy that my wife and I tend to live by, including some of the folks that have influenced particular parts of the strategy.


This is the simplest component, because, lets be honest, there really is no “good” debt. Some could make the argument that purchasing a home (aka mortgage debt) can be “good” debt, because a portion of it can be deducted come tax time, but really, the answer is: limit debt. But lets dig a bit deeper:

  • Home Ownership: Despite Ramit Sethi’s Myths of Real Estate Investment, who writes I Will Teach You To Be Rich (who I’ve read since college), my wife and I made an active decision to buy a house. Not because it was the next logical step in our progression, but rather because we were quite tired of living in apartments. We didn’t necessarily see renting as throwing our money away, but saw the value in buying a house. A contributing factor was certainly, that when we bought, the market was nearly at its lowest following the 2007 downturn. Most importantly though, we ended up buying a house roughly 66% of the value that we were pre-approved for. If there’s one lesson here: Don’t buy as much house as you can afford, buy as much–or as little–house as you need.
  • Student Loans:If there’s one thing that frustrates the heck out of me, it is the student loans that we have to pay on a monthly basis. I actually have not one, but two sheets taped to the wall over my monitors with how much we owe. My strategy there has been a mixture of paying them off when the balance is low enough to just knock out, and in other areas, I’ve consolidated, like I did when I applied for the Chase Slate. Beware though, Interest Rate Arbitrage, which is what I did by doing a balance transfer from our school loan to the Chase Slate (0% for 12-15 months and 0% transaction fee), is risky if you don’t have a plan. That said, Interest Rate Arbitrage can give you that lift out of debt that much sooner–just have a plan!
  • Credit Cards: Generally speaking, we avoid credit card debt (except previous statement). Furthermore, we leverage the float for Reselling.


When I got my first cellphone, way back when StarTACs were cool, I wanted to avoid a monthly payment at all costs. Luckily, cooler heads prevailed, but, the fact of the matter is, I don’t particularly like them, still to this day. Heck, it took my wife until 2 months ago to convince me that we’d be better off with Netflix than without. There are a couple of rules I generally have when it comes to expenses:

  • Going for Big Wins: Ramit Sethi talks about “Big Wins” a lot, in fact, I’ve used that phrase a bunch myself, and it makes sense. An example from Ramit’s Scrooge Strategy, is the concept of calling your cable, phone, or insurance provider and try getting them to cut your bill. Why is this a “Big Win” and skipping a Latte isn’t? Because generally you can yield more savings just from calling the retention line (remember, we do this for credit cards too!). Remember, customer acquisition is more costly for these companies than customer retention. I call my cable provider on average every 6 months, and realize 15-25% savings each time.
  • The $10 Rule: Chris Guillebeau spoke at the first Frequent Traveler University event I went to, way back in 2013. He shared lessons learned from traveling to every country in the world. The single most important lesson I learned from his talk was the $10 Rule. It is a way to limit stress when traveling, and sometimes when not. Every so often, I find myself skipping Walmart as I manufacture spending, and going to an easier place to buy money orders, even if they might cost me a penny more per point.
  • Put Everything on a Credit Card: This is a no brainer here, but it’s worth repeating. If there is no additional fee, paying with a credit card should be a no brainer, as long as you don’t carry a balance month to month. It’s easier to track your expenses, you can earn points for travel or just cashback, and you don’t have to carry change around with you. You could go even bigger and automate your personal finances – I’m too much of a control freak to do that completely though.


I intentionally left income for last, because the first two really shouldn’t take much of your focus. You should block and tackle your debit, reduce expenses where you can get Big Wins, and then focus on increasing your income, thereby reducing the previous two to a lesser percentage.

  • Savings and Investments: Part of income is really how you use your income. Obviously you are using it to pay down debt, and pay your expenses, but there should be a good percentage that you’re putting to savings, and that you’re investing. Two lessons here: Max out your Employer Match for your 401(k), and max out your Roth IRA.
  • Leveraging Miles/Points/Cashback: The reason I think any of us are in the miles and point game is because we see outsized return from our investment. For me, I’ve used it to Grab the Brass Ring, more times than I could count. I know of folks who leverage miles/points/cashback so heavily that they not only travel in style but also supplement their income. The challenge of course, is that you can’t overdo things, as Vinh from Miles per Day highlights: Manufacturing Spending is a Get Rich Slow Game. Perhaps even more so from a churning perspective with Chase’s latest changes–Gosh it’s hard to get a new card from them.
  • Get a Side Gig: Everyone has a talent. Whether its tutoring piano, doing graphic design, reselling, or consulting. Ramit talks about 3 ways you can earn more money, leveraging a nice looking infographic, although in all fairness, I think the thing that influenced me more was Tim Ferriss’ Four Hour Workweek, and believe me, I failed a number of times before finding the answer in Fulfillment by Amazon.

Wrapping Up

While I realize this may be a bit off topic from my normal stuff on Fulfillment by Amazon and Miles and Points, I think it’s important to put things into perspective. Especially as some are reeling from Delta’s devaluation of their Skypesos program (how much worse can it get, Delta SkyDrachmas?), I think its important to consider how Miles and Points fit into our macro-financial picture.

How do plan financially? Do you focus on the frugality approach or the increase income approach?

12 thoughts on “How do Miles and Points influence your financial planning strategy?

  1. Miles and points are definitely part of my overall financial package. For larger sums, I have made use of the Fidelity bonus for opening brokerage accounts (several times) and I have recently opened a BankDirect account for the AA miles. I keep a smaller amount “floating” between banks and credit card companies for various and nefarious miles and points earning opportunities. I like to assign values to miles and points I collect, and I will channel money into opportunities if I think they are a good value.

    • I like your comment about assigning values. I’m curious, how do you generally assign values? Based on the kind’ve redemptions you do (e.g. if you fly a particular class of service, you get x value per mile), or based on the flexibility/usability of them?

      • I assign values based on what I would be willing to pay for the product. If I am accruing airline miles, I base my valuation of what a normal coach ticket would be. For example, I flew to Greece in the spring on an first-class award ticket on US Airways for 50K points one way. The coach price was 30k. I would have bought a one-way ticket for $750. I value the points to buy the ticket at $750/30,000 or 2.5c each. I do not play the game of valuing the points based on the cash price of the first class ticket because I would not ever buy one. In my mind, I paid $500 to upgrade myself to first class, which I recognized for the splurge that it is. I usually fly coach with my rewards, but every once I reward myself for all my hard work accruing miles!

  2. Great post, I like reading beyond the churning and reselling to see some the bigger picture financial stuff. I very much agree with buying less house than you can afford and going for the big wins. Some people focus too much on the small $ items and ignore the small changes they could make to save $$$.

    If you don’t mind sharing, how much income are you making from the reselling side-gig? It definitely seems more profitable than the gift cards I swing, but I’m hesitant to get started. Feel free to send me an email if you don’t want to share publicly.

    • Thanks! Yeah, its the Big Wins that make a difference, not just because you can save (or generate) more money, but because you need them psychologically. Essentially they are that re-assurance that you’re on the right path, at least the way I see it. It’s like the first time you get an award flight in the cabin you desire, makes the MSing and CC churning worth it.

  3. I really liked this post. Frankly, our finances are a big haphazard. Thus far we’ve simply stuck to the “we have more money coming in than going out” kind of approach.
    We definitely max out the 401(k) match, but nothing more sophisticated than that. So, I really enjoy posts like this that get me thinking about being more purposeful about what we do with our money.
    It’s like Matt has said in a fashion… once you do the travel hacking to pretty much remove that from your budget, the natural progression is to start thinking about removing other things from your budget and whether you can apply some of the skills you’ve acquired in the travel hacking arena to other areas of your finances.

  4. Miles/points are a super coupon. I don’t include coupons in my financial plans per se. I do find them to be very useful and I track their value with assigned point values but I don’t add it to my NW (which I separately track).

    The biggest impact on my financial planning strategy is pre-points I would budget for “big trips”. Now I don’t. I still spend money on travel (eat out more, some activities don’t lend to points) but with points taking out at least airfare and lodging it no longer warrants a line item in my plans. My “budget” is more of a capital budget since its generally allocating my incentive comp to savings and spending goals and my regular check more or less covers the bills (while maxing the 401(k) and HSA).

    The other major impact on me is behavioral. I am very future oriented and plan and replan a lot of things. Keeping up with the points game is useful in that I pay a lot of attention to it which might up being allocated to other hobbies that cost money versus generate future discounts.

    • @Sesq – I wouldn’t ever value my points as part of my networth… Gosh, if I did that and American did what Delta did, I’d be….well, I’m not going there!

      You make a great point – even with miles and points, travel isn’t free, but its probably more akin to the costs you might incur when at home.

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