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asthejoeflies

Helping you and your family save money on your vacations to Disney and beyond

Why I mostly ignore point valuations

This post has been a long time coming. It’s been in draft for awhile, but I’ve been procrastinating. The other day, however, I saw on Twitter someone had used a major bloggers point valuations in their divorce proceedings. (Actually, it took me another two weeks to finish) I have tons of thoughts on that, but the takeaway is that it reminded me I need to write about why I mostly ignore point valuations these days.

Telling me that Starpoints are worth 2.2 cents per point or Ultimate Rewards points are worth 2.0 cents per point means nothing to me. I used to put a lot of stock in those valuations, but they no longer have much relevance to the way I use my points and miles.

Don’t get me wrong, I will always try to extract the maximum value from my points. I’m just not going to assign monetary value to them (aside from one penny per point). I’ve found that point valuations act as a crutch, not a benefit, in my game. Here’s why.

Point valuations mostly feel like marketing tools these days

When you’re starting out, other people’s point valuations can be useful because you have no idea what your miles are worth. They give you a general feel for what kind of “value” you are getting from your redemptions.

But after doing this for 5+ years, I have my own feel for how much points are worth. And that means point valuations mostly feel like marketing tools to me now.

“Starpoints are worth 2 cents per point so a 30,000 point sign up bonus is worth at least $600”. While that may be true in a sense, it’s actually not worth $600. But statements like that tempt me to equate the sign up bonus with actual money.

But as my esteemed colleague always says, the least valuable point is the one you don’t redeem. And if you never redeem those 30,000 Starpoints, they aren’t worth $600, they’re worth $0. 

Even a veteran like me gets a bit starstruck when I see sign up bonus after sign up bonus – 100,000 point Sapphire Reserve is worth $1500! I have to consciously tell myself not to buy into the marketing hype and figure out the worth for myself.

Point valuations lead me to hoard

The tendency to give points monetary value can easily trick my mind into thinking of my points as cash. Starpoints 2 cents a piece? Then 20,000 Starpoints = $400! Even though rationally I know Starpoints are worth nothing until I redeem them, it causes me to put extra value on them.

That leads me to hoarding miles and points even when I know better. Starpoints are a great example – I tell myself they are so valuable that I never redeem them! They might as well be worth nothing. 

While point valuations aren’t the only thing that cause me to hoard, they can be a contributing factor. Remember, your points should be working for you, if you’re not using them, they aren’t. And if thinking of a certain mileage currency as X points per mile causes you to not use them, is that valuation helping the cause?

Point valuations lead me to neglect cash back

Do you know what credit card rewards are as valuable as cash? Cash! Don’t overlook the psychological element of credit card rewards. You may not explicitly think this, but if you can earn 2% cashback or 1 Starpoint per dollar (which is “worth” 2 cents back), isn’t it possible you ignore the cashback because of the aspirational nature of the Starpoints? I know it happens to me.

Moreover, for some reason, spending points can feel better than spending cash. Maybe it’s because you don’t see the money in your bank account go down when you spend points. But if you’re neglecting cash back, which I did for years, you are in danger of missing the forest for the trees. Your points won’t be able to pay your rent if you lose your job – but cash will. Don’t let the “value” in points distract you from that.

Point valuations almost always take into account aspirational awards

Another reason I find point valuations faulty for the average consumer? They almost always take into account aspirational awards. I just looked up AAdvantage miles on a popular website – 1.5 cents per point.

To me, you can’t come up with such a generous valuation unless you are assuming that some of the miles will be used for business class flights. Otherwise you’re saying a roundtrip flight anywhere in the US is worth $375. That could be a good deal in some instances but obviously is a terrible deal in many others.

Well, if you have a family, or aren’t generating a ton of miles and points – should your point valuations really be that high? Aren’t aspirational awards “inflating” the value of those points? If you’re not in this to book aspirational awards regularly, I’d recommend being very careful about putting too much stock into the big sites point valuations.

Point valuations are based on unclear math

My final reason for personally ignoring other people’s point valuations? Fuzzy math! I am not sure I have ever seen anyone describe how they actually came to their numbers. Mileage Plan miles are worth 1.8 cents per mile! Why? How did you come up with that?

Why are Starpoints worth 2.2 cents per point? Just once I’d love to see how people come up with that. Is there an algorithm or are they just doing it by feels? Just another reason not to trust other people’s point valuations.

A better way to value miles and points

I should point out there is one big site whose point valuations I can get behind. They’re not perfect, but Frequent Miler uses the concept or “reasonable redemption values“. If you must use someone’s point valuations (and I do from time to time), then Frequent Miler isn’t a bad place to go. His point valuations tend to be more conservative, so that helps avoid a lot of the problems above. Still some fuzzy math, but it is an imperfect solution that I find worth using. Also worth checking out, Frequent Miler’s super simplified approach (every mile is worth 1.4 cents).

So, smart guy, if you don’t use point valuations, what do you do?

Well, first of all, I’m not that smart of a guy. I’m just trying to save money on my car insurance travel. So this is basically what I try to do: earn miles and points for less than 1 cent per point, redeem for more than 1 cent per point.

For example, I can buy Ultimate Rewards points expensively at 0.9 cents per point. With my Sapphire Reserve I can use them to buy flights at 1.5 cents per point. Win.

That’s pretty much all I do. I used to try to track exactly how much I paid for every point and how much value I got for every point but that got two cumbersome. I know some people have the time for that, and all the more power to them! This is just works for me.

Final Thoughts

Point valuations have their place, especially for beginners. It gives you an idea of what your points are worth. I’m not saying ignore them completely, but take a thoughtful look at who you’re listening to. What really matters is that you are getting the maximum value out of your points and that you’re actually redeeming them. If you find point valuations are distracting you from that goal, throw em out! I haven’t really missed them, and you probably won’t either.

ForçaChape

2016 has really sucked. 

A lot of my thoughts today have been devoted to a soccer team that I didn’t even know existed yesterday. As I’m sure you’ve heard by now, Brazilian soccer club Chapecoense suffered a horrible plane crash that claimed the lives of almost the entire team. In total, 75 people perished right as the plane was about to begin its descent into Medellin, joining a list of other footballing tragedies.

Anyway, I recognize I had no emotional attachment to the team, but the tragedy still hit me hard. Part of that is due to the intersection of two of my major hobbies – traveling and watching sports. I’m sure people have been annoyed by my soccer tweets among many others, I hope you’ll indulge me as I process via writing. 

What probably is foreign to an American sports fan is just what this team has accomplished. Chapecoense was playing in the 4th division of Brazilian football in 2009. In soccer, many leagues have a promotion/relegation system: the top teams move up to a higher league while the bottom ones move down. What Chapecoense did to enter the top division by 2014 is the equivalent of a single A team working its way up to Major League Baseball.

They were flying to Medellin to play the first half of the Copa Sudamericana final – the second biggest competition in South America. Teams from countries all over South America compete against one another for this cup, hence a Brazilian squad vs. an Argentinian squad in the final. Chapecoense was to play for their first piece of hardware. The amount of work it took to get there from 2009 until now was huge – all to end in the cruelest of ways.

Chape’s opponents’ response to the tragedy has provided a ray of light, and I’ve watched the footballing world unite in honoring Chape today. 

In that spirit, my heart goes out to the families, fans, and community of the small city of Chapeco. Forca Chape, and as the below tweet says, “may this be the last image of our warriors.” Rest in peace.

Image from Omar Momani at goal.com

This may be only amusing to me…

When Matt took me on at Saverocity, he had one overriding message: write what you enjoy and write what you want. Normally I avoid writing about other blogs but I’ve been having too much fun so I thought I’d share.

People have lots of varying opinions about Ben, the founder of One Mile at a Time. It’s a blog I check the headlines for though I really don’t follow it much anymore. He seems like a nice enough guy but there is a fair amount of credit card schilling which has turned me off quite a bit. But it’d be disingenuous of me to truly flat out hate on his blog because his trip reports have helped me quite a bit in the past and still do.

Anyway, Ben hired a few writers to help supplement content, which I’m not sure has been a net add. Except to my amusement level.

Last Friday I was cleaning out my RSS reader when I found this gem of an article:

When an Airline Makes You Miss Their Own Check-in Time

One of Ben’s new writers, Daniel, essentially wrote about how he arrived at the airport an hour before his flight and found the lines to be so long that he was forced to cut the line. I think what really puts the article over the top is that he is acting like he HAD to cut the line to make his flight on time and everything was out of his control, when of course he should have just showed up earlier.

Anyway, as everyone knows, internet comments are very forgiving (not) and thus he got absolutely roasted. I found the comments pretty hilarious, though sometimes they are pretty mean; this is some kid who doesn’t know much better (he’s 19).

Fast forward to yesterday and Ben himself wrote a post:

And The “Hotel Check-in Line-Cutter of the Year Award goes to…”

Again, the comments are hilarious, including a lot of “Daniel?” comments.

At least at Saverocity if we write conflicting articles we are on different sites (like I am never posting on Matt’s site), but I find it funny that Ben can write an article about how line-cutters suck when someone wrote on his site two weeks ago about how he was justified in cutting the line. Clean it up, OMAAT!

And if you have a dumb sense of humor like me, leave the articles up and read the comments from time to time as you go about your day to keep yourself amused.

The 5/24 guideline is dumb but easy to enforce

I’ve been thinking lots of thoughts about Chase’s 5/24 guideline so I figured I might as well write them down. If you are unaware, it is Chase’s arbitrary automatic declines of credit card applications for anyone who has opened more than 5 cards in the 24 months. Notable exceptions are Chase Private Clients, in-branch pre-approvals, and for some reason certain Chase cards like the Ritz Carlton card are unaffected by the guideline.

I’ve finally given up on reconsideration for the Chase Sapphire Reserve, my wife was approved and I’m tired of talking to CSRs <= get it? I did speak to a Customer Resolutions Specialist (CRS!), who does seem to have more power than the regular reconsideration people. Still, she didn’t have enough power to overturn my denial. As she and the other two reps I spoke to said, “there is no reconsideration if you are denied for the reason of too many accounts.” Okay then.

Anyway, I am a little bit salty but I was happy to risk the credit pull for the potential reward. Maybe I will take the $250,000 out from under my mattress and try again! Regardless, here are my thoughts about the 5/24 guideline in general. Or, specifically, why it makes no sense to me.

What is the purpose of this guideline?

Here is the most lucid response I received in all of my phone calls: “Since you opened up so many cards in the last two years, we can’t really evaluate what your spending is going to be like on all those cards.” That sounds to me like Chase is sort of trying to say they don’t want to increase their risk, which makes sense: I’ve applied for 15 credit cards in the last two years (the rep said 16 but I didn’t feel like arguing). Maybe I’m suddenly not going to be able to pay those cards off and Chase will be left holding the bag. That’s a pretty logical fear. Except, if that’s the case:

Why not apply the guideline to all cards?

If Chase created this guideline to mitigate risk, then why doesn’t it apply to all cards? See a list of the many cards exempt on Doctor of Credit’s post (along with some hypotheses about why those cards are exempt). Chase should apply this to all their cards if they are so concerned about their risk (I’m not requesting that they do that, I’m just following that idea’s logical conclusion). Moreover:

If it’s about risk management, at least a few people should be approved via moving around credit

I get that lots of applications looks risky, but if this move is about risk management, then they wouldn’t be saying “there is no reconsideration.” She didn’t say there was no reconsidering me, she said it as a blanket statement (and it was pretty much phrased the same way by the other two reps).

It kind of makes no logical sense that even the customer resolution specialists (one level up from the regular guys) have absolutely no wiggle room. To be fair, the rep sounded a little annoyed by the blanket edict from Chase and said they have been forwarding all the complaints along. Or maybe she was just being nice to me.

The guideline is super easy to enforce

I suspect one of the reasons Chase implemented this is because it’s ridiculously easy to enforce. It only requires the ability to count! Writing a script to count up applications is simple enough (for the automatic denial) and then telling CSRs to not reconsider under any circumstances is also very simple. I doubt that it is actually impossible to approve on the backend, I think CSRs are just being told not to do it. That’s just a guess though.

Obviously Chase is trying to cut down on churners, but the guideline is still silly

As I stated above, though I am salty, I have no problem with Chase turning me down. 15 cards in 24 months is a lot! And if they are trying to weed out people like myself because they deem me unprofitable, it makes sense.

Still, I think 5/24 is pretty harsh. 8/24 might make a little more sense to me – that’d still get rid of people like me. I think especially with the CSR Chase could probably rake in a bunch of people to pay the $450 annually, even people who play this game.

My hypothesis: the 5/24 guideline is Chase’s long con to trick everyone into becoming Chase Private Clients

I started thinking that as a joke, but actually, there could be a grain of truth to that. I mean, think about it:

  1. Make up arbitrary gate
  2. Let high value clients through said gate
  3. Trickle out the data points that high value clients get through the gate
  4. High value clients start considering taking their assets to Chase to get through the gate
  5. PROFIT!

OK, so maybe there is a 5% chance that this is why the guideline came about. But you never know!

Final Thoughts

The one thing I do know is that Chase believes that the 5/24 guideline will increase their bottom line. I do not understand banks or economics enough to know if this is indeed the case, but I am sure they have smart people telling them so. “That’s why I rob banks for a living” is what Free-quent Flyer would say at this point, and I don’t have anything half as good, so I’ll end on that note!

Fourth Year Reflections

Four years ago I started this tiny little blog to, what else, help my friends and family! Four years later…I remain a tiny blog. I am not exaggerating or being humble. But other than that, tons of other things have changed! Here are my pithy thoughts and observations. (Note: the original intent of this post was to say my observations were pithy but then make DEEP MEANINGFUL AND INSIGHTFUL comments about the state of our game, but I mostly ended up reflecting. In case you don’t want to waste your time.)

Fatherhood changed me – and this blog

On August 26, 2012, my wife was four months pregnant. Now I have two beautiful kids who have changed my perspective in more ways than I can count. Looking back on the past four years, it’s been amazing to see our family grow and to share our love of travel with our kids. When my daughter keeps asking me for her own suitcase for her fourth birthday, I know I’ve at least done something right!

Obviously as the family has grown the blog has as well. I still want to help friends and family, but the blog also gives me a chance to reflect on my travel with my wife and kids. Also, I’m no longer writing about flying first class all the time (or even setting that as a goal). Now I hope to help inspire people with families to travel as well; to let them know that having kids isn’t the end of having fun out in the wide, wide world. I’d like to help other families understand that miles and points remain the means to making the end more achievable. That’s what I write about when I have the time. But of course, with two kids, I don’t have the time.

These guys.
These guys.

Saverocity has become my online miles and points blogging family

When Matt was looking to expand Saverocity, he welcomed me with open arms. He gave me a chance to write for a bigger audience and really helped me integrate with the miles and points community at large. Thanks, Matt, wish I could have repaid you with millions of clicks. What I’ve always appreciated about Matt is he’s always said “Write what you want to write about and forget about all the rest.” I love the freedom that gives and it’s one of the many reasons Matt is the best not-really-my-boss ever.

What I love about Saverocity is that we are a small group of writers who just write what we love. Sometimes that stuff is good, sometimes it’s funny, sometimes it’s utterly pointless. But we write because we want to write and aren’t beholden to anyone. I respect every writer at Saverocity and my only wish is that we all had time to write more.

Meeting actual human beings in person who play this game is a lot of fun – online is cool too!

I’m not the most social person by nature, I do most of my connecting online, but Dia’s FT4RL conferences have been a ton of fun. I talk to Trevor and Joe Cortez twice a month on the podcast but finally got to chance to meet the former in person (he’s tall), Dia’s real life persona is as big and beautiful as her online one, Kenny’s an amazing guy in so many ways, CTP has some of the best advice (and is incredibly helpful), and Nick is as hilarious as he is smart (probably a compliment?). I don’t know if we count Free-quent Flyer as Saverocity but he’s great too. 🙂 When Matt and I finally meet up we will be ready for world domination.

Beyond that, Saverocity readers and forum members are some of the best in the business and it’s been a pleasure to meet so many of you. It’s been great meeting other bloggers in this space as well, like Shawn and Rich my fellow fathers in arms. Many others I’m probably forgetting as it’s past midnight (oh, like Leslie!). Best of all, it’s great to dialogue with people whose spouses and friends think they are as crazy as mine does. I appreciate the chance to get advice, give advice, discuss, and joke with so many of you online. Except for those of you whose partners play the game with you: I’m just super jealous of all of you!

I don’t really think things have gotten tougher

At some point in the last four years I had to ask myself this question: what is the goal? If I look in the mirror, my goal is this: to save money on travel for myself and my family. Like, a lot of money. And if that’s the case, if I’m being honest, this game hasn’t gotten tougher. If my goal was to fly up front all the time, then yeah, things are tougher. I guess?

But I’m taking a last minute trip next weekend “for free” (note: not actually free) when the cash flights are going for $550. Banks have cracked down, opportunities are drying up, but you can still save a ton of money flying your family around the world for the amount of time you’d invest in a casual “hobby”. Champagne actually tastes the same (or better) when your feet are on solid ground and I can buy a bottle with the money I’ve saved if I’m really craving some.

Was this taken in the air or on land?
Was this taken in the air or on land?

Traveling is awesome

I know most people don’t really like or read trip reports, but for me, that’s what this entire game is about. Not the writing or reading trip reports per se, but everything that happens from the moment you step on that plane to the moment you step back inside your house. 100,000 point sign up bonuses are super exciting and fun, but what they enable us to do: that’s where the real magic is.

There is an amazing world out there to see and I just love getting out there to see it.

There's so much wonderful stuff to see out there
There’s so much wonderful stuff to see out there

Things have gotten a bit more mainstream, but I’m not losing sleep over it

Traveling is awesome. If other people want to travel more or for less and get into this game because of it, who am I to begrudge them? I was that guy six years ago.

Do all bloggers have their readers’ best interests in mind? Probably not. And that probably goes for the “good” bloggers, too! Look, none of us are perfect here and we all gotta make our choices. I’ll keep trying to make good ones and hope others are too. Not much I can do beyond that. Griping is fun every once in awhile and I love to do it, but in the end let’s just get to work and help each other out. Or something. World peace!

Thanks

Thanks to everyone who has read this blog over the years, especially you, mom! It is a pleasure to write and hopefully it has not been too much of a pain to read. I hope to still be writing another four years from now if blogs are still relevant then. Or perhaps especially so if they are no longer relevant! (I don’t think they’ll be actually).

Until then, enjoy your travels everyone and as always, if you have any questions, comments, or concerns hit me up on Twitter @asthejoeflies or e-mail me at asthejoeflies@gmail.com – happy trails!

Back to your regularly scheduled programming aka random sporadic posts.

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