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asthejoeflies

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

Are you focusing on your goals?

“Think on the end before you start.” – Fortune Cookie

In my presentation at FT4RL, a good portion of my talk was dedicated to hammering home the point that it is important to have clear goals in this game and to be focusing your time on meeting those goals – especially if you have limited time.

Goals look different at different stages of life of course: realistic goals change after you get a dog, or a spouse, or start taking care of a kid(s). That’s why I find it important to review and revise our family’s travel goals from time to time.

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Shawn from milestomemories related a sad (to me) fact at the conference: he’ll get way more hits on a post about saving literally a dollar or two than any of his trip reports (or awesome videos). Now I get it, people don’t really enjoy reading trip reports about the same places over and over again, but sometimes I think it’s easy to lose sight of the fact that we’re in this game to travel, and trip reports can inspire us to do so even if travel hacking is 99% just about bragging rights.

(OK, maybe not everyone is in the game to travel, some people are just making money hand over fist. But I’d like to believe a lot of people are doing this in order to get to places beyond Walmart).

Let me offer a few suggestions about how to ensure you are meeting your goals. None are perfect, nor do I practice them all, but I think the important thing is to be thinking about whether the miles and points you are earning are purposeful enough for your needs or not. Remember, the value of an unredeemed point is 0 cents.

Determine your travel hacking goals

Everything starts here. As I said in my presentation, despite what Matt would have you believe, traveling for freee (™ by Saverocity) is mostly a myth. If you’re single and have lots of free time, then you probably can fly around the world in first class every month. And that’s awesome and I’m genuinely envious.

But there are lots of different motivations for travel hacking, subsidizing the cost of travel, moving up one cabin, etc. Make sure you determine your goals before going about earning miles. If you are unclear about your goals you are going to end up earning miles that you don’t know what to do with.

It’s also important to familiarize yourself with the currencies you will be earning – where can your miles take you? How much will it cost? What does availability look like? If you’re new to this, don’t assume you’re just going to earn miles and freee™ travel will suddenly happen, it usually takes work and experience (and a degree of failure) to truly start optimizing your travel hacking.

Create a demand schedule to determine your travel goals

Way back in 2013 Milenomics wrote about demand schedules and using them to target earnings. Basically, it is a working planner for all of your flights divided into one way segments. He has a working document that you can copy and edit as you see fit, but essentially it includes dates, classes of service, and costs (in miles or points). I have a simplified version that takes into account lodging as well; we used it as a worksheet at the conference so you could fill it out in 5-10 minutes if you want something simpler.

Milenomics demand schedule (image from Milenomics)
Milenomics demand schedule (image from Milenomics)

As my time has become squeezed more and more and my margins have become tighter and tighter, the demand schedule has become more and more important to me. I need to know where I want to go in order to earn in the right programs; gone are the days where I can blindly chase the sign up bonus for the Hawaiian Airlines card without any use in mind.

Even if you don’t completely fill out a demand schedule, I highly recommend reading Milenomics’ posts and then thinking about your travel goals. Then make sure the miles you are trying to earn match up with those goals, otherwise you’re just leaving money on the table. There’s no point in buying discounted Southwest gift cards if you have no reason to fly Southwest.

Take an honest look at whether you are meeting your budget goals

While this post was in draft I saw an interesting pair of posts over at ‘dem flyers. In it Daniel outlines how he tried to calculate the amount he spent on travel last year and then a reevaluation of his initial evaluation. I found it interesting to see how people keep track of their travel budget, especially as someone who isn’t too detailed in budgeting myself.

Whether you do something similar to what he did, or whether you look at every purchase/MS/resale/flight/hotel blow by blow (not my personal recommendation but to each his or her own) – at least get a general idea of whether you are saving money or spending more money on travel with all your hacking. Then you can make sure that idea squares with your overall goals and motivations determined above.

For example, I personally am happy paying for travel, but I like to use miles and points to make my travel more comfortable and luxurious (or as Matt would say, I travel to passive aggressively tell “family and friends how inferior their lifestyle is”). I’m currently considering whether to make a run at requalifying for Hyatt Diamond status for next year.

Take that, MOM (j/k mom love youuu)
Take that, MOM (j/k mom love youuu)

This is where I need to be brutally honest to myself about my budget goals. With my current travel plans for the year, the number of mattress runs I’ll need to requalify goes beyond my budgetary goals – I’d end up spending more money than diamond status is probably worth for my 2017 travel needs. So if I end up making the run, I need to at least be honest with myself that I am paying extra for luxury.

However you make your own evaluations, make sure you are honest about whether you are under, meeting, or exceeding your budgetary goals.

Evaluate whether your travel and budgetary goals are meeting your overall family/spouse/pet hedgehog goals

I went to this more in depth at the conference, but your family goals are going to dictate your overall travel and budgetary goals. Make sure they evolve as your life situation evolves; the less time you have the more efficient you have to be.

Get rid of points that have no value

I joked about the Hawaiian card above, but that is borne out of a true story. I signed up for the card and planned on converting those miles plus a bunch of miles I transferred from AMEX to book some AXON awards right before they were about to be devalued. But it turned out I couldn’t transfer the Hawaiian miles that were originally AMEX points to Hilton! (it’s against the terms and conditions to convert sign up bonus points). The result? A bunch of Hawaiian airlines miles I had absolutely no use for.

Pro unclutterers have a rule of thumb: if you haven’t worn an article of clothing for a year it’s time to throw it out or donate it. Lots of airlines have a decluttering rule already built in: your miles expire in 12-18 months.

I’d suggest getting rid of any of this points clutter (and making sure you only earn miles that fit your demand schedule in the future). Freequent Flyer has a lot of great ideas for how to get rid of them. None of them really approach the “1 cent per point” value people are always talking about, but they are better than the zero cents per point you would get by not getting rid of the points at all or letting them expire.

Remember – regardless of how you earned your points, that cost is sunk. You’re not saving anything by redeeming at a bad rate, you’re just unloading product, to borrow a reselling term (or a term I assume resellers use at least).

Seriously consider ditching those points you’ve been holding on with no real plan for – you’re just not that into them.

Final Thoughts

Think on the end before you start. Figure out what your goals are – travel-wise, budget wise, family wise – and make sure the time you’re spending accurately reflects those goals. The above are just suggestions and ideas, throw them out if you’d like but at least spend the time to think about what you’re doing (I’m talking to myself here). Boasting about 2 million point balances might feel great, but if deep down you know you’re only redeeming 20% of them…why did you spend so much time earning the other 80%?

References

I referenced a lot of posts that have been very valuable to me in my thinking about this miles and points game. They’re all linked in the post but I feel like they’re all worth reading so I’ve put then down here for reference as well. Consider this an academic paper 🙂

What Travel is Really About – milestomemories (a must watch for any family traveler)

A More In-Depth Look at Demand Schedules – Milenomics

Using Demand Schedules to Target Earnings – Milenomics

Introducing the world’s most amazing advice columnist – PF Digest (OK this is just a classic)

Honesty Revisited – ‘dem flyers

Love and Hate in the Land of Travel Blogging – Saverocity (not completely relevant to this post but one of the first posts with freee™ in it)

Earn the miles you redeem, redeem the miles you earn – Free-quent Flyer

Do people make a commission on buy mile promotions?

Update: Turns out the internet had answers to my questions before I even asked them! Check out this post by Dia in February and comments by Oliver2002 on this FT thread.

One of the things that has always annoyed me about the miles and points blog world is the incessant pushing of buy or share miles promotions. I actually think it bugs me more than credit card promotion because I personally find signing up for credit card bonuses to be a way better return on my investment than buying miles (though I have done both).

I really got to thinking after the Alaska Air Emirates devaluation last week. If you were paying attention, some time in mid February Alaska did a 40% bonus on mile purchases and quite a few people advertised that. Then of course last Thursday happened and a lot of people were stuck with a lot of miles. Alaska has at least said that anyone who bought miles in the month of March can return them, but this all still happened.

After the devaluation some people were of course complaining that Alaska was aggressively selling miles while planning this devaluation. It felt like a bait and switch. But nobody (that I know of at least) wrote a post apologizing for writing posts linking to Alaska’s mileage sale. Or even a “man I thought buying Alaska miles was a decent deal at the time but boy was I wrong” kind of post.

And what about those links? I remember really appreciating Matt’s post a couple years ago about the usage of pretty links to hide affiliate links. I learned a lot about what to look for and how to figure out if someone was possibly profiting off selling me something. If you haven’t read it or are fuzzy on the particulars I suggest you go back and take a look.

What I hadn’t realized before a few months ago is that points.com, the site you buy the Alaska miles through, has an affiliate program. You can read about it here.

Now, the details are a bit fuzzy on that page (you’re supposed to contact them for more info) and I have no hard proof that the way it works is “people buy miles through your link and you make money”. I thought it would say that, but instead under “commissionable miles” it says “Earn commission when customers join or complete a swap transaction of their miles or points into another program on Points.com”. So maybe they don’t earn commissions when people buy miles through their links.

But the fact is, if you search for them, you’ll find that some of the big sites “buy Alaska miles” links are pretty links. They generally read something like blognamesomethingelse/Alaskapoints or the like. So what’s the deal, do they earn a commission when we buy miles through their links? I’ve never seen a direct disclosure like I do with credit cards. Why not?

I took a look at five big sites, typing their names into Google along with “buy Alaska miles”. I found that two of the sites didn’t seem to have points.com affiliate links (for Alaska at least) as far as I could tell, while the other three did. Out of those three, one of them had a generic affiliate disclosure. For the other two, no disclosures in the buy miles posts, just the post about the buy miles promotion along with pretty links.

If people were earning money off others clicking their links and buying miles…I dunno. That doesn’t sit well with me. If I had personally bought miles and then gotten stung by the devaluation and THEN found out whoever’s link I clicked made them money; I’d probably want an apology.

Anyway, nobody cares what I think, but I say if you have a link that is going to make you money, disclose it. I don’t really have much of a problem with the “credit card pimping” that goes on out there, and I put that in quotes because I wouldn’t even call it that. For many bloggers their blog is their business and part of their business model is credit card sales. I see blogs as being news aggregators and never expect them to be objective, and I just default to assuming I am being sold a bill of goods.

But if you’re making money from some link on your blog, I wish you’d at least disclose that. Then I can use that knowledge to discern just how biased the information you are giving me is.

Businesses have every right to run their businesses however they want. But if the business practice is shady, I have every right to take my business elsewhere.

What’s your blindspot?

On Episode 25 of the Saverocity Observation Deck, I went on a little rant about how Delta gets so much crap even though they release a lot more award space than they are given credit for, especially from the East Coast to Europe. Meanwhile everyone keeps talking about American Airlines as if they are the best program for this game (I understand there is going to be a push due to the devalution but still).

I’ll admit, six months ago I was all about AA as well. In fact I had moved to AA miles being my principal source of investment. But I’ve realized with all the criticism (much of it deserved) that is directed at Delta, it had become a major blindspot in my strategy. I got to the point where I didn’t even check Delta award space anymore.

When I was talking about the award space on the podcast, Trevor or Joe said (paraphrased) “yeah but it probably costs a ton.” Except using United miles to Europe only costs less if you are flying on United metal in business class, and it costs more if you’re flying on partners. The coach price is the same. After AA’s devaluation in two weeks, AA will only be 5K cheaper in business, same in coach.

But Delta has a bad rep, so lots of people in this game ignore it. Which works out great for myself and others in the know, of course. (At this point I realize nobody’s going to listen so I’m not afraid of “killing” anything).

This got me thinking about blindspots in general. To me, a blindspot is something that you ignore due to bias or preconception, usually to your detriment. Delta award space was a major blindspot for me while I was listening to “conventional wisdom”, until I looked for myself and found otherwise.

Another blindspot I have is low cost carriers, or even an airline like Southwest. I have never flown on Southwest (crazy, right?) and when I’m booking travel I often am searching for prices using OTAs and forget to even check prices on Southwest’s website. I hadn’t flown a flight on Jetblue for five years until our recent trip from Aruba, mostly because I’d been busy chasing premium cabin space.

To give one last example, a blindspot that often rears its ugly head for me is cash back. I often forget the value that can be had in just earning cold hard cash back, especially as my family is shifting to more and more domestic economy travel.

The great thing about having kids is that they blow up your entire life – they create fundamental changes in your priorities not only in life but also in travel. This has really helped to reveal my blindspots and make me reconsider my overall strategy.

But you don’t have to have kids to identify your blindspots. You probably already know what some of them are, those programs or strategies that you ignore because you don’t have the energy to be bothered or that just seem too confusing for you. Or maybe you don’t, because you’re so fixated on one or two things that you haven’t been able to identify them.

Everyone has blindspots. The most successful people in this game (not me) and probably in life (also probably not me) are those who are constantly evolving to ameliorate and eliminate those blindspots.

So I encourage you to spend a few minutes this week: what’s your blindspot?

Making sure the Hyatt Diamond deal doesn’t get the best of me

For about six hours, it was possible to match almost any hotel chain status to Hyatt Diamond. Ironically, the PR move was one of the many things that has ended up costing Hyatt some loyal customers (I first remember Dia writing she was done in December and Julian just wrote about it this week). I totally understand Diamond members who earned status via hard work being frustrated about that, but this post isn’t for you.

This post is for all of us who glommed onto Hyatt Diamond the “easy way”. I’ve been realizing that having Diamond status has been subtly and not so subtly affecting the way I plan my travel. That has got to stop, otherwise this win-win situation is going to turn into a win-lose situation, with me as the loser! Here are some of the ways status has been affecting the way I plan my travel, maybe some of you can relate.

None of these effects are bad in and of themselves, but it’s important for me to process them so they don’t end up costing me more money in the long run!

It affects my choice of destination

Hyatt has a fairly small footprint compared to say Hilton or Marriott. What I’ve found whenever I’ve had Diamond status (this is the second time) is I subconsciously limit my destinations when I am sitting on the status. This happens by either a) eliminating a destination due to no Hyatts or b) considering one because there IS a Hyatt (Mallorca anyone? Though in my defense on that one we were supposed to go there before we found out it overlapped with our son’s due date. GOOD JOB, SON!)

Apparently this is what the Isle of Skye looks like. But there aren't any Hyatt properties there!
Apparently this is what the Isle of Skye looks like. But there aren’t any Hyatt properties there!

This is really stupid in this instance because I have Hilton Diamond status as well for the next year. So I shouldn’t be limiting my destinations, but those confirmed suite upgrades sway my subconscious quite a bit. Sure, there’s a good chance I can score a suite at a Hilton, but there is no way for me to know before I get there.

Luckily, my wife won’t stand for going to a place just for a hotel (or just to fly on an A380), so that helps balance things out. This summer we are going to Scotland, land of zero Hyatts, and I’m just going to make do. Which leads me to my second point.

The allure of suite upgrades can cause me to ignore more family convenient options

In Scotland, since no Hyatts exist, I booked us a nice house and a nice apartment to stay in. These places feature kitchens, double baths, lawns – aka things you would never get from a hotel.

Contrast that with our upcoming trip to Aruba. I really, really wanted to redeem a Diamond suite upgrade, so I convinced myself that it would be better to stay at the Hyatt Regency than finding an apartment. This was easy to do.

  • Oh hey, since we’re Diamond we get free breakfast, money saved (and unlike the Devil’s Advocate, breakfast is pretty important to us even though I don’t care for it – must. feed. toddler.)
  • The hotel is on the beach so it’s going to be way more convenient. An apartment further inland might prevent us from going to the beach as much. Plus it has pools!
  • It will be easier to have the resources of a hotel at our fingertips rather than figure everything out ourselves

Now, those are all valid points, and I don’t regret booking the Hyatt Regency Aruba at all. Still, I barely looked at any other options, and when that happens, it’s definitely something for me to internally keep an eye on.

I can sometimes fool myself into spending more money

Here is the biggest kicker for me. It is lovely to enjoy suites if you are paying the cost of a regular room. But it’s very easy for me to convince myself to toss in an extra $50 to stay at a Hyatt and confirm a DSU as opposed to staying at another hotel. Plus I might not just be passing on a cheaper hotel, I might be passing on a cheaper and more conveniently located hotel!

This suite at the Andaz 5th Ave was pretty sweet but did it cost too much?
This suite at the Andaz 5th Ave was pretty sweet but did it cost too much?

Take London, for example. We are spending a few days there before hitting Scotland and I am going to book a refundable room and confirm a DSU. But the refundable rate is 440 quid – over $600! Now, I’m not going to pay that (I’m going to wait to see if cash and points open up but want to “hold” the suite), but I am tempted to. Again, it’s easy to justify – I’m saving a ton of money in Scotland lodging so have extra left over to splurge in London. Very dangerous thinking.

So it’s important for me to set my lodging budget ($350/night for a suite as I said in a previous post) and stick to it. If not, I just have to let it go…probably…okay yes I should let it go. Temptationnnn!

It affects my Ultimate Reward usage  

Before we had kids, this wouldn’t have mattered that much. Spend some UR points to redeem cash and points or free nights at Hyatt and we still had plenty left over. But in 16 short months I will be forced to pay for four tickets. If I need to use Ultimate Rewards for those I’ll need pretty healthy balances.

So I’m using Ultimate Rewards for Hyatt more and more while at the same time Chase is 5/24ing everything and earning UR is getting harder and harder. Is staying in a suite for three nights worth having to pay cash for one of my broodlings to fly to Asia? Tough one. I can earn quite a few UR but the number isn’t unlimited, so I need to weigh all those things on balance.

Final Thoughts

As always in these “Joe thinks aloud” posts, I’m just processing how having Hyatt Diamond status has been affecting my travel planning lately. I don’t think any of these effects are bad in and of themselves; they are just things I am trying to stay aware of. If I know I’m paying extra but my wife and I are okay with it, then fine. I just don’t want to be fooled into bad decisions by the allure of suites and executive lounges. When he said it at the time, I disagreed, but I now know for sure FQF was right: giving out Diamond status was a great move for Hyatt’s bottom line. Hopefully I can keep it a win-win situation, instead of turning into the biggest loser.

How much would I pay for an Ultimate Reward point?

Free-quent Flyer kicked off an interesting discussion on Twitter the other day:

 

It’s something that we brought up on Episode 23 of the Saverocity Observation Deck last week. As Matt explained on the podcast, his answer wasn’t to troll (well, mostly); he was saying that if you need a certain amount to complete a redemption then the amount you are willing to pay goes way up. I agree with Matt, but I’ve been thinking about something else he said on the podcast all week.

I said that I would probably speculatively buy UR points at anything less than 1 cent per point as long as it didn’t require me changing out of my pajamas. Matt countered with this point (paraphrased) – “if you’re getting enough value out of it, shouldn’t you be willing to pay more than one cent per point? One cent is just the absolute minimum you can get in return.”

His reason for this is what he calls the “double pivot” – aka the two places where you can use miles and points to save money on travel. The first pivot is in the acquisition of miles and points, which I admittedly am not that great at. The second pivot is maximizing the value out of the miles and points you earn, which I have a much better eye for.

So I’ve been spending the last week mulling over how much would I pay for an Ultimate Reward point? This is especially apropos considering the news that Chase is going all DEFCON 2 about credit card stuff – if I’m not gonna be able to bank Hyatt free nights or United miles via credit card bonuses, how much am I willing to pay for them?

Here are the things I have been thinking about – written both so I can clarify my own thinking and also to hopefully spur others to come up with their own evaluations as well!

Factor 1 – What are my travel goals?

I’m on record saying that my goal isn’t to “fly for free.” My family would set aside money to travel every year even if we were paying cash. For me, the goal is to use miles and points to either

a) save money

b) make travel more comfortable

c) both

I am not against spending money. But if I can save a little money or use the same amount of money to fly in business class, I’m all for it. This affects how much I am willing to pay per point because I can think of the money I pay for UR points as paid upgrades on economy tickets if I’d like (in the case of airlines) or think of it as subsidizing more expensive hotel rooms (Hyatt).

Factor 2 – What am I really going to use the points for?

All of the valuations out there take into account all of the transfer partners, but my personal reality is that I only really use two of them regularly: United and Hyatt. So when figuring out how much I’d be willing to pay for these points all that matters is how much value I can get at United and Hyatt.

Would I redeem for Korean or Singapore? I wish, but with a family of four I’m probably not gonna get four first class tickets on either of those airlines (well, maybe Korean). Though if that were my goal (and I was confident in the availability), that would skyrocket the price I’d be willing to pay…to a certain extent.

Factor 3 – How much would I be willing to pay for travel out of pocket in the first place?

Dia recently wrote a post about how she’s stalking Gwen Stefani or something like that. She makes a great point which is she would never pay $2500/night for a room in the first place. (I think later on Twitter she confirmed that her price point would be $300/night max or something? Don’t quote me on that).

When I first got into this game, I used to be suckered into that kind of thinking – “aw snap I got a $10K first class Lufthansa ticket for free baybee!” But that’s not really the case, and it’s even less the case when you are looking to spend money for points outside of credit card bonuses (which, again, bye bye Chase). So the question is, how much would I really be willing to spend?

For a hotel room for 4, maybe $300/night now max? For roundtrip tickets to Europe in the summer during school vacation, $1200? For roundtrip tickets to Asia over Christmas, $1800? Those are obviously moving targets, but those are targets that matter when I’m thinking about how much I’ll spend on points, because that brings up:

Factor 4 – How much value can I redeem the points for?

My valuations of how much UR points are worth are variable to my own tastes, needs, and current opinions. So the question for me is how much can I personally redeem the points for at this particular point in time.

As Matt says, if you’re good at finding saver award space, you might be able to redeem for a much better value. But that value for me has to be in line with how much I’m willing to pay for the travel in cash.

As an example, we’re going to Aruba where the going rate for the Hyatt is $500/night when we are there. That’s a bit steep for us, but using cash and points, we are paying $150 out of pocket and 12,500 Ultimate Rewards points. (As an aside, when booking hotels, you might want to check FQF’s imputed redemption values first but that’s a whole other ball of wax). Ignoring points we would have earned paying $500 cash for simplicity (though we would not have stayed at that hotel at that rate), I’m getting a value of about 2.8 cents per point. So if I got those points for anything less than that I’m winning, right?

It’s easy to think that, but in my personal case, that would be wrong. Remember, I said that I only wanted to pay $300 for a hotel room. Since I confirmed a Diamond Suite upgrade, let’s bump that up to $350 (if they offered me a suite twice the size for $50/night I’d probably take it). If I paid, say, 2 cents per Ultimate Reward point, I’m a loser in this scenario. 12,500 points would have cost me $250 putting my total cost for the room at $400 – above the threshold I’d be willing to pay in cash.

While that might seem simple to some, it’s something I find it’s easy for me to forget in the “excitement” of a deal.

Factor 5 – What are the odds I’ll be able to redeem these points at a price I’m happy with?

Having points is great, having points that you are having trouble redeeming is not. For hotels, while cash and points is preferred, you can always book a room completely on points at the Hyatt if there is a room available (hence the necessity of the imputed redemption value table). For airlines, saver award space isn’t necessarily easy to find. While I’m generally confident in my ability to find some, the reality is it’s not totally in my control.

So even if I think points are worth buying at, say, 1.5 cents per point, I think if there is difficulty to redeem them that has to take some of the shine off. Even Hyatt takes away some value just because the hotel doesn’t have as large of a footprint around the globe.

Putting it all together

Bringing it back to the beginning – I think I’m still only comfortable buying at around 1 cent per point. Then if I’m “buying” a business class ticket to Asia it’s costing me $1600, which is what I’m okay with but not thrilled about. If I’m redeeming for Hyatt, I’m usually winning, and if I’m redeeming for coach I’m probably winning again. But the lack of a large Hyatt footprint and the difficulty in finding four saver awards severely diminishes that. If I’m booking standard awards in the future then I probably need to get my Ultimate Rewards points at less than 1 cent per point.

Gun to my head, I probably am comfortable paying a little more than 1 cent per point, but the 1 cent value is easy because I can do all of the math in my head. So while I was convinced sticking to 1 cent per point was wrong on the podcast, I think a week of reflection has made me come back to that price point. I’m sure Matt will point out why I’m mistaken about that soon enough. 🙂

Final Thoughts

I’m sure a lot of you out there have factored in all these things when evaluating the price point you are willing to manufacture points at. Like I said, manufacturing isn’t my forte. Still, I found this a useful exercise, and one that I can revisit regularly (with all currencies) to make sure I’m not fooling myself. I’d love to hear how everyone else thinks about/calculates these things, so tell me why I’m dumb!