Are you too poor for First Class?

Matt

Administrator
Staff member
Points are a great enabler, but each redemption creates opportunity costs, they are real, despite what Drew thinks :)

Many people here on the forum may have a $20K line of credit on a card, so could, in theory, buy a F seat somewhere nice. However, most of the people who could actually do this probably shouldn't because it is considered financially irresponsible.

  • Some couldn't pay back the card.
  • Some could, but still have other debt/ generally aren't financially independent
Overall, it seems that when points are involved many things become fair game, but are you being irresponsible by booking travel with points, rather than doing other things, such as cashing out for statement credits, giftcards (for resale or personal use) etc... in order to increase your net worth?

It seems to be such a different perspective when points are involved, pretty much any redemption is acceptable, more or less, because people think of the sticker price value. When cash is involved, keeping the cash in your pocket seems a lot smarter.

Is there a level of net worth where you shouldn't fly in F? Does that become the same question for J, and even Y?
 

Andrew Beall

Level 2 Member
Points are a great enabler, but each redemption creates opportunity costs, they are real, despite what Drew thinks :)

Many people here on the forum may have a $20K line of credit on a card, so could, in theory, buy a F seat somewhere nice. However, most of the people who could actually do this probably shouldn't because it is considered financially irresponsible.

  • Some couldn't pay back the card.
  • Some could, but still have other debt/ generally aren't financially independent
Overall, it seems that when points are involved many things become fair game, but are you being irresponsible by booking travel with points, rather than doing other things, such as cashing out for statement credits, giftcards (for resale or personal use) etc... in order to increase your net worth?

It seems to be such a different perspective when points are involved, pretty much any redemption is acceptable, more or less, because people think of the sticker price value. When cash is involved, keeping the cash in your pocket seems a lot smarter.

Is there a level of net worth where you shouldn't fly in F? Does that become the same question for J, and even Y?
When I first got in to churning, MS, etc. I didn't see it as a way to increase my net worth. I just saw it as a way to experience things I would never pay for otherwise. The more I get into MS the more I realize there is huge potential for increasing net worth, but I don't think it has to be either/or. The way I see it is as long as I am staying on track or ahead of my financial goals I have set then it's okay to spend (including rewards) on things that don't necessarily increase my net worth. I do agree that paying 100k UR points is the equivalent of paying $1,000 for a flight. I don't fly first class, but I do like to stay at nicer hotels. As long as my financial situation is improving monthly and I'm staying on track towards my goals I'm happy.

I might cry after redeeming 100k UR points for a statement credit. I would probably feel differently if they were accumulated through signup bonuses than manufactured spending. After all, I could've had at least double the cash if I had just used a 2% card to begin with. Granted it's a sunk cost at that point, but typically when MS'ing I have an idea of what I want to do with the rewards eventually. Of course things change, life happens, and there may be a point when you really need that $1,000 cash regardless of whether or not it can get you a $4,000 flight.
 

sriki

Level 2 Member
Interesting thought.

One can only improve their financial standing using MS if they can do it on a large scale and do so profitably *.

This is not always possible for everyone. For folks with limited MS opportunities or for whom MS is not worth their time and energy, this will not apply. However, many people can quickly signup for a few cards and get the bonus miles/points to put together a RTW F trip. So, the question narrows down to people who can MS at significant profit & scale (either miles or CB). I am not one of them but would be interested on their take.

* Assuming that a few hundred to few thousand dollars more (redeeming CC bonus for cash equivalent) is not a significant increase in financial standing.
 

Confectioneer

San Francisco Bay Area
Very interesting thought.

For me, the points free up cash that would've otherwise gone towards flight or lodging expenses. I can't work extra employment hours to earn income (that can be spent on travel, on necessities, etc.), but I can spend time MSing and use FF points/cash back for trips.

So for my otherwise fixed travel budget, I can now travel more frequently; and/or in more comfort.

The thing I've especially found is, having travelled in J and F, it can be really nice! So it's added mental pressure to have a churn/MS level that'll support future travel like that.
 

jmw

Level 2 Member
I have no pressing financial need to redeem airline miles for gift cards. But I don't like spending more real cash than necessary. I'm a cheap bastard. I've thought about selling the points to a broker, but I felt detection would be too easy. If I knew about the deal to redeem UA for Amazon GC at 1.8 cpm on MileagePlusX, I would have unloaded all of my UR and UA virtual currency. That would have saved me a ton of real cash. You wouldn't do that deal if you had to fly in J or F, but I would not hesitate at all to pull the trigger on 1.8 cpm.

I give away flights to family that can't afford it. But I couldn't do that if I flew F all the time.

I have points because there is a finite number of cashback cards and sign-up bonuses on cashback suck. Most of my points are via sign-up bonuses. Did I say I like cash?

I had a talk about this with an AAdvantage agent while booking a reward flight from Asia back to the US. I needed a flight to get home the next day since this was a family emergency. The only option available was a flight on Cathay Pacific in F. That's not what I wanted to hear. I asked her to find a seat in Y or J. She could not find any other seats, so I took the F seat. If I could stay an extra day cheaply to get Y, I would have gladly done that. While she was processing my reservation, I asked her how often do people ask to downgrade. She says my request is more common than the other way around. I think what we do by upgrading to F like many bloggers is strange.

Most of my family and friends sit in Y. They would not pay for an upgrade with cash or points. When they ask me for travel advice, they don't ask about sitting in J or F. Even the friends that read flyertalk or MS with me don't redeem in F or J. They are far more likely to look for advice to buy 6 Y seats during summer on the same flight and sometimes have to pay non-saver rates to pull it off. They're not doing the trip in October when saver tickets are plentiful.
 

Andrew Beall

Level 2 Member
I have no pressing financial need to redeem airline miles for gift cards. But I don't like spending more real cash than necessary. I'm a cheap bastard. I've thought about selling the points to a broker, but I felt detection would be too easy. If I knew about the deal to redeem UA for Amazon GC at 1.8 cpm on MileagePlusX, I would have unloaded all of my UR and UA virtual currency. That would have saved me a ton of real cash. You wouldn't do that deal if you had to fly in J or F, but I would not hesitate at all to pull the trigger on 1.8 cpm.

I give away flights to family that can't afford it. But I couldn't do that if I flew F all the time.

I have points because there is a finite number of cashback cards and sign-up bonuses on cashback suck. Most of my points are via sign-up bonuses. Did I say I like cash?

I had a talk about this with an AAdvantage agent while booking a reward flight from Asia back to the US. I needed a flight to get home the next day since this was a family emergency. The only option available was a flight on Cathay Pacific in F. That's not what I wanted to hear. I asked her to find a seat in Y or J. She could not find any other seats, so I took the F seat. If I could stay an extra day cheaply to get Y, I would have gladly done that. While she was processing my reservation, I asked her how often do people ask to downgrade. She says my request is more common than the other way around. I think what we do by upgrading to F like many bloggers is strange.

Most of my family and friends sit in Y. They would not pay for an upgrade with cash or points. When they ask me for travel advice, they don't ask about sitting in J or F. Even the friends that read flyertalk or MS with me don't redeem in F or J. They are far more likely to look for advice to buy 6 Y seats during summer on the same flight and sometimes have to pay non-saver rates to pull it off. They're not doing the trip in October when saver tickets are plentiful.
I feel similarly. I do free travel, not cheap travel. Or at least I don't pay cash for travel. I think I would use miles to have friends/family travel with me before booking first class. Maybe once just to see what all the fuss is about, but for now I'm happy in coach.
 
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Better_by_Design

Level 2 Member
I feel similarly. I do free travel, not cheap travel. Or at least I don't pay cash for travel. I think I would use miles to have friends/family travel with me before booking first class. Maybe once just to see what all the fuss is about, but for now I'm happy in coach.
I'm happy to be travelling, more than I'm happy in coach, per se.

Another poster above also put it well:

Very interesting thought.

For me, the points free up cash that would've otherwise gone towards flight or lodging expenses. I can't work extra employment hours to earn income (that can be spent on travel, on necessities, etc.), but I can spend time MSing and use FF points/cash back for trips.

So for my otherwise fixed travel budget, I can now travel more frequently; and/or in more comfort.

The thing I've especially found is, having travelled in J and F, it can be really nice! So it's added mental pressure to have a churn/MS level that'll support future travel like that.
That's it exactly - my income is more or less fixed, so MS and CC sign ups, etc help to augment my travel budget, rather than produce cash for savings, etc - which I've already aggressively budgeted for.

Additionally, friends/coworkers are always "amazed" at how often we travel, and say things like "man, it must be nice to have all those points and travel for free". Unfortunately, it ISN'T free, but I usually wrangle enough points to cover the air & hotel... and MAYBE some taxis/trains etc... which means 50-70% of the travel is covered, but it sure isn't free entirely, as I haven't managed to scale enough cashback profitably to cover EVERYTHING... let alone buying F all the time.

So basically, I'm getting a lot more done travel-wise than I would be able to do responsibly on my own dime. But not regularly redeeming for F tickets, or becoming independently wealthy from doing so, unlike the lifestyle purported, sold, and marketed by many of the bloggers out there.
 

John

Level 2 Member
Living in NYC I found the hassle of most MS not worth the cost in time. I use my points to fly mostly BC (once in a while FC) which as I am older helps on my body and state of mind. I have gotten spoiled and do my best to never fly coach. I will pay for a domestic or inter Europe Flight rather than spend too many hours waiting to connect with points/miles flight. I realize how fortunate I am in this part of my life to type those opinions stated above. So however you do it, just keep on travelin'
My philosophy is that I can always make more money but can never make more time!
 

MickiSue

Level 2 Member
Supporter
While your thoughts may be, in fact, true, they are not necessarily valid for me.

Yes, yes, I could always improve my net worth. But if it is currently at or extremely near my goal, then why waste my finite time MSing for extra pennies? Even with a 5% CB (which are fewer and farther between, today) I could only make an extra $12 K/annum, MSing $20K/month. And because I AM older, that wouldn't have the opportunity to grow much, in most investment portfolios.

But at 1% for miles, it gets me two RTs in J, (possibly F, if I choose the right miles) and as I've posted before, extends the pleasure of a long distance trip, rather than making the travel itself something to endure. If I can MS in such a manner that I can make a few dollars on that $20K, as well, I am that much farther ahead.

For many of the posters here, who have children, or future children, to raise, the necessity to secure their financial future is more crucial. But the necessity to ensure that they have joy in their lives is, to me, also a necessity.

Drew may be half wrong. But he's not completely wrong. MSing for miles and points does not preclude making and saving money entirely. If creating shared memories with one's family is a high priority for someone, then keeping the money that one earns from employment for current necessities and investment for the future is a value, as well.

I still think it's good that you bring it up, Matt. The age bracket in this forum skews downward, and noting that today isn not the only day is one's life is an important message.
 

italdesign

Level 2 Member
It all depends on your goal. I don't play the game to increase my net worth (I don't need to, and it's not my passion). I do it for travel (and specifically to fly premium and to have a roof over my head). I design my strategies and activities to enable this goal. That's it.
 

Matt

Administrator
Staff member
It all depends on your goal. I don't play the game to increase my net worth (I don't need to, and it's not my passion). I do it for travel (and specifically to fly premium and to have a roof over my head). I design my strategies and activities to enable this goal. That's it.
Then you aren't too poor :)
 

cocobird

Level 2 Member
I have enjoyed reading the ongoing discussion on when it's worth your time to do certain things and now we have is it worth the money to do certain things. I am turning this around a little because I am wondering when do people think they have enough to fly F? In other words, are you rich enough you should fly F.

I think for many people with a saver mentality, it's touch to let go of our frugal ways. It wasn't until I actually retired that I gave myself permission to stop over analyzing every expense and alternative to that expense. I still do it for most purchases. I may be in the minority and think that I can never be rich enough to pay for F.
 

italdesign

Level 2 Member
I am wondering when do people think they have enough to fly F? In other words, are you rich enough you should fly F.

I think for many people with a saver mentality, it's touch to let go of our frugal ways.
When you can easily earn loads of points and the only realistic way to unload it is to fly premium NOW.

I'm a cheapskate. I kind of love devaluatuions because it forces me to enjoy luxury NOW.
 

Hexaplorer

Level 2 Member
I think it depends on the value of your reward. Many forums I visit have two large camps- those devoted to miles and those devoted to CB, but a very small portion of people devoted to a convenient mixture.

Personally, I'd rather gather miles to cash back at the moment, except for some category spend on Discover (10% is a little ridiculous for me to ignore lol). The reason? I don't really have a high income as a grad student- so even with decent credit with good AoA my income would restrict my credit limits. MS-ing large amounts every month to make a couple hundred dollars isn't worth getting my cards shut down because they see I'm spending way over my income. I can MS much smaller amounts for miles and earn more than 2cpm (sometimes a lot more)- which comes out like getting 4% CB minimum on category spend bonuses. I would post the math but I wasn't sure if that's ok in a public forum. And while there's nothing as versatile as cash *rubs fingers*, the return from miles allows one to leap frog the return from CB if you have a lower income and/or credit limits (e.g. less than $15k on any card).

Basically, if you're MS-ing lower amounts you wouldn't really be enriching yourself that much with CB as opposed to getting miles (assuming everyone travels). Example earning $1000 a year from 2% CB (so spending $50k/year) that you'd use to purchase a coach ticket to Asia, vs earning $7500 a year from 3x bonus spending the same amount per year. In the strictest sense you can now buy 7 tickets to Asia, or get a FC/BC flight, or get a mix of flights and hotels for the same amount of work. I'd rather redeem for FC or BC flights because why not? Everyone will indulge themselves in something (be it possessions or experiences) and that decision is highly personal.
 

Touristtrap

Level 2 Member
I just booked business class flight using United miles and UR. There is no way I would pay $9k for that ticket as I think it would be financially irresponsible (too low cost/benefit ratio).

Now, if I had been able to get that ticket for $4k and get the tax write-off it might have been an example of an acceptable cost/benefit ratio:).

I think I would be better off to work more instead to MS more.
I don't like the idea of "MORE" in either one.

My practice of increasing my net worth is simple: "Live bellow your means but within your needs" and it worked quite well.
 

MaryE

Level 2 Member
I MS'ed for one reason - to fly in either business or first because there are multiple benefits: 1) I hate getting squished in economy being six feet tall; 2) the extra 2-3 suitcases help a lot when moving to a new job location or shopping to restock and bring it back to new home location. On my own it took a few years through sign up bonuses and regular spend, but the last few years were on Redbird and Vanilla Reloads. Ahh, the memories. Now that I am out of the MS market, not being stateside, it's riding on the points saved for a bit. Sad to hear the birds have died. I never had a Serve so maybe I'll sign up before summer vacation and see if newbies can play.
 
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nickelfish1

Level 2 Member
I'm willing to pay for an experience but not a luxury flight or hotel. That said, I just booked $42,000 in airfare for about $2,000. (JFK-SPU and DUB-JFK) Hubs said, "No one pays $6,389 for a one way ticket so you can't value that seat that way." I was all...yes, I can. Just because WE didn't buy tickets for 25k doesn't mean someone else didn't. Personally, if you can afford to spend 25k on four tickets to Europe why aren't you NetJetting? So, perhaps he's right. Maybe it's mostly companies paying those prices to get their people to meetings. At any rate, I love miles because it opens up travel dollars for experiences....like chartering a boat for a day...that we all really really loved. (And the Gucci shoes and LVuitton bag from BCN that I love ;)!) With miles/pts we can pay less to lay down on a flight, keep the hotels cheap (need 2 rooms now that the kids are 17) and eat the same. BUT! We're able to do wayyyyyy cooler crap once we get there. I don't need luxury when I travel...I need experience.
 

SanDiego1K

Level 2 Member
The query could be broadened to ask "Are you too poor to stay for status?" It's fun to have top tier status in a hotel chain. It's fun to be Starwood plat and stay in a hotel in Asia where odds are high you'll get a suite. Yet I scratch my head when I see some young people whom I know to be of limited means make the 25 stays a year, all on their own money, because they enjoy that elite status. Starwood is not a moderate hotel chain. It's mid tier with the associated costs. I get recreational traveling. I do it. But when I was young, I did so very economically. I flew in coach. I stayed in modest hotels. I savored the destination. I never lost sight of how all the economic aspects of my life needed to be in balance.

I came on FT in 2000 when I was a heavy business traveler and a moderate recreational traveler. I became friendly with a number of young men, then in their early 20s, all heavy recreational travelers. One was very careful to get his 25 Starwood stays in each year and gleefully reported on each suite upgrade. Another started down that path, spoke to me about his financial concerns, and backed away from it. There is a significant financial toll when you pay for 25 hotel stays a year in a mid to upper tier hotel chain. Yet the person I mentioned lived with his parents. He had a simple job. Is it possible he was saving to create a financial foundation? Yes, but it's improbable. Was he a trust fund baby? Perhaps. I have no reason to believe so. This person continues to maintain this style of travel and I believe gains significant self worth from it.
 

falconbeach

Level 2 Member
Interesting question that I've been thinking about. As someone with negative net worth right now (school you so crazy), I just signed up for a bunch of deals/bonuses to try and generate enough points to fly my sister first class to Asia as a graduation present. The opportunity cost of that is certainly high. I would be out 5 round trip flights in the US which I could definitely use to visit friends I haven't seen in years. Nobody in my family has tried it (including me), and I hope that my sister will enjoy the trip. For me, there's not a level of poverty out there not to try it (once).
 

jlang

Level 2 Member
interesting question (albeit an older one).

I'm in good financial shape - no debt (other then a mortgage which is above water), I max out my 401k and roth, have good savings, etc. last month I cashed in for two F tickets to SE Asia - taipei, Singapore, Thailand. bunch of places I've always wanted to go, and one of the last big trips before me and the wife expand our family (probably). So wanted it to be a special trip. Got great routings on Korean A380 with stopovers - so an experience I could never afford otherwise and one that will be really memorable and special.

oddly, its the one trip that I've ever booked that has somewhat lingered in my mind with a slight bit of buyers remorse. it was my first UR redemption for points, and I used 400k for the two tickets... we still have a ton more points, but in the back on my mind I think "wow, I could have cashed it in the points for $4k." Having previously really only redeemed AA miles or UA miles, cash was never an option - it was always maximizing the value of the ticket. But the fact that UR points can be made to cash (and thus their opportunity cost increases) really got me to still think about. I essentially paid $4k for that airfare.

So with transferrable currency I think it always should be thought about, no matter what net worth level you have
 

PghRocks

New Member
(hit post to early, that's why I edited, I'm new 'round here)

When I get asked this question in real life I tell people that I don't think there's a right answer and that it all comes down to how you do your own personal accounting - some people, like me, basically view miles/points as a travel savings fund where the returns on investment are huge. Some people don't like this mental compartmentalization, some people compartmentalize every aspect of their financial life - "this money is for this, that money is for that" when really, money is fluid, but how you think about can be not.

That's not to say that I've never turned in points for cash, I've been able to build a nice down payment for a car by turning in TYP and AMEX for cash (TYP in the form of mortgage checks and AMEX through gift cards and then liquidated them). I understand that this might give some people a heart attack. But I've got a job and life and a kid and I just can't up and leave for SE Asia for two months when there's a mistake fare. I applaud those that can, but that's not the life I've chosen. I can get overseas for maybe 2 weeks a year.

So for me its a balance of having enough miles/points to do whatever we want but not so many that I'm just puffing about how big my balance is. We should all remember, in the face of "monthly valuations" and all that arbitrary trash, that miles/points are worthless if you don't use them for stuff.

To directly answer the question, I know a very wealthy man, and his limit is $2,500 for Business Class (he flies private in the US, except for long hauls). If the seat is under $2,500 he pays cash, if not he uses his AMEX points (sometimes are very below 1 cent per mile, because they are just not money in his mind)
 
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Billiken

Level 2 Member
For company travel, I get J on over-an-ocean flights.
Personal travel I will either upgrade (e.g. UA GPUs) or use miles to fly in J/F.
(I'm 6'5" tall...coach, even coach plus, really sucks for me.)

Fortunately, as an adult I have never flown in Y across the Atlantic or Pacific Oceans.
(Crossed the Atlantic 10x in 2015)
 

Barefootwoman

Level 2 Member
PghRocks, I see your point clearly. With this question, we usually come back to life stage and priorities. If I were a person still in the beginning stage of an expected long term career, business or academic or similar vocational venture, I would devote more of my resources toward that career and less toward MSing which is ephemeral in nature, on a long term basis, although potentially lucrative on a very short term basis.

That said, I am nearing early retirement. I am tired of my 30 year career. I learned the ropes of MS to try to see what is possible in retirement when my time will open up. I've learned that I've budgeted too much for travel in my retirement plan...but since this game is ephemeral in nature- should I change that budget? hmmm... My entire portfolio can often fluctuate in one day the same amount that I earned through MSing in all of 2015. Some days I've begun to question my sanity, but if it felt like work, I would have stopped. Maybe I do things based on how they feel to me....hard to apply math to that.
 
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AndyP

Level 2 Member
Easy answer for me. I MS to aggressively increase my earnings and net worth by redeeming for cash and paying for flights I would have taken with or without MS. In daily expenses, I probably spend slightly more freely (at most 1k/year) than I would without MS because of the extra income and it's possible that I might not have taken one or two of those flights if it weren't for the 3c redemption value. So for me the question is not do I redeem for first class or coach, it's redeem for cash, redeem for airfare I would have bought anyways, and maybe take one extra flight per year using 3c/pt. The opportunity cost of not redeeming those points for cash is probably only $100-200 per year for me. I am also young and saving for a home so cash and savings are king.
 

Falim

New Member
With 2 young kids (2 & 3), it's basically impossible for me to travel enough to use up all the points/miles I've earned. I churn to earn miles, and resell to earn money. Because of this, I'm willing to use the extra miles for J/F on long haul flights. I realize eventually when I need to book 4 award tickets this may no longer be possible but that's a ways off and there are sure to be many devaluations until then.
 

Risk

Level 2 Member
I started playing with credit cards to avoid paying for the economy flights that I would have taken anyway. I don't do it to take more comfortable flights, or to generate extra income. If I get better with MS, I might start spending my miles and points more freely. Or may be not. Trade-offs are real:
  • One business class or three coach class flights?
  • A first class flight or $4,000 in cash back?
  • Spend time reading bank's terms and condition or go for a walk?
The problem is that the choices and their subjective values are not precise, and calculations of cost/benefit ratios are biased.
 

aerovol

New Member
Before I was putting my spent on travel related cards (meeting a sign up bonus, everyday spend, light MS, etc), I would only use a cash back card - and not a good one at that. Whenever I would make my redemption, I would normally spend it on travel or something else trivial.

I've taken a break from MS, so all my spending is either sign up bonuses or everyday spend. Since every where I travel I legitimately want to go (for example, I would have spent my own money eventually), I receive so much more value by getting points as opposed to cash back.

I think it's also worth stating that I'm in this "hobby" because I'm in a good place financially.
 

Amy

New Member
I am still a newbie to points/miles but its so interesting to me. Being a teacher, my opportunity to travel is limited by time and finances as well. But this developing hobby has allowed myself and my family increased travel opportunities. I have been able to share with my students many of our trips. So to me, its not about net-worth or traveling first class. Its more about having the opportunity to have and share these experiences.
 

thedrills

Level 2 Member
For me its all about being able to do things that I wouldnt be able to do otherwise. I can technically afford to take my family on a vacation but they get to be very expensive. If Im able to cut out flights and hotels from my cost vacations are affordable. Although, I do have plans on hopefully dropping my kids by a family member for a week and going to hawaii with my wife. For that occasion especially because of the length of the flight I would arrange, to the best of my ability, to fly "lay flat" first class.
We were spoiled when I got in on the Delta Glitch a few years ago and did 2 west coast trips for pennies and on one of them we were in "lie flat" 1st class. Nothing like it, although for a "regular" trip I dont think I would burn through so many points for 1st class.
 

Benjamin

Level 2 Member
Half of it for me is just the challenge. This whole thing is a hobby and as much as it offers me a chance to do experience something special, I would still do lots of the same things I already do, just not as luxuriously. But, I am super new to this. Maybe once I bid on an SPG Moment I will re-think my perspective...
 

MickiSue

Level 2 Member
Supporter
Eh, Benjamin. Once you see that it's relatively easy to accumulate the miles or points to move up to the front of the plane, you may change your mind.

I can't afford to travel as often as many here, mostly because I'm not MSing 100K/month.

Even if I could, though, I'm hampered if I want to travel with my spouse, as his job is pretty brutal these days.

So, I accumulate miles/points/cashback enough for front of the plane once or twice a year. And that way, our vacations start when we get to the ticket counter, and check in at first class, go through the pre-screen line, and head for the first class lounge.
 
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