Planning and Funding Your Own Travel Savings Account

How should you approach miles collecting?

There have been several posts on Saverocity blogs recently on the idea of having, funding and maintaining a travel savings account. But where should you start, keeping in mind that one size does not fit all and more is not necessarily better? If you are looking to travel as a family with (or even without) a specific destination in mind, your approach and strategy must line up with your needs or you’ll wind up with miles that took time and money to collect which you can’t use, and be another casualty to the complicated mess that award travel can be. So here are a few common approaches to earning and using rewards:

Low-hanging fruit: collect whatever is easiest.

This is what most people do with rewards programs. They use a few of them when it’s convenient, they use a credit card or two, they might learn to maximize shopping portals and hunt for deals. They might even learn to do some manufactured spending to speed up their earnings but they are often not working toward a specific goal. Then every so often they redeem their points for whatever seems like the best deal at the time.

Strengths: It is simple, with minimal tracking and no learning curve.

Weaknesses: It’s hard to get enough points to go beyond North America and the Caribbean, especially with a family.

Recommendations: Collect cash back or cash towards travel using a card like the Fidelity American Express, Blue Cash Preferred from American Express, or Barclays Arrival card. Or the ‘Old’ Blue cash if you can do significant grocery and drugstore MS. Earn some Southwest points like Big Habitat is, or by opening some Southwest credit cards if it’s convenient, and use the points to have fun with domestic and Carribbean travel. The simplicity of Southwest’s program is what makes it one of the most popular award programs among non travel hackers. Seats are easy to get and book. You don’t need a blog, an expert flyer subscription or anything else, just a couple weeks’ notice.

One trip at a time.

This is one step up from the low hanging fruit strategy in at least one area. You may need to do more targeted manufactured spending or apply for a couple more credit cards. It’s also likely that you’ll need to learn an award program or two. We started out with this strategy, aiming toward a trip to Europe.

Strengths: You can put together a plan to go basically anywhere, and it’s still a simple, clear strategy from beginning to end. A well timed App-O-Rama from both parents can turn the points collecting project into one that takes just a couple months.

Weaknesses: Award programs and availability can change without notice and leave you short of the needed miles and points for your trip.

Recommendations: For most international destinations, the easiest and most flexible strategy is to earn enough to book one way on one airline or alliance, and the return on another airline and alliance.

The Demand Schedule.

I’m stealing this one from Milenomics. If you want to travel several times during the year, you switch from just one trip at a time to looking at your travel and cashback wants and needs for a year or more. You’ll likely be doing more than one App-O-Rama per year, and may be doing significant but predictable manufactured spending.

Strengths: You can build a schedule and stick to it, and earn only the miles you expect to use. This gives you the best chance to always get the most from your miles. It doesn’t require constant checking of blogs, forums and changing program rules.

Weaknesses: It’s not so simple anymore, and you’re still subject to changes in program rules. This one relies too much on planning for my tastes, but may help to keep you more organized than more aggressive strategies.

Recommendations: Read. Study award charts and credit card offer timing. Do lots of dummy bookings. Study the sweet spots that exist from your home airports.

Earn and Burn.

This is the favorite of aviation buffs, first-class aficionados and others with flexible schedules who use miles to stretch significant travel budgets further. Many people use this strategy while buying points or doing large volumes of manufactured spending and incurring costs along the way that are not offset by other arbitrage activities. Since they are collecting with the sole goal of traveling in style, they want to use their miles as soon as possible to avoid losing value of this pseudo-currency they have been paying for.

Strengths: You can accomplish a lot of travel in style at a much lower cost than paying for the same tickets and high-end hotels.

Weaknesses: I think the Vendoming* and status-chasing that results all too often takes the focus off of what is important in travel. There really isn’t necessarily anything frugal or money-saving about this approach unless you were actually going to pay for that first-class seat. Many people wind up taking trips they barely want or enjoy because they have collected points or free nights that they can’t bear to see expire or be devalued.

Recommendations: This one is not for me at all.

Opportunistic Hoarding.

I was going to give this approach a different name but I like this one, from the Frequent Miler, better. This is where we are at right now. There is minimal long-range planning other than a plan to acquire the maximum number of miles, points and cash at the lowest possible cost.

Strengths: You can earn so many points and miles that you have to start giving them away, which is a lot of fun. You can do this to your travel patterns with minimal or no extra cost. It’s a lot of fun!

Weaknesses: Staying on top of every offer and deal, tracking applications and manufacturing the required spending takes a lot of time. Your balances may get way out of whack with some not high enough for your needs and others more than you could ever use, and it may not be possible to get the highest value from each of the miles and points you earn. You may wind up with orphan accounts that were opened for a specific purpose and never quite work into any trip plans. And again you may wind up taking trips you don’t want because you just can’t let that free night certificate expire.

Recommendations: Start small, and tread carefully! Then once you master the basics of manufactured spending, you can jump on basically any deal that works for you.

Which one works for you?

Only a few of us fit neatly into any one of these categories, and you definitely don’t have to choose or stick with just one. Hopefully you’ll travel occasionally and that will throw a monkey wrench in your points collection planning!

*The word Vendoming was, I think, coined by Dia the Deal Mommy on Twitter. Scott over at Portland Travel Tips also wrote a great post on the concept. I don’t know exactly what ‘Vendoming’ means to Dia, but to me it is the practice of staying in very high-end places so you can say you stayed in a high-end place full of high-end people enjoying high-end service, all of whom are there for the purpose of staying on a high-end place full of high-end people gushing over all the high-end stuff and service. Also it gives me the chance to insert one of my favorite cartoons!

Disclosure: None of the approaches mentioned change the fact that if you spend more on credit cards than you can pay in full each month, you will lose. Big time. One size still does not fit all.

– Kenny