I asked this question last night on twitter, and got a couple of responses, and I’d like to dive into it further in this post. Let’s say you are starting out today with zero miles and want to cover 5 years of travel like a rockstar.. how much do you need to MS to achieve it?
There’s a ton of blogs out there who promote this lifestyle, and push a credit card or 7 on you to achieve it. I believe that this can be a solution for a trip, perhaps two, but can it sustain the lifestyle that they are selling you? As I think on the topic more I believe it is a double edged sword. If you don’t MS you cannot sustain this for an indefinite period, but if you MS too much, you are wasting your time and effort.
The concept is drawn from recent thoughts on retirement. I feel that many people don’t really know their their retirement ‘number’. The corollary here is that many aren’t saving enough towards it (not MSing enough) and some might even continue working when it is no longer necessary (MSing too much). Where is that sweet spot?
This is a great ‘out’ from such thoughts, but there is no way that I travel the same way as you do, nor the same way I would have 2 years ago. Everyone has their own needs. But it doesn’t mean that you cannot ballpark them.
Five years is too long
I’m not confident that we will have award travel as we currently know it five years from now. However, the real goal here is sustainable point generation to meet our needs.
OK – so how much do you need?
$50k Year 1; $250k thereafter. RT @Saverocity: What's the minimum MS you need to cover 5 years of fancy travel? Signup bonuses are allowed.
— Seth Miller (@WandrMe) April 13, 2015
Remember, Seth has his own, subjective travel needs, but let’s dive into these numbers and see what they could yield. Note, that another person suggested similar numbers:
@saverocity $70K per year incl signup bonuses per person. w/out bonuses $250K per year.
— Jon-Bentley Wiggins (@beawarded) April 13, 2015
What will $50K buy you?
An average min spend seems to be around $3,000, sometimes it goes to $5K, or even $10K for Business cards, but the majority hover at $3K I’d argue that we might well see bonuses along the following averages:
- Cash Like 40K
- Transferable 60K
- Airline Points 50K
- Gutted Hotel Points 70K
- Soon to be gutted hotel points 30K
I’m not going to do the fancy chart bollocks here. But if you consider the above, for ‘cash like’ I would say things like the Arrival or the Cap One Venture card. They seem to offer around 40K pts for a ‘cash like’ value. The transferables are Ultimate Rewards and Membership rewards, and if you look at the 50-150K bonuses on offer an average of 60K seems reasonable. Airline points seem to range between 40-60K, with a spike to 100K for the Executive card.
Hotel points are cheap because they have gutted the programs so much – you can easily get big signup bonuses on programs like Marriott and Hilton because you need a ton of points for a night, other programs, like SPG have not devalued, so the bonus is lower…
As you can see, I’m just ballparking here.
How many points can $50K yield?
Again, its all about timing, but if we use $3K min spend goals, $50K in spend will yield 16.67 signup bonus, plus 50K base points. If we pushed the number up a little to include a mix of personal and business cards then perhaps we could say 12.25 signup bonuses (using an average signup bonus price of $4000 spend).
That’s a lot of points right there. but is it enough? That comes down to your ability to travel.
Problems from lack of churnability
Churning cards allows you to sign up for the same bonus many times over. Kenny, from Miles4More apparently churned the AA Executive card 42 times, only surpassed and Phil from MilesAbound who churned it 109 times. However, not all cards will allow such tactics. This can mean that people run out of cards to apply for.
At some point, you need to find the ‘next best card’ in order to fill your 16.67 from $50K capability. Sooner or later, you might find yourself with nothing else to apply for than the Walmart card that comes with a 2 litre bottle of Coke as a bonus….
This is why people want to know the answer to:
How long before I can apply for the same card and get the bonus again?
This ties into the thoughts of Seth and Jon-Bentley from twitter – year one you can make it pretty easily, but year 2 you have applied for the good cards are now need to supplement the ‘dregs’ with more MS. I don’t know about you, but I find this stuff fascinating! Because that $250K doesn’t need to be ‘pure ms’ it could be a couple of sign up bonuses, and then some MS? Or could it be 16.67 signup bonuses that are inferior, topped up with MS?
Could it be that we are just totally forgetting about a slew of cards that mean we don’t even need to up the MS spend?
Getting into a groove
I’ve been travelling for free now for about 6 years, but in that time I have been very blinkered by the manner in which I redeem points. I’ve only redeemed points for flights using AAdvantage, MileagePlus, Avios, and just recently JetBlue. That means that I have never churned the Alaska card (huge value) nor have I redeemed Membership Rewards for ANA (pretty damn good even after a devaluation). I’ve also never actively earned a Thank You Point. Personally I find that I’m limited by my capacity to learn the new programs, especially as travel isn’t that important to me.
Where I’d like to go with this concept
I’d like to really drill down into how much you actually need to MS. The replies above are good, but I wonder if they are limited by lack of vision regarding ‘other ways’ to travel, in the same way that my own approach has been blinkered to what I know best. I’d also like to dive into ‘other cards’ more to see how that works. EG in year 1 you might apply for a certain program, like United and fuel it with a UA card, and a mix of UR cards. Then in year 2 you focus on a new chain, and circle back to UA once you are ‘allowed’ to get new signup bonuses again.
I really think that by exploring this further we might be able to tighten up our game, and waste less time on MS. I’d like to take it further, and once we set targets of ‘I need $50K’ or ‘I need $250K’ we could build out easy packages to achieve this. $50K might sound like a lot, but a single Serve card can yield almost double that.