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Recently, I stumbled on a new podcast (during my paternity leave). This one podcast gave me so much motivation. The name of the podcast: Choose FI. In this instance FI stands for Financial Independence. There is a whole community out there that has placed their focus on building up their wealth in 10 or 20 years of work and then plan to retire early.
The idea with reaching financial independence is to find as many life hacks that can save you money and keep your expenses low. It’s about keeping expenses low and saving boat loads of money for approximately 10 years. Some spend 20 years on this journey, but it is completely attainable in 10 years.
One way that the FI community cuts costs is the use of travel hacking. I had heard of travel hacking and never really understood it. Therefore, I did nothing. My wife and I had been using one credit card for years and put all of our expenses on one card. Throughout the early part of our marriage, we would consistently build up enough points to fly to visit my family in Nebraska for free.
Now that we have two kids, our free travel has been harder to attain with our normal spending. I found the travel hacking information on the Choose FI podcast, did some research of my own and created a plan for my wife and I. I am feeling brave enough to tackle this strategy and we are excited to try it out (we will detail our journey along the way)!
Basically, Brad and Jonathan (the hosts of the Choose FI Podcast) gave both my wife and I the courage, because they laid out a detailed plan and they explained how much savings you can find by just completing this travel hacking strategy.
At the end of the podcast, one of the hosts (Jonathan) shared how he can book a flight to Zimbabwe for free using points that would have cost him $6,000. Jonathan was already going to spend that $6,000 to fly to Zimbabwe, but essentially saved $6,000 and still gets to go on his trip to visit family.
That’s a win-win in my book. Part of the journey to financial independence requires us to give up some things or sacrifice, however the beautiful thing about travel hacking - - - you don’t have to give up vacations and you can still keep your costs low.
The Choose FI initial podcast on travel hacking was recorded in early 2017, since then there have been changes. I have modified the plan (nicknamed the Chase Gauntlet by Jonathan) to make it work for us and work with the changes in the policy of each credit card.
Before we can jump into the plan, I want to define a few things that will make this process easier to understand.
Chase Ultimate Rewards
Rewards earned through specific Chase Credit Cards
Chase Sapphire Preferred
Chase Sapphire Reserve
Chase Ink Business Preferred
Ultimate rewards are very valuable and flexible, because they can be transferred to travel partners listed below:
Aer Lingus AerClub
British Airways Executive Club
Flying Blue AIR FRANCE KLM
Iberia Plus
JetBlue TrueBlue
Singapore Airlines KrisFlyer
Southwest Airlines Rapid Rewards®
United MileagePlus®
Virgin Atlantic Flying Club
IHG® Rewards Club
Marriott Rewards®
The Ritz-Carlton Rewards®
World of Hyatt®
Rewards points are worth 25% more than Cash (For Example, 50,000 points = $625 in travel or 50,000 = $500 in cash)
Southwest Companion Pass
Can be earned through Southwest by earning 110,000 qualifying points in a calendar year.
Chase Ultimate Rewards does not count.
Earning any Southwest Rapids Rewards does count.
This will allow you to fly with a companion for the calendar year that you earned the pass and the following calendar year.
Pass can be earned using bonus points from opening rewards credit cards.
The Plan (also nicknamed the Chase Gauntlet by Jonathan at Choose FI)
Before you start any other rewards programs, you should begin with Chase. The reason to begin with Chase is simple. Chase will not allow you to open a credit card if you have opened five within the last 24 months (called the 5/24 rule).
This also means that you should not add your spouse as an authorized user. An authorized user status will count as opening a credit card and will hurt the amount of points you can earn. Thus, a couple can open up 10 credit cards in a 24 month period (5 with one spouse and 5 with the other and no authorized user on each account).
Coupled with this plan, if you open up a capital one card and then try to open up 5 Chase cards. On the last card, you will be denied on the fifth card. You will have to wait until the end of the 24 month period since opening your first card in the credit card rewards game.
On a side note: You should not attempt this plan or open up multiple credit cards, unless you are able to pay off your credit cards in full every month. Travel hacking will not work, if you are carrying balances over every month and staying in perpetual debt.
You can win with this strategy by paying your credit card off every month! If you pay your entire balance off every month in full, you will not be charged any interest. People get in trouble with credit cards, when they perpetually pay the minimum payment only.
Below is a screenshot of our plan to use credit cards to earn points towards travel:
If you are having a hard time viewing the image, click on the image and you will be able to see all of my notes better.
Above is our 24-month plan to earn at least 618,000 points for travel. Some will be used for flights and others for hotels, but this gives us a lot of flexibility with a lot of travel scheduled for year 2019. Below are rationales and tips for each card:
No annual fee for the first year
Earns Chase Ultimate rewards, which are very flexible (50,000 points for my wife and I).
Chase Southwest Business and Plus Cards:
Open these cards back-to-back, for the same person which will allow you to earn a companion pass.
Earning a companion pass essentially doubles all of your Rapid Rewards points, as anyone can fly on the same flight with you for free!
We suggest earning the companion pass using this strategy:
Open both cards for myself
Earn the companion pass in 2019 and use in 2020.
Once my companion pass is about to expire, open both for your spouse. This will earn your spouse the companion pass!
Earns Chase Ultimate rewards, which are very flexible (80,000 points for my wife and I).
This card can be switched out for any other hotel card (Marriott or IHG).
We choose Hyatt, because there are some really nice Hyatt hotels within 3 hours of our house.
We have wanted to go to these hotels, but the prices have just been too much for us.
Earning these points will make a stay at one of these Hyatt Hotels attainable (my wife’s brother uses points to stay at these Hyatt hotels).
According to ChooseFI, Hyatt has some really good redemption deals on hotels, which make these points very valuable.
After completing our first Chase gauntlet, my wife and I plan to tackle the gauntlet again. Our second round plan is shown below. Note: This time the Chase Sapphire is not available due to a 48 month wait period before you can apply for the card again. Therefore, Chase Sapphire is replaced with the Marriott Rewards Premier Plus.
If you are having a hard time viewing the image, click on the image and you will be able to see all of my notes better.
As you can see above, I have kept everything the same. I only switched out Chase Sapphire for the Marriott Rewards credit card. I choose Marriott, because we have stayed at Marriott hotels a couple of times over the last three years and we will get some use out of these points. However, a Marriott reward is approximately 3 times less valuable than a Hyatt reward point.
I could have easily chosen the IHG rewards credit card, but we don’t use those hotels as often. If flying is more your style, the British Airways Visa Signature Card is a great option with a 100,000 point bonus if you spend $20,000 during your first year with the card. Plus you can earn a travel together ticket from British Airways by spending $30,000 each year on you credit card.
The Results
From my calculations above, I estimated a minimum of 618,000 points earned in the first Chase gauntlet and 666,000 points earned in the second Chase gauntlet. By using the Chase calculation, I estimate that these rewards will earn you at least $7,000 in free travel over the course of two years (not counting the companion pass).
That’s $7,000 dollars that you can save on travel. That’s $7,000 extra dollars to save every two years. That’s $3,500 in savings over the course of one year. My wife and I spend approximately $3,000 on travel each year for the past 5 years. That would be covered by just using these points!
The Worries
Lots of Credit Cards
It may seem weird that you will be opening up and eventually closing credit cards over and over. This was the main reason I have avoided travel hacking. I didn’t want to have 20 open credit cards. This is a true worry. You can take a step to avoid this by putting a reminder in your phone before the annual fee pops up. I taken this step with have done this with our first card.
Sadly, you will need to keep at least one credit card open for storage of points. I plan on keeping either the Chase Sapphire or the Chase Business Ink open to store Chase Ultimate Rewards Points.
Credit Score
Lots of people worry about their credit score. This can be a legitimate worry, and I really don’t know what will happen to my credit score. However, the ChooseFI guys stated that their credit score has decreased a little, but not a huge swing. They have seen maybe a 15 point drop.
I don’t see a 15 point drop as a major deal, because we are near the 800 point range for credit score. There is not much difference between 775 and 800. I will detail our credit score fluctuations in any future articles that deal with travel hacking.
Any others? I can’t think of any. Message me in the comments section and we can talk about them.
Future Updates
I am going to detail our travel and savings over the course of this travel hacking trial. Here are our current travel plans for 2019:
Cruise in March
Visit Family in April
Sister’s Graduation in May
Sister’s Graduation in June
Washington DC in September (FinCon)
Minnesota in October (Annual Nebraska Game)
Visit Family in December (Christmas 2019)
We have a minimum of seven trips to try and use travel rewards on in 2019. I love that I found this just in time to use boat loads of points on flights to Nebraska and other parts of the U.S.! We began our journey with the Chase Sapphire Preferred and we are almost halfway to our first 50,000 point redemption.
What are your thoughts? Are you ready to jump in or will you avoid travel hacking? Answer in the comments section below.
