In Ramit Sethi's book, I Will Teach You to be Rich, Sethi spends a lot of time explaining the ins and outs of personal finances and investing. He advises in a no-nonsense fashion and manages to make personal finance exciting and accessible to everyone. He encourages his readers to spend extravagantly on the items or lifestyle choices they care about the most while also cutting ruthlessly on the things they do not care about. Often these items of little concern can become large financial drains. I love this concept and think it makes a lot of sense. If we stop letting life happen to us and instead find a plan and be intentional, we can shift our resources to what matters most to us. For example, I have found that if I stop to think more about my purchases and their uses or importance in my life, it's easier to see that many things become unnecessary or burdens in the end. Over the past couple of years, we have looked more closely at our purchases to make sure that they each count. Travel and experiences shared as a family has become a huge priority for us, and an essential part of how we help our boys understand the world and all of our unique differences. I hope these tips can help you do the same if you share our goals.
1. Make memories, not things a priority
Travel has become a very big important part of our lives. Making memories and building experiences rather than collecting items to maintain has become our focus. With this in mind, the money we have previously spent on physical things has diverted to a savings account dedicated to travel expenses. Making travel affordable for you is not always about finding a lower price; it is about deciding that it's important to you, making it a priority and planning correctly. That might mean eating at home more often or fewer trips to Target, but it's well worth the sacrifice if travel is your goal.
2. Start with 5%
In The 5 Day Weekend: Freedom to Make Your Life and Work Rich with Purpose, the authors, Nik Halik, and Garrett B. Gunderson, advise readers to set aside 5% of their income to be directly deposited into a savings account. I have this money automatically diverted into a high yield savings account with Ally and have set my percentage a little higher than the 5%. As we have worked to get our finances in better order, we have been able to increase this amount over time. Honestly, I do not miss the money because I never see it, and it is always waiting for me when we return from vacation to help pay off some of the food and other expenses incurred during the trip. I highly recommend setting up such an account for yourself. Saving for any occasion is always more comfortable when it is automatically deposited from your paycheck. Online high-interest savings accounts like Ally and many others are also a good idea because the funds are not as easily accessible as they would be in a savings account connected with your daily-use checking account. Additionally, your money will be making a little bit more for you with higher interest rates.
3. Bundle your flights and hotels
I like to use the bundling feature with Expedia to find great deals. I have booked two trips this way to Rome and Spain. On our seven day trip to Rome, we paid around $1000/per person for our flight and hotel combined for four people. When I checked directly with the airline to make sure I was getting the best deal, I found that I could not get an airline ticket alone for less than what I was paying for both the flight and the hotel. I am often shocked at how high airline tickets can be when purchased alone. Test it out for yourself, unless you are getting a crazy deal on a ticket, which can happen, I have found that bundling is the best value.
4. Take Advantage of Credit Card Offers
On top of the discounts we find when we bundle our flights and hotels, we find significant additional savings by utilizing credit card sign-on offers to collect huge chunks of points.
When using credit card points to pay for part of your vacation, you should consider several factors and use these tips.
-Where do you want to go? Some credit cards are linked to specific hotels or airlines. If you are looking to travel to Europe, you might pick an airline credit card that offers a large sign on point bonus for an airline that flies to Europe. On the other hand, a Southwest Credit Card might be a good option if you want to travel within the United States, and Southwest offers multiple flight options through your local airport. When it comes to hotel chains, location is also essential. Check to make sure hotels are available where you want to travel and on the side of town where the attractions are that you would like to visit.
What are you looking for in the card? Some cards offer extra benefits, like TSA Pre-Check, lounge access, airline credits, and more. If you often travel for work and know you will be spending a lot of time at the airport, these benefits might make these cards worth the annual fee. Such cards include the Chase Sapphire Reserve and the American Express Platinum. I have both cards and think they are both good values considering the high sign-on bonus and other perks. We recently signed up for the American Express Platinum card, which has an annual fee of $550, but comes with lots of perks including, but not limited to the following: 60,000 point sign-on bonus (worth around $600), a monthly Uber credit, $50 credit to Saks Fifth Avenue every 6 months, $200 Airline Credit, free TSA Pre-Check or Global Entry, and access to hundreds of airport lounges around the world, which offer comfort and free food and beverages. If none of this matters to you and you are looking for a once a year nearly free trip, I advise you to find a low to no-fee card like the Capital One Venture card or a hotel/airline card that suits your needs as mentioned before.
Can you hit the minimum spend? If you simply do not spend much money that could be a problem. You can sometimes get around this by timing big-ticket purchases around the opening of a new card. For example, we purchase our auto insurance annually, put the entire amount on a credit card, and pay it off. Think about big-ticket purchases like new appliances, a down payment on a car, or even work expenses, if you can use a personal credit card.
Utilize Cashbackmonitor.com. I love this site because it allows me to get the biggest bang for my purchases online. For example, if you are out of makeup and need to make a purchase online from Ulta, you can log in, type in Ulta and see who is offering the most points or even cash back from the online portal. Your credit card might be offering 2x points, and American Airlines might be offering 5X miles, for instance.
5. Get your finances in order
Are you in credit card debt? Before you can start seeing the world, you should take the time to get your finances in order. It's not productive to get a free vacation with points while you are paying the credit card company 18% interest or more on a revolving balance. Be sure you can pay off your credit card each month before you attempt to start using credit card points to travel or purchasing discounted travel by bundling your flights and hotels. If you are reading this, and find yourself buried in debt, be encouraged, we have all been in the same position. You can find your way out with some discipline and planning. There is no limit to the free resources available. Start by downloading the Mint app, which is completely free, and start tracking your spending. You might notice you are spending way more than you should be going out to eat or during weekly trips to Target to buy things you don't remember exist two weeks later. You can also find lots of great podcasts that are full of helpful information. Some of my favorites are the ChooseFI Podcast and the BiggerPockets Money Podcast. There are also podcasts out there to help you make more money to move towards your travel goals faster like the Side Hustle Nation Podcast.
If you want to travel, it can be done. I hope these tips will help you find a way to get where you want to go for less than you might expect. Planning and a little bit of homework go a long way.
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