How to Travel Big for Little

Ask most people and they would say they want to travel more.  The most common excuse is the lack of time and money.  We have all seen the commercial where the kids tells us that 768 million vacation days went unused last year in the United States.  PAID vacation days.  I would argue that it really only comes down to one thing, money.  Imagine if you won $500 million dollars in the lottery.  Would you be able to make some time to travel?  Would you be able to hire a private tutor to teach your kids while you jet to another continent on your private plane?  I can’t tell you how to win the lottery but I can show you how we managed to travel a lot more with very little money.

So if you had a little money, perhaps not lottery sized money, but some money, where would you go?  For a lot of people it would be Hawaii and since we went to Hawaii last year we will use this as an example.  For our example, we will use a typical family of four going to Hawaii.  Now Hawaii is great but not exactly cheap.  I remember when we were in Hawaii a $5 Subway foot long sandwich was $8.

Let’s price out a typical full price trip.  First you got to get there and airfare costs between $400-$800 per person depending on your departure city and time of year.  Assume you are from the West Coast or found a sale.  Four tickets at $400 is $1,600.  Once you arrive you got to stay somewhere.  Now you didn’t win the lottery so you stay at the Holiday Inn Express in Waikiki which runs around $250 a night including taxes and resort fee.  The free breakfast will help the food budget and the automatic pancake machine is just cool.  Eight nights at $250 a night is $2,000. 

You can’t go to Hawaii without going to a Luau.  When we were in Honolulu we went to Germaine’s Luau and it was pretty good.  $94 for adults, $74 for kids 4-12 coming out to $336 before tax.  It is a buffet so no tip required.  Whew!  The rest of the time you enjoy the beach for free, perhaps go to Pearl Harbor to see the Arizona Memorial for the cost of a bus ride, if you are feeling active, make the 45 minute climb of Diamond Head, also free.   Oh, gotta eat too.  Not going to lie, eating is going to be expensive.  Four subway foot longs is going to run $35 without sodas.  Sodas are bad for you anyway.  Stuff yourself at the free breakfast, swipe snacks for the day at breakfast, eat a light lunch then an inexpensive dinner to spend $100 a day for food for $800.

So let’s add it all together.  $1,600 for flights, $2,000 for hotel, $336 for a splurge Luau, $800 for food and to make a nice even $5,000 we throw in $264 for incidentals such as ice cream, bus fare and sunscreen.  So $5,000 for a week in Hawaii.  You can buy a brand new Nissan Versa for $15,000.  For a one-week vacation each year you could buy a new car every three years.  No wonder so many paid vacation days are unused.

So how do we go to Hawaii?  Three secret comes down to three things:  credit cards, timeshare presentations and bank bonuses.

Start with airfare, can’t swim to Hawaii.  Southwest flies to Hawaii and gives you two free bags. They have a totally awesome program called Companion Pass which is basically a buy one get one free flights.  Any flight, any time.  In order to get a companion pass you need to earn 125,000 qualifying points or take 100 qualifying one way flights a year.  Wonderful, however unless your job entails flying all the time there is no way any normal person can get a companion pass.  Except by using credit cards.  Let’s assume that you normally spend about $2,000 a month on credit card purchases.

First, you get a Southwest Rapid Rewards Plus credit card.  For a $69 annual fee you get 40,000 points after spending $1,000 and an additional 35,000 points after spending $5,000 in the first three months which would get you 75,000 points.  Since you spend $2,000 a month on your credit cards anyway you should be able to easily fill this requirement.  After you fulfill the sped for the first credit card, apply for a Southwest Rapid Rewards Premier Business credit card which will earn you 60,000 points after spending $3,000 in the first three months for a $99 fee.

Before you say that you are not a business, you would be surprised at how widely they define “business”.  You do not need a business license, you can just use your own social security number as your business tax ID.  Your “business” can be anything from part time babysitting, mowing lawns, selling stuff on ebay or etsy, tutoring etc.  The documentation requirements for your business are minimal.  Get a friend to let your tutor their kid once, give you $10 and you could truthfully say you have a tutoring business.

The two cards would be a total of $8,000 required spend which you should be able to fulfill in four months with your regular spending.  This is very important, do not spend more than your normally spend and always, ALWAYS pay off your credit cards in FULL EVERY MONTH. Overspending could easily lead to financial ruin.  Credit cards are powerful financial instruments which can either greatly benefit or completely destroy your financial life.

At the end of four months, you will have 140,000 points (135,000 sign up points and 5,000 spending points) which is more than enough to earn a Southwest Companion pass without ever leaving the ground.  The Companion pass is good for the rest of the year you earn it and the entire year after.  If you time it right you could get almost two years of two for one flights for $168 in credit card fees.  After one spouse gets the two cards, the other spouse gets the two cards.  In eight months, you will have 280,000 points and two companion passes so the kids fly free.

280,000 points is more than enough to get two flights from anywhere in the US to Hawaii.  Even better, the companion pass works for award flights so you buy two flights for free with points AND get two more flights for free with the Companion Pass.  We have cut that $1,600+ for flights down to $336 in credit card fees.  In reality the effective cost will be less than zero since you will have more than enough points left over after your Hawaii vacation to pay for more than $336 worth of flights.

OK, now for the hotel.  The Holiday Inn Premier Credit card offers 80,000 points sign up bonus for spending $2,000 in the first three months for an $89 annual fee.  Even better you get every fourth night free and a free night every year.  Both spouses get the card and get 160,000 points after two more month’s regular spending.  The Holiday Inn Express Waikiki cost 40,000 points per night.  80,000 points gets you two free nights, you get a free anniversary night and the fourth night is free.  The first spouse books four nights and the second spouse books four more nights.  The $2,000 for hotel has been slashed to $178 and you get Platinum Status at the hotel as well offering room upgrades based on availablity.  For even more points there is also a business version of the card.

Cool, we have gotten our flight and hotel for $514 out of pocket.  Once in Hawaii, there are a bunch of timeshare companies just begging to give you stuff for the chance to sell you a timeshare.  One of them will happily give you four tickets to Germaine’s Luau in return for two hours of your time.  They may even throw in a free lunch.  Now a lot of people will balk at spending two precious vacation hours at a high pressure sales presentation.  I don’t blame you. However, consider that the Luau cost $336.  So they are effectively paying you $336.  Two people, two hours each comes out to $84 an hour.  They will say 90 minutes but just block out two hours.  I don’t know about you but I would happily work a couple hours for $84 an hour.  If you normally earn more than $84 an hour you are wasting your time reading this article, go back to work!

You can attend timeshare presentations from several different companies depending on your tolerance for wasted time and how much free stuff you want.  In the past we have gotten gifts from timeshare presentations like two Disneyland tickets and four nights hotel, free ski lift tickets, helicopter rides, jeep tours, free meals, sailing tours, cash etc. The important thing is DON’T BUY!  Don’t be embarrassed going to these presentations with no intention of buying.  They know you don’t intend to buy, they will tell you they know at the presentation.  Don’t be seduced by their slick presentation.  No matter how great a deal they are offering you can always get a better deal using points.  We have friends that bought a timeshare and they spent so much on the purchasing the timeshare they don’t have enough money to fly to the timeshare.   Remember no matter how fancy the room, you are not spending big bucks travelling to exotic destinations to hang out in a room all day.

So we still spent $514 for credit card fees and got about $1,000 of food and incidental costs. This is $1,514 cold hard cash.  To get cold hard cash we go to bank account bonuses.  Chase is currently offering $300 to open a checking account and have a direct deposit.  There is no minimum balance required but you will need to keep $300 in the account to avoid fees.  Each spouse opens one up for a total of $600. 

Now if you got a bunch of money laying around you can open a savings account as well and deposit $15,000 for 90 days you can get $900 per person instead of $300.  You could open one account and then move the $15,000 to the other account after the 90 days are up.  This would be a good way to making some risk-free money using emergency funds.  If you do have an emergency you could always just withdraw the money and forfeit the bonus.  Most people don’t have $15,000 cash laying around so we will put a pin in that one.

You can also open up a Discover Bank savings account.  It is an online bank from the company that issues the Discover Credit cards.  They will give you $150 if you open a savings account and deposit $15,000 or $200 if you deposit $25,000.  Don’t have $15,000 or $25,000?  The interesting thing is that this bonus is for cumulative deposits not average balance.  Each spouse opens an account.  You deposit $1,000 in one account.  Transfer it to the other account then transfer it back.  Repeat 15 times and you have deposited $15,000 in each account.  Of course if you can deposit more than $1,000 then you need less transfers.  If you are diligent and get the $200 per account from Discover you got $400 for the both of you. 

Remember that you started a business to get your Southwest Business credit card?  Well, Chase will give you $500 if you open a business checking account, deposit $2,500 for 60 days and make 5 debit card purchases.   You are in the branch opening the credit card, why not get the checking account too?  Take the $2,500 you have been bouncing around the Discover Savings account and put it in the Chase business checking.  Repeat for the spouse for a total of $1,000.  Close the accounts after getting the bonuses.  That business idea you had didn’t work out after all.

There you go. Using $2,500 of the emergency fund you really should have, you have gotten $2,000 of spending money for Hawaii with no risk to your money.  So let’s review, by next year you could have four airplane tickets, eight nights hotel, a luau, food, incidentals and about $500 cash, a bunch of Southwest points and a Companion pass left over from your Hawaii vacation for a few hours effort getting credit cards, opening bank accounts and sitting through a sales presentation.  Be aware though that offers and bonuses change all the time, sometimes really great deals come up but all deals eventually expire.

You do need a little cash in the bank to start, $2,500 would be best but even a few hundred dollars would work.  You also need self-control, be responsible for your spending and have a reasonable credit score.  One common concern is how opening up multiple credit cards would affect your credit score.  You may experience a small temporary drop in credit scores when you get a new card.  However, if you pay off your balances on time every month your credit score should actually increase over time.  The reason is that a large portion of your credit score is credit usage.  If you normally charge $2,000 on to your credit card and you have one credit card with a $5,000 credit line you would have a 40% credit usage which is a big minus to your credit score.  If you get two more credit cards with $5,000 credit lines each, your credit usage would drop to 13% giving you a big boost to your score.

As a bonus, one spouse can also apply for a Chase Sapphire Reserve credit card.  Now this card has a very steep $550 annual fee.  However, it gives a slew of benefits including a $300 credit which can be used for any travel expense such as airline tickets, taxi’s, buses or hotels.  It also provides Lyft credits, Priority Pass lounge access for the entire group and Global entry.  Imagine breezing though security through the Global Entry line where you don’t have to take off your shoes and then going to a lounge with free food and drink while you wait for your flight to board.  Now that is the life. 

What are you waiting for?  Once you get into the points and bonuses game the world lays at your feet.  If you have any questions please leave comments below and I will be happy to answer them.





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