Note: I’m introducing some new software in this post so please check it out and let me know what you think!
You’re a Mad Fientist reader so I have no doubt you have a good handle on your investment portfolio. If you’re like me, you probably spend a lot of time each month adding numbers to your FI Spreadsheet, analyzing your asset allocation in Personal Capital, and charting your progress to financial independence in the FI Laboratory.
What if I told you there’s another portfolio you should also be managing?
This other portfolio is even better than your normal investment portfolio because…
- You can build up this portfolio for free
- The currency stored in the portfolio isn’t taxed at all
- It reduces the amount you need to withdraw from your investment portfolio during early retirement
Sounds great, right? It definitely is.
The portfolio I’m talking about is your travel miles/points portfolio.
Value of Travel Hacking
You may be a bit skeptical of the value of travel hacking but I can tell you that even though I’m quite conservative compared to most travel hackers, I’ve still accumulated millions of miles/points and saved tens of thousands of dollars with minimal effort!
In addition to the monetary value of points/miles, there are also fringe benefits that are worth exploring.
Having a stockpile of miles and points increases your options, which allows you to potentially save a lot of money.
What do you do if you need a flight on a certain date but prices are extortionate? If you don’t have any frequent flyer miles, you probably just have to bite the bullet and pay the high prices.
If instead you have hundreds of thousands of miles in various airline programs, you have many more options to explore and will likely find a way to get where you need to go without spending a fortune.
There are also many minor perks that add up to make traveling much easier and more enjoyable.
I have obtained status with many programs through the credit cards I’ve applied for over the years so I often get upgraded to better hotel rooms, get to board the plane early, am able to cancel/change my itinerary for free, etc. so my travel days end up being much more relaxed.
Miles and points also allow you to do exciting things you’d never actually pay money to do but are enjoyable nonetheless.
The picture at the top of this post is actually a picture of me drinking ~$200/bottle Krug champagne at 5:10am in Doha, Qatar (all thanks to an American Airlines award redemption).
Would I ever pay that much for a drink? No way!
Was it ridiculously delicious and am I glad I had the chance to try it for free? Absolutely!
How to Build Your Portfolio
The benefits of putting just a small amount of effort into this hobby are plentiful so let’s talk about the best way to grow your other portfolio (even if you don’t have any immediate trips planned).
The single best way to get points and miles as cheaply and quickly as possible is to sign up for credit card offers.
Since most Americans are idiots with money, credit card companies offer incredibly generous signup bonuses because they think you’ll rack up a big balance and will spend many years paying them a lot of interest.
You obviously won’t do that though and will instead pay off your balances in full every month but that doesn’t mean you shouldn’t take advantage of the amazing offers that are available.
So how do you find the best signup bonuses?
Mad Travel Cards
I actually wrote a web application back in 2012 that helps you do just that so after dusting off the old code and making some significant improvements, I’m excited to introduce Mad Travel Cards!
This application is a custom credit card search tool I created specifically for travel hackers that allows you to find the very best signup-bonus offers for the programs you want to focus on*.
Since the mile/point landscape is quite confusing and it’s hard to keep track of which points convert into which programs (and at what transfer ratios), it’s hard to determine the best cards to get. This tool solves that problem.
Here’s a quick intro video I created to show why I think it is by far the best credit card search tool for travelers:
So now that you have a way to easily find the best cards, it’s time to decide which programs to focus on.
There are a few things to consider when deciding which points and miles to get.
Specific Trip Planned?
If you have a specific trip coming up you want to use miles for, it makes sense to research the best points to get where you want to go.
If you’re planning to travel to Europe, for example, you should Google, “Best miles to get from USA to Europe”.
Take a look at which miles the various travel bloggers recommend for your trip and if you see any posts from the travel blog, Travel Is Free, click those articles first because he’s the best when it comes to maximizing the value of miles/points.
If you don’t have a specific trip coming up, I’d recommend accumulating flexible points.
Flexible points can be transfered to multiple airline and hotel programs so they give you more options and they also reduce the risk that a devaluation will decimate the value of your miles/points before you use them.
The two best flexible points programs are Chase Ultimate Rewards and American Express Membership Rewards.
These two types of points can be transfered to many different airline/hotel programs so this is where I’ve focused the majority of my effort (my balances in these two programs alone are currently worth nearly $10,000, based on The Points Guy’s latest valuations).
You can easily find the best Chase and Amex offers in the Mad Travel Cards tool by just clicking the two buttons highlighted in the image below.
Before proceeding with an application though, there are a few other things to keep in mind when deciding which card to get…
Most cards make you spend a certain amount within the first x months to get the signup bonus so you need to make sure you’ll be able to hit that amount without spending more than you normally would.
There are ways to “manufacture spend” (i.e. meet the spend requirements without actually spending the money) but those strategies are usually too much hassle for me so I haven’t done much of that and instead just make sure my normal spending can achieve the bonuses.
Another thing to keep in mind is your relationship with the various banks. You don’t want to apply for and cancel a bunch of cards every year because the banks will stop approving you.
The card companies are starting to crack down even more on excessive applications so now it’s more important than ever to have an intelligent strategy going in so you don’t miss out on the best deals or piss off the banks.
This is one of the main reasons you should build up your balances gradually over time, rather than try to frantically get a lot of points right before you go travelling.
As I mentioned before, my approach is quite conservative but after doing it for nearly a decade, I’ve accumulated millions of miles/points, I still have a 800+ credit score, and I maintain great relationships with all the big issuers.
Here’s my conservative but lucrative strategy in a nutshell:
- Apply for a new card every 3-6 months
- Accumulate flexible points unless I have a specific trip planned
- Only apply for cards with spending requirements I can achieve with normal spending
- Apply for cards with no first-year fees
- Downgrade fee cards to no-fee cards, when possible
- Only pay annual fees when the benefits outweigh the costs
- Keep at least one card from each issuer at all times
Since I now have an incredible new email service provider that allows me to easily create different segments and email sequences, I’ve created a new email series for anyone who would like to implement my approach for accumulating miles and points.
The email series consists of an email once every ~3 months that contains the following:
- Which card I’d recommend you apply for at that time
- Reminders to cancel or downgrade cards before the annual fee is due (with recommendations on which cards to downgrade to and why)
- Alerts for limited-time signup bonuses and offers
This email series will help you accumulate miles and points in the most efficient manner possible, just as I’ve attempted to do over the years.
If you want to sign up and are already on my email list, just click the link at the bottom the email I sent you today and you’ll be added to this new Travel Hacker segment.
If you’re not on my email list (or if you don’t want to hunt for today’s email again), just enter your details below and you’ll instantly get an email containing the card I recommend you get first and why. The email will also include the limited-time offers that currently exist, including two highest-offer-ever signup bonuses that expire on Wednesday.
After receiving the first email, you’ll then get another email in roughly 3 months with the second card I’d recommend (and the reasons for that choice), then another 3 months after that, and so on.
If any exceptional signup bonuses come out in the meantime, I’ll also send you a message to let you know so that you can take advantage of the best limited-time offers when they come along.
I will make sure to keep the emails updated so even if you’re reading this post months from now, you can still sign up to the email series and be confident you’ll get the best strategy for the current credit-card environment (including the limited-time offers available at the time you sign up).
Miles and points have allowed me to travel to over 40 countries while pursuing financial independence and will help me travel to even more after I finish working at the end of July. Hopefully this post has motivated you to start building your own mile/point portfolio so you too will have hundreds of thousands of points to use for exciting trips when you eventually leave your job!
*I want to give a big thanks to Brad from Travel Miles 101 and all the other beta testers for their help when I was developing this application.
Also, full disclosure…I could receive a commission if you use some of the credit card links on the Mad Travel Cards page and in this post. However, I will always post the highest signup bonuses, regardless of whether I earn a commission or not, so you can be sure you’re clicking on the best offers available.
Finally, I’d love to hear any feedback you have regarding the Mad Travel Cards tool so please let me know what you think in the comments below!
Travel Miles 101 - Travel Hacking and Financial Independence
The guys from Travel Miles 101 stop by the Financial Independence Podcast to talk about investing, early retirement, and the benefits of travel hacking!