Budgeting – Despite points, travel is expensive

I’m a personal finance, travel, and software geek. I like systems and I’m frugal. I’m told it’s all due to my Scottish heritage. There’s something that’s bothered me a bit among the many blogs and sites I read. I can’t recall, despite reading thousands (tens of thousands?) of posts, practically any discussion of personal budgeting and this hobby.

Establish a travel budget

After I got married, we relocated to New Orleans and I knew that we’d need to make it back to visit family pretty often. I also realized our miles wouldn’t fully cover that. As a personal finance geek, I established a budget item of $300/month for travel. My logic was this: 6 trips/year @ $300/person for two people would require a budget of $300/mo. Back then I used ING Direct because you could create (sub) accounts online with their own automatic deposit schedules so every month, some funding was withdrawn from my joint checking. Then, when I traveled, I’d withdraw the amount I spent from the travel budget back into joint checking where credit cards were paid from. A bit tedious but keep reading…

I also maintain a net worth spreadsheet and tracked miles as an asset as they were scarce and valuable (I was really excited when I hit 100k NW miles). If I found a cheap enough fare home, I’d pay for it from the budget. If it was expensive, I’d try to use miles (my old value was 25k NW = $400). This all made perfect sense except that fares between New Orleans and Minneapolis were more expensive than expected and my miles were dropping quickly.

It was then that I found the online communities and blogs and discovered that miles needn’t be scarce at all. I dived in and so it began. My original goals were just to reduce the cash outlay for domestic tickets in our budget and save up for a trip abroad… Within months I knew flying premium cabins internationally was within reach.

In retrospect, I think establishing a budget for what you’d spend on travel without the benefit of miles and points is worthwhile. Here’s why…

Travel is EXPENSIVE even with points & miles

We now generate a lot of miles and points. We rarely pay for a plane ticket anywhere unless it’s using some cash equivalent (vouchers, US Flexperks, some companion ticket, thank you points, etc) to support airline status and then it’s very deliberate. We make it home often but also fit in weekend trips here and there and an occasional big trip. That’s all VERY different than before.  Last year I flew 104,000 miles and so far this year I’m at 87,000 as of early May with fewer domestic and more international flights. Compared to the really heavy travelers, I realize these numbers don’t come close but they’re big for me and the majority are leisure.

One thing has stayed the same, our monthly budget. I think this is very, very good thing.

It should be obvious that travel is expensive but it wasn’t as obvious to me as it should have been when I started. Traveling a lot is expensive even if you keep things very modest. Consider these costs:

  • Eating – We bring food, we go to grocery stores, we eat hot dogs off the street. And, yes, we eat out but usually on a tight budget. It adds up anyway.
  • Lodging – Even with SPG points and cash stays, you’re often looking at $45-$90/night. Those add up. And the other options deplete your points quickly. Then there are the places without good points options and/or poor point values (like our trips to the gulf shore beaches).
  • Parking at the airport – It’s either $38 one-way just to get to the airport for us or parking at ~$9/day.
  • Car rentals – We find good bargains but usually not free. Call that $25/day average.
  • Ground transport – ~$50 each way from the airport in Buenos Aires to downtown. We took the bus back which was 2.5 hours but only US$1/person and more fun than the taxi once anyway.
  • Activities – Park fees, shows, etc. Sure we’d do some of this at home but we do more when we travel.
  • Miscellaneous – All sorts of other miscellaneous expenses too…visas, passports, vaccinations, internet, etc.

A tiny note about our budget…  When we’re traveling, we do factor in that we’d have been spending some of our personal discretionary budgets were we at home anyway but we’re realistic about that.

One of my core tenets has been that this hobby can improve our lifestyle but it shouldn’t, at least without it being a conscious decision, do so in a way that it harms our other goals in life. We still have to fund retirement accounts, pay for home improvements, save for a rainy day, pay down the mortgage, and more. All this “free” travel isn’t free at all! In fact, I’d argue that it can be a trap if you aren’t savvy and wise about it.

But wait, there’s more…

The points/miles aren’t free (or risk free) either

Some cards are worth the annual fee so we pay more annual fees than I expected. Gift card plays can be great but usually involve some cash investment. Buying Wyndham, Choice, Best Western, Hyatt, and Alamo points/certs via Daily Getaways involves some very real money. Propping up your hits in the US Air Grand Slam doesn’t come free either. And neither are mattress runs to generate massive Club Carlson points. I could go on and on and on. I’ve done all of theses and more and put very real money into this.

We sit on 2-3 million points of various sorts at a time. Quite a few had some hard cost to them and then there’s the time.  Is it worth it? For us, I think so.

I like the game but it can get out of hand quickly. It also has risks…

Last year I got one of our Amex account “noted” for a promo that gave out 5000 Amex Membership Rewards Points per $100+ purchase on Delta. Combined with my 100% elite bonus as a Platinum Medallion, I loaded up. I believe the tally was 20-25 purchases, typically $150 or less one-way tickets. At $125 or less on a long’ish fare, I was generally in positive value. As I started, I was ecstatic – this was a huge play with a path to cash out via Amex MR > Delta SkyMiles > Amex gift cards.  Then things starting going wrong.  First, Delta withdrew the ability for elites to cash out 11,000 Skymiles for a $100 Amex GC before I’d really realized all the miles. That closed out the way I was going to offset the ~$2,000 I’d spent on tickets. Then, in the fall of 2011, Amex started rejecting claims by people for promos that they were not targeted for but which they’d previously been told, often in writing, their account was “noted” for (a common and very lucrative approach last year). All of a sudden, 100k+ Amex MR were at risk. My $2,000 was spent and unrecoverable and I might not even have picked up the points I was going for. I was sweating bullets. It more or less worked out and is a big reason I’m Delta Diamond this year. None of my plays have went horribly bad but some have been close.

Back to the budget… All of these costs are taken out of our travel budget. Sometimes it’s negative and I’ve accepted that and then big payoffs roll in like yesterday’s check from PlasticJungle for some Sears gift cards I sold.

Whether you just pay an occasional annual fee, buy a few points here and there, or make risky moves, I firmly believe this should come out of your travel budget.

Unchecked, this gets out of hand

I really enjoy this hobby but I think we need to be honest as a community about some aspects of it and, more importantly, honest with ourselves.

A good deal often ceases to be a good deal when you buy more than you can use. I know I’ve been guilty of that. And these are not long-term investments. The game and valuations change all the time.

You can play this game with very little money/credit or a lot. You can invest a little time or a lot. It can be low or high risk. It can also pay you back in fantastic fashion.

Unchecked though, it’s dangerous even if you’re succeeding. You can easily spend far more than you expected and that can happen without you even realizing it as a hundred here and a hundred there go out the door, at a very real cost to your household savings/investment or, worse, your credit. I’d really feel terrible if someone I know is hurt by it.

Practical suggestions

I’ll get off my soapbox now.

  • Establish a travel budget just like you would any other budget. ING Direct is really great for this but any separate account will do. When the money’s separate from your other accounts, there’s no missing that you’ve overrun your travel budget.
  • Set the budget to something reasonable, something rooted more in what you’d do without points/miles than with them.
  • Use points/miles to extend the budget you established.
  • Recognize that secondary costs of all this come out of your travel budget.
  • Credit is important. Use it wisely. Read up until you understand it.
  • Start small!
  • Tracking details and follow-through aren’t important, they’re essential.
  • Ask for help.
  • Don’t put real cash (more than a typical annual fee) on the table unless you’ve studied the risks.
  • Have fun.

Oh and back to a comment at the beginning… Once I reached around 1.5m miles/points in our household I stopped tracking miles/points as a household asset. They have value but, absent liquidity, only insofar as they’re defraying expenses you’d otherwise have.



  1. […] for them (or us). Third, it assumes that points and miles are reasonably in balance. We maintain a household budget for travel rooted in what we have to do (absent points/miles). Imagine that our household budget had $500 in […]

  2. Just found your blog through SPG. I agree so much with what you have said here. Many bloggers/FTs make it sound like they an infinite amount of money to get “free” travel. I only use my travel budget or excess daily spending money for the extra I need to earn a few more miles. I am not willing to get into the selling of things on Amazon etc.

    1. Thanks for the kind comment. It’s so easy to get excited, at least for me, and dive in without the full appreciation of what happens after the points are banked. I’m all for playing it however one wants but wanted to encourage people to go in with their eyes open.

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