Note that most of our trips are unplanned due to military deployments.
Introduction: Our Story
My husband is from Maine, USA, and I’m from the Philippines. And as a military household, we live so far away from our families.
When we’re still living in Japan, we always try to visit our families as much as possible. But doing so is anything but cheap.
A roundtrip flight from Japan to the Philippines costs $400-$600. While a flight from Japan to Maine costs $1,500-$1,800. This isn’t terribly expensive for one person, but we need 3 tickets.
We used to visit my husband’s family every year, and although Maine is beautiful, and it’s always nice to spend time with his family, our happiness was always short-lived.
That’s because we would return home to thousands of dollars of credit card debt from our flight tickets and the cost of our overall trip.
This was also during the same time we were paying off our wedding debt. It was embarrassing. But we were one of the many households overrun with credit card debts.
We were a financial wreck.
How We Achieved Financial Success
We got tired of having nothing left on our bank accounts at the end of each month just because of our debt. So we decided to straighten out our finances.
How we did it? I’ll share some things:
1. Controlled our money (to make it stop controlling us).
We stopped accumulating any more debt. We cut back on groceries, stopped buying junk foods and other stuff that don’t add value to our lives. We also became mindful of our electricity and water use. And we started auto-allotting savings every month.
2. Sold stuff not being used.
I sold some stuff that I don’t really use anymore such as a few camera gears and clothes that no longer fit. They were just sitting in my closet, so I figured it’s much better to rid of them, sell them. We also sold some baby gear that our daughter has outgrown. Overall, we earned an extra $1,000+ just selling things we don’t need and it helped pay off our debt.
3. Helped my husband in making extra income.
After I gave birth, I couldn’t go back to work. So I started a blog and hoped to make money off it. Fortunately, it did and it helped pay off our debt. And now, my blogging income helps us live comfortably while saving for our future plans. If you’re interested in how to start a blog and earn extra income, fill-out this form and I’ll send you my Blogging Masterclass Course.
How We Discovered FREE Travel
The flight to the Philippines was manageable, as it was easy to set aside $75 a month to be able to visit every 2 years. It was the flight to Maine that had impacted our financial decisions the most.
Going there just wasn’t something we could do on a whim anymore. We needed to save $5,400 for the three of us, which is $225 a month for 2 years. It was a bit too much for us.
Is saving $5,400 a good plan? Maybe. But it’s not good in the long run. It could delay our plans for our future.
It could also require my husband to stay in the military longer than necessary. And could, perhaps, also require me to hustle online very badly. Or at least, that’s what I thought.
That was when I met a guy who travels the world for free that got me hooked. He called it “travel hacking.”
‘Hacking’ seems to imply something shady, but this whole travel hacking thing is legal.
So what is travel hacking?
In simple terms: It’s just finding ways to accrue points by using credit cards, paying the outstanding balance in full, and use those points for travel.
So we decided to look into travel hacking.
Our Travel Hacking Success Story
Our timeline below hopes to give you a better picture of how travel hacking has benefitted our family.
|Total money saved||$7,500++|
|2014-2016||Debt of about $10,000+ from the wedding, flight tickets, and having a new baby.|
|2016-2017||Straightened out our finances. My blog started earning extra money.|
|May 2017||All debts paid.|
|September 2017||Started travel hacking.|
|April 2018||Our family (2 Adults, 1 Child) flew from Japan to Maine round trip. We only paid $249 of taxes.|
Money saved: $5,400+
|April 2018||We stayed at Four Points by Sheraton, a 3-star hotel in Bangor Airport when we arrived. We had a complimentary room upgrade too. We paid nothing.|
Money saved: $130+
|August 2018||Husband deployed. So my daughter and I flew from Japan to Manila roundtrip. We only paid $85 of taxes.|
Money saved: $600+
|September 2018||We stayed in a 5-star hotel in Cebu for 3 nights during my husband’s port visit. We paid nothing.|
Money saved: $450+
|October 2018||I flew from Manila to Jeju, to meet my husband who had a port visit in Jeju Island, South Korea. I only paid $187 of taxes.|
Money saved: $320+
|February 2019||My husband had a 3-day port visit in Sapporo, Hokkaido and stayed at a hotel. He paid nothing.|
Money saved: $240+
|April 2019||We had a staycation in the Tokyo Bay area and booked 2 nights in the Hilton Tokyo Hotel in Odaiba. We paid nothing.|
Money saved: $360+
Step 1: Learn travel hacking.
You obtain huge bonus rewards when you sign up for individual credit cards. These bonus rewards can be in the form of miles or points.
Miles vs Points
Miles or Frequent Flyer Program are associated with a partner airline (e.g., Delta’s frequent flyer program is called Delta SkyMiles, United MileagePlus for United Airlines, etc. ).
Points, on the other hand, are Bank Program Points and aren’t associated with any Frequent Flyer Program. These points offer flexibility, as they can be transferred to their airline partners or hotel partners (e.g., For Chase credit card, you’ll get Chase Ultimate Rewards points which can be transferred to a partner airline).
Bonus rewards are usually around 50,000-100,000 points or miles. And, depending on how you will use it, it’s equivalent to $600 to $2,000 of free flights or travel credit for a hotel.
What Are Things I Need To Know?
There are a few things you need to know before engaging in the travel hacking.
Fees & Minimum Spend Limits
Some credit cards will require you to pay a fee upfront to get the sign-up bonus immediately. But the most common credit card for travel hacking is the one with a minimum spending requirement during the first 3 months, which is usually between $3,000-$5,000 to get the sign-up bonus.
These cards also have annual fees. Thankfully, they (usually) waive it for the first year.
Ways to Meet the Minimum Spending Requirement
If you have at least $1,000 a month in regular expenses, it’ll be easy for you to meet the minimum spend requirement of $3,000 during the first 3 months.
When I signed up for a credit card offer with 80,000 bonus points, it had a minimum spend requirement of $4,000 during the first 3 months. So we charged ALL our expenses on that card. Food, gas, electricity, water, car insurance, we even paid our taxes using the card.
If you pay for childcare, it will be easy peasy as most childcare centers accept credit card payments. You are also in luck if you can pay your rent using your credit card.
For those of you who live a more frugal lifestyle which may make it harder to reach the minimum spend limit, try and use the cards to pay off taxes you may have; income, state, property, etc. You can also plan around any upcoming large purchases you may have.
After all, even frugal people need a new washer and dryer occasionally, or maybe a new mattress. Christmas is also a good time of year to open the card, but only if you spend no more than you would normally.
Who Should Avoid This?
Unfortunately, travel hacking isn’t necessarily available to everybody immediately. You should not attempt this if you meet the following criteria:
1. If you’re in severe debt and can’t handle credit cards. You need to settle your finances first before you engage in travel rewards. This might be the longest part of the process, but it will pay off in the end. Because when you get into travel hacking, you’re not only debt-free but also can travel for free.
2. If you have a poor credit rating. Repair and improve your credit score first.
3. If you are about to apply for a loan. Applying for a loan decreases your credit score. Now if you don’t want to reduce your credit score even further, then this is not for you.
Also, travel hacking isn’t for you if you are unable to pay all your credit card balances in full every month. By paying your balances in full, you keep your credit score high and avoid interest piling up.
This means you can apply for another credit card with even better bonuses as they come along.
Can I Engage in Travel Rewards?
You can engage in travel rewards if you are the opposite of the things above. You need to have good financial standing and credit score of at least 700.
You need to be someone able to live below your means and limit spontaneous purchases. Most importantly, you need to be able to pay off your credit card in full each month.
Fortunately for us, our finances were already sorted out when we discovered travel hacking. Read above again, on how we achieved financial success for tips.
How Will This Affect My Credit Score?
If you know how the credit score system works, only 10% of your credit score is affected by a hard pull inquiry from a company each time you apply for a new line of credit.
So, yes, it will certainly decrease your credit score when applying for a new credit card, but not that much. The reality is that with the new line of credit it will improve your credit score over time.
The benefit outweighs the cost; just as long as you consistently pay the full balance monthly.
You should also refresh yourself a bit on how FICO measures the consumer credit risk:
- Payment History: 35%. If you have late payments, it will cause your FICO score to drop.
- Amounts Owed: 30%. If you want a good score, open a new line of credit to increase your total credit available. Then all always pay it off in full on time. This is the basis of travel hacking, and it works in favor of your credit score.
- Length of credit history: 15 %. of your score. This just measures how long you’ve had a credit or the average age of all your accounts.
- Types of credit: 10%. Also called credit mix, if you have taken different kinds of loans, like a mortgage or personal loans, this also improves your credit score.
- New credit: 10%. Multiple credit inquiries can temporarily hurt your FICO score. Again temporary. Over time, the new line of credit will help improve your score.
Now, if you have a credit score of at least 720, you have a good chance of credit card approval. If you don’t know your credit score and want to improve it, I recommend signing up for an account at myFICO monitoring and credit reports.
How Do I Get Started?
First, you need to know that the substantial sign-up bonus is really all that matters. Avoid opening new cards. This is especially true for retail store cards or your credit union bank’s offer. Ignore the shiny lures and all the gimmicks.
Next, assess your monthly spending. If your regular and recurring expenses per month are around $1,000, this is going to be a natural process for you.
If you’re married, alternate opening new cards between the two of you. This means double bonuses too. Avoid signing up your spouse as a supplementary cardholder to yours no matter what.
Ready? Let’s dive into Chapter 2!
For further reading, you can also buy our recommended books for traveling for free using Miles and Points. I have Pascal Wagner’s book and it really hit the spot.
Step 2: Follow our Credit Card Opening Strategy
If you’ve heard of travel hacking before from other sources, then you’ve also probably heard these people suggest getting a Chase card first (JPMorgan Chase bank), and you’re going to hear that from us as well.
To best start this whole travel hacking game, we’re going to share with you the credit card opening strategy we used.
Why Love Chase?
Chase’s point is called Ultimate Rewards and it’s the most flexible and valuable points program we’ve found. Cardholders have the option to transfer Ultimate Rewards points to their travel partners or redeem points at a 20% discount using Chase’s own Ultimate Reward portal (more on this later).
Why Should I Get Chase Cards First?
First, know that Chase has a 5/24 rule. The simplest explanation about what 5/24 rule is:
You will not be approved for a certain Chase card if you have opened 5 or more bank accounts in the past 24 months.
All new revolving accounts on your reports (e.g., credit cards, a new line of credit, an authorized user, etc.) that are not just Chase accounts count towards this rule.
In other words, if in the past 24 months you were approved for 3 American Express Cards, 1 Capital One card, 1 retail store card, then added 1 authorized or supplementary user on your account, then you’d be denied for applying for a new Chase card because you’re over 5/24.
If you think you are over the limit, or nearly reaching it, you have to wait for 2 straight years before you can apply for a Chase card, and you shouldn’t open any new line of credit from other banks within the period.
The ‘Chase the Rewards’ Strategy
Now, if you’re under the 5/24 rule, you have the best luck in the world. There are many credit card strategies available. But we’re going to tell you our simple strategy designed to give you the most bang for your buck.
Our Credit Card Opening Strategy (in order):
- Apply for Chase Ink Business Preferred (me) – 80,000 points. $95 annual fee*.
- Apply for Chase Ink Business Preferred (husband) – 80,000 points. $95 annual fee*.
- Apply for Chase Sapphire Preferred (me) – 60,000 points. $95 annual fee*.
- Apply for Chase Sapphire Reserve (husband) – 50,000 points. $500 annual fee*.
That’s a total of 260,000 points!
Now if you’re single, you’ll just have to choose between Sapphire Preferred or Reserve. We recommend the Preferred for beginners because of a $95 annual fee, should you want to keep the card.
If you’re single, your credit card opening strategy should look like this:
- Apply for Chase Ink Business Preferred – 80,000 points.
- Apply for Chase Sapphire Preferred – 60,000 points. (Or get Chase Sapphire Reserve if you’re in the military.)
That’s a total of 140,000 points!
Now, what’s next?
Step 3: Redeem Points
In this chapter, you’ll learn how to redeem your points.
What are the ways to redeem Chase Ultimate Rewards points?
There are 3 ways:
- Cash redemption.
- Chase Ultimate Rewards portal redemption.
- Transfer points to travel partner programs.
1. Cash Redemption.
Redeeming points for cash is the worst option (1 point = 1 cent).
For example, you now have 140,000 points sitting in your account. If you redeem it for cash, it’s worth $1,400. Although not bad, it’s not a smart choice to redeem for travel, unless you really need to.
2. Chase Ultimate Rewards portal redemption.
Using your points through Chase Ultimate Rewards Portal is the simplest and easiest way to redeem them. Chase has its own travel portal that’s powered by the Expedia system.
When you use your points through the Chase portal, you’ll get a 20% discount for booking (hotel, cruise, experience, or flight) through their travel portal.
This means, if you redeem your points through the portal, your 140,000 points will be worth $1,680.
3. Transfer to a Travel Partner Program.
The third option is the best option.
For example, if you’re living near a Southwest Airlines hub, which is a Chase travel partner, you can always get the best deal on domestic flights, which always starts at as little as 4,000 points for a one-way trip.
Rather than paying for a normal one-way domestic flight that usually costs $300 and up, you only use 4,000 points and just pay the taxes.
To do this (as an example) logon to your Southwest Airlines account, search for flights using “Points” instead of “Dollars.”
Once you’ve confirmed how many points you need to book your flight, transfer your Chase Ultimate Rewards points to your Southwest Rapid Rewards account in just a minute.
You must remember that once you transfer your points, you cannot get them back. So always check the airline’s portal first to know the exact amount of points you’ll need.
This is how you’ll get the most value from the third option, saving you both a ton of points and money!
So, how did we fly from Tokyo to Maine?
Again, the third option is what we used–transfer to a travel partner program.
First, we checked which airline is a transfer partner of Chase Ultimate Rewards that flies roundtrip from TYO (Tokyo) to BGR (Bangor, Maine). In this case, it was United Airlines (United MileagePlus).
I sign-in to my United Airlines account, fill in the flight details. Select “Book with Miles” instead of “Dollars” and make sure to choose Economy and flexible dates.
Next, we looked for the dates with the lowest Economy Fare.
A roundtrip flight needs 70,000 miles per passenger. So for 3 people, that’s 210,000 miles.
Lastly, knowing that we need 210,000 miles to book the flight, we transferred our 210,000 Chase Ultimate Rewards points to a United MileagePlus account (we used my husband’s United MileagePlus account). and just pay the $248.25 tax.
If we used the Chase portal redemption, it would have cost around 432,000 points (20% discount of the original flight ticket–$5,400). That’s a waste of a lot of points!
And if we used the cash redemption, then the 210,000 points were only worth $2,100! See why cash redemption is the worst?
This is why you’ll get the most value when transferring points to a travel partner.In summary: We only used 210,000 points instead of $5,400 to fly to Maine!
Step 4: It’s Your Turn
Now it’s your turn. Go back and review Chapter 1 to see if you can engage in travel hacking. If you are, get ready to take the first step. Start with Chase Ink Business Preferred*.
80,000 Ultimate Rewards Bonus Points after you spend $5,000 on purchases in the first 3 months from account opening.
* If you’re just starting your small business (e.g. babysitting, tutoring, housekeeping, blogging, etc.), apply using your social security number instead of EIN. And choose sole proprietor as your business entity. When asked for annual business revenue or sales, you can enter zero since you’re just starting out.
If you have questions, please leave your comment below!
Recommended Books For Further Reading: