Saving For A Travel IRA
22 Sep. 2018
Saving For A Travel IRA

Anniversary and 10M

This week is my five year anniversary of being involved in the points and miles hobby/profession.  Kind of by coincidence, I’ve just passed the 10 million points mark.  That total isn’t points earned, it’s points currently banked.  I haven’t accurately kept track of points that I’ve redeemed, but know that it’s in the millions.  My current points stack looks like this:

Airline Miles:  4.2 million
Hotel Points:  3.4 million
Bank Points:  2.4 million
Total Points & Miles:  10 million
Again, I’m not posting those totals to make people feel insecure about their own points balances, but am only doing so simply to be open.  I’m very well aware that there are people with much higher totals than mine, and that there are many who earn at a higher rate than me.  I’d love to have more points and earn more than I do, but since I have three jobs, fairly limited resources, and spend a good amount of time collecting travel rewards, I’m happy with my progress.  I’ve set goals each year and have managed to achieve nearly all of them.

The Beginning

My initial goal starting out was simply to start earning travel rewards.  I wasn’t that well versed in the major points currencies and programs, but picked out some brands, specifically United Airlines and Hilton, that were familiar to me and applied for my first rewards credit cards.  After earning a couple of credit card sign up bonuses, I created the goal of trying to accrue 1 million travel rewards points in my first year in “the hobby”.  I accomplished that goal and have raised my points earning goals considerably since then but have managed to meet them each year.
After a few years of earning points, I figured out that manufactured spend was a valuable tool to earning rewards en masse.  Like most I started MSing on a smaller scale, and paid all of the fees associated with low hanging fruit MS via mall gift cards and Walmart liquidation.  Seeing my points balances increase at a pretty rapid rate was exciting, but after a few months of MS, I looked at the costs I was incurring and it was an eye opener.  Buying a depreciating asset, especially assets like travel rewards that may or may not be used anytime soon, isn’t a great financial path, so I changed courses and made a pledge to earn rewards with one overriding goal:  it had to be at no cost.  With that said, I’ve earned those 10+ million travel points and miles with no out of pocket money, and I’m very pleased with that result.

Saving vs. Hoarding

My first proper interview for my podcast was Randy Petersen in January 2018.  Randy is a legend within the travel community and was the founder of FlyerTalk.  I like to call him the godfather of travel points and miles.  When we spoke earlier this year, Randy said he had around 17-18 million points and miles in the bank, and a few other things that stuck with me:
“I’m a hoarder.  I save it for a rainy day.  My miles that I have is my travel IRA.  One of these days, when I retire I’ve got travel ahead of me.” – Randy Petersen
Sometimes I can’t figure out if I’m a hoarder or if I’m just saving, as Randy put it, for a travel IRA.  To me hoarding is saving and not spending; letting things (points in this case) pile up without any use.  I definitely use and redeem my reward points, so I’m not sure hoarding is an accurate way to describe my situation.  In Randy’s case, he’s saving with the goal in mind of travel at a later date.  I am too, but I’m also earning points faster than I can currently spend them.  So even if I tried to spend my points as soon as they were earned, I doubt that I could.  Time off from my day job is the main factor holding me from using up my points more quickly.
Being single is also an easier situation to save points en masse, but I have a feeling that will change in the next year or two.  Add in another person or two/other relatives into that equation and points/miles can be spent very quickly.  If you mix in first/business class flights and splashy hotels into those travel forecasts, then millions of banked points can disappear extremely quickly.  During my visit to South Africa a few years ago, I interviewed one of the best wine producer/vineyard owners in South Africa a few years ago and he said something that has stuck with me:
“I don’t judge a great wine cellar by how many bottles of full wine are in it, I look at how many have been emptied and enjoyed.” – Eben Sadie, owner of Sadie Family Wines in South Africa.
I have every intention of spending the points for memorable trips, so I have no problem shelling them out.  Points are a means to an end.  That end is life experience(s).  I’ve always wondered how many points in a particular program I’d have to earn in order to feel secure about traveling the rest of my life.  How many Delta or American airlines miles would you need to future proof your travel?  That’s a huge question that’s not attainable for most, but the answer is in the millions.  I’m taking steps in that direction but really only scratching the surface, especially if I ever do have a family.

Glory Days

The points and miles landscape is constantly changing.  That makes it fun to participate in because you never know what news you’ll wake up to from an airline, hotel, or rewards issuing bank.  When I first started collecting reward points and miles five years ago, the award charts were much more generous than they are now, MS was easier (but not necessarily better), and the points seemed to flow in like candy.  Business and first class flights along with splashy hotel rooms were easily in reach.  However, as airline and hotel award charts increase their redemption rates, and MS become difficult, earned points become more valuable.  Ask people in cities where Walmart has become unviable for unloading debit (gift) cards how valuable their points are now compared to when things were easy.
For me the most significant negative changes in the points and miles world are the application and anti-churning rules that banks have created over the past few years, and the crackdown on manufactured spending from a variety of angles.  There’s still room for optimism in both areas, as banks roll out new cards and earning rates are still strong with an assortment of cards, and MS is far from dead.
Reward points are becoming more and more popular in so many aspects of life too, not just travel, and that’s only bound to increase options available to save (or make) money.  However, I don’t think it’s controversial to say that, in general, things are more difficult for points enthusiasts now than ever.  More and more people are learning to collect and use travel rewards, and there are only so many flights and seats on those flights that can be used for “free” tickets.  Points don’t stretch quite as far, are harder to earn, and also depreciate faster than ever.  However, as long as I see people paying with cash and debit cards at local stores, I know there’s still room for opportunity and growth.
My strategy right now is to earn, burn and enjoy my earned rewards as much as possible, but at the same time, to save for future travel – in the form of a travel IRA.  I don’t think I’ll ever get to the point of future proofing my points stack to where I don’t feel I need to earn any more travel rewards, but I don’t consider the thought to be impossible either.
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