How we can afford to travel so much especially internationally?
TL;DR; - Skip to the bottom to read more about PointHackr, the free service we use for Travel Hacking.
One of the questions we get asked the most from fellow travelers or aspiring travelers is, “how we can afford to travel so much especially internationally?”
Firstly, I would like to clear up the myth that traveling internationally is prohibitively expensive. Of course it can be! But, we have found through our experience that a lot of international travel tends to be much cheaper relative to the costs of traveling in the US. For most of the world, the main expense ends up being the flight to get you where you want to go, and once you are there, the cost for housing and food ends up being minimal. Of course, this completely depends on where you are traveling and your preference for spending.
For example, a quick search for roundtrip flights from San Francisco to Bali show flights over the summer for $1300 dollars at the cheapest. Of course these will fluctuate, but in general they are upwards of $1000 dollars or more. Once you are in Bali however, it becomes much cheaper. We were able to rent a house with an epic private pool for 800 dollars... FOR THE MONTH! The cost for food is around 5 dollars (or less) per meal, and we rented a scooter for the month for about 80 dollars. Add all that up, and you are really talking about paying about the same price as the flight to live for a month. If you can reduce the cost of the flight, you are cutting the price of your trip in half!
Knowledge is Power
We have spent countless hours learning and figuring out how to take advantage of the reward point systems of various credit cards. In the travel world, this would be called, "travel hacking". Call it what you want, but it works and can be the single biggest way to save money on a big trip! Before our year long journey, Shiva and I spoke to companies about getting a travel around the world ticket that would let us travel in one direction for as many flights as we wanted around the world. The issue was it was going to cost over $3000 per person! It does seem like it is not a bad value at first when thinking about all the big flights, but I can tell you there are better options out there. For all of our big international tickets, US to Rwanda, India to the US, US to Thailand, and Malaysia back to the US, we paid only around 800 dollars total! So that is averaging only about $100 dollar per flight which is much more manageable.
For me, being an engineer, there is nothing better than figuring out the cheapest and most efficient way to get from A to B. Shiva tends to thinks I am legitimately insane, but it is honestly fun for me, and I love it! But, I realize that most of the travelers out there will not want to spend the time to learn the system and spend the time when they are trying to book their flights. And with everyone's busy schedules, just getting the time between work and other priorities can be a hard sell.
For example, let's say we want to fly from San Francisco to Paris, a quick search on Hipmunk shows there are flights on Air France, American, KLM, United, and a slew of other airlines that look reasonable. If you have Chase reward points or American Express points, each of these can transfer into a large number of other airlines, 10 airlines for Chase and 18 for American Express to be exact. To really know if you are getting the best conversion for your points, you need to search upwards of 28 different websites to see the rates! This can be a drag, and I am not even going into the fact that you can sometimes find better deals by booking, for instance, a United flight from a partner airline's website versus booking it directly on United!
But credit cards are evil and will hurt my credit score! MYTH BUSTED!
Disclaimer - I am not a financial advisor, and you should obviously evaluate your own financial situation and do your own risk assessment. I will just talk about my experience.
Before our trip, I was opening a new card for myself and Shiva at the rate of about a new card every three months. We would immediately put the account on auto-pay to pay the entire balance each month, spend enough to hit the welcome offer (generally from 2,000 to 4,000 dollars over 3 months) and move onto the next card. As long as you pay in full every month and are not rolling a balance, this is essentially FREE MONEY! For these three months, we were putting everything on our cards, groceries, entertainment, bills, and anything you can think of. These are normal expenditures we would be making anyway if I used my Bank of America debit card for instance, but now I am accruing POINTS that will allow me to travel for almost free!
For example, if Chase and American Express have cards that are giving away 50,000 points, and if Shiva and I both open a card with each service that is 200,000 points right there. And, that is just opening four cards in a year. A flight from San Francisco to Paris will be around 30,000 points in general, so you see we have just landed 6 flights between Europe and the US for basically just spending how we would normally spend anyway! On this note, never add a card to an existing account. You should always open two separate accounts to get a full bonus for each of you. If you add a user to an existing account, you will only receive a fraction of the reward you could receive if that person just opened up their own account.
At any given time, I have about 4 or 5 different credit cards open, so how did this affect my credit? Negligible! There is no hard and fast rule on how your credit is being calculated, but if you are paying your card balance on time every month, it generally will not affect your score that much (again, this is only in my experience, and you should do your own research and risk assessment as well). For example, I went from a 815 credit score to a 795. To me, this only matters if I am going to be trying to secure a loan for a big purchase like a house as maybe in that case that small dip could actually have an impact on my loan rate. Again, you have to evaluate your own situation, but this is what I was seeing.
This is too much work!
I agree that this strategy is not for everyone, and it does take a lot of time, expertise, and want to manage all this. But, there is hope! The one biggest time saving service we have found is a new site called PointHacker. If you sign up for a credit card through their site, they will do the work for you when it comes time to book your next big flight, and it is FREE! It sounds too good to be true, but they actually get a commission when you sign up for a card through their site, so that allows them to offer you their services for free. You can also pay as you go for their Trip Planner service, but you are going to get a credit card anyway, so why not have their service for free.
As much as I love doing my own travel hacking, it is always nice to have someone do it for while you are focusing on what you do best.. traveling!