Two of my personal favourite blogs are the polar opposed, the Barefoot Investor and Nomadic Matt. For those who are not familiar, the Barefoot Investor is probably Australia’s premiere personal finance guru, and Nomadic Matt was one of the earliest travel bloggers. Years later, his travel blog is still going strong, and he was one of the first bloggers to talk about travel hacking.
On a lot of topics Matt and Scott (the barefoot investor) have a similar approach. They both believe in making the most of life, and using your money to ‘tread your own path’. What they really don’t agree on, however, is credit cards.
The Barefoot Investor – who, I want to stress, is not a travel blogger but a personal finance expert – thinks credit cards are the devil incarnate. In his latest book (which I have read, absolutely love, and recommend to anyone), he flatly dismisses the argument that ‘I’ll pay it off at the end of every month and just collect the points’. On the other hand, Nomadic Matt has written a whole book on travel hacking, much of which revolves around using credit card points to maximise travel rewards.
So, who is right?
In an effort to find out, I decided to sign up for a travel rewards card and see how ‘travel hacking’ worked for me. As I am a bit of a personal finance obsessor myself, I researched it carefully and eventually decided upon the American Express Explorer Card. Now, it goes without saying that I am not a finance expert (everything I know I learnt from the Barefoot Investor, and Ramit Sethi), so please consider your own circumstances. But, to me, this card seemed the best. It does have a pretty heft $395 per year annual fee, but you get a $400 travel credit which can be used on dozens of airlines. You also get 2 points to every $1 spent, and there was a 50,000 point bonus.
A couple of months later, we’ve tested out the card, and after paying for our honeymoon (more on that soon), we had enough points that a 2 person trip from Adelaide to Sri Lanka cost us just $900. This was a saving of over $1000, and in just two months,
So – what do I think of travel hacking?
Honestly, I am a very dedicated saver and I fear even I spent more than I otherwise would have, since I got the card. It seems really stupidly obvious, but it is just so tempting to spend up big once you have the card – particularly when you think you’re being rewarded for doing so. Now this might seem like Adulthood 101, but there’s a reason credit cards make so much damn money.
Therefore, yes, I think this card offers good rewards if you use it for your everyday expenses. If you use your Amex card for all your daily expenses, I expect you’d be able to heavily subsidise a relatively humble (e.g. Bali or Fiji) overseas holiday each year. So, if you are dedicated – go for it. On the other hand, considering such a holiday is likely to only set you back $4k – $5k anyway (and that’s being generous), it’s worth considering whether you’re likely to spend more on the card than you would have saved otherwise.
So, at the end of the day? I think they’re probably both right. They are sort of the devil incarnate, because anything less than an iron will may end in disaster. On the other hand, there is no doubt you can “travel hack” your life so as to get a few extras for spending as you normally would. You just need to make sure you carefully track your spending (the American Express phone app helps) and that you pay it back, religiously, every month. Otherwise you may become just another fool lining the pockets of rich credit card execs!
Want to know more about the cards I use while travelling? Click here.