Travel Hacking on a Budget

I have a confession to make, my wife and I have become somewhat fond of travel hacking. What is travel hacking you ask? Well, it means you purposely choose credit cards that offer nice sign-on bonuses that you can turn into free vacations. It does require some work, but if I can do it then I know anyone can. One problem that can arise though is how to do so on a budget. We pride ourselves in living by a budget, and have found ways to churn credit cards without busting our budget – you just have to be creative. 🙂

Don’t let Travel Hacking Cost You in the Long Run

The knock on travel hacking is that it can end up costing you quite a bit of money in the long run. I won’t lie, that is certainly a possibility. However, if you’re going to start travel hacking then you need to have some discipline in place so you don’t allow your spending to get out of whack.

As opposed to manufacturing spending just to meet the required minimum spend to earn rewards points, I believe you should just follow your normal spending. You can do that with some of the following:

• Buying groceries
• Spending money on gas
• Other monthly bills you’d normally write a check or draft out of your account for

These are just a few of the options that should allow you to meet the required minimum spending amounts easily within the 90-day period.

Plan Your Large Purchases

One other way we master the travel hacking game is by purposely planning our larger purchases in order to meet minimum spends in one purchase. My wife and I are doing that in May as we’re going to be purchasing new couches for our family room.

There have been a number of reasons why we put off this new purchase and one of those was to be able to meet a minimum spend right away. We have the money saved for the couches, so why not get rewards out of it? This does require some purposeful spending, but it can be done.

Know Which Cards to Use

One big problem with many cards used for travel hacking is they often carry annual fees. Those can be difficult to manage while on a budget. While there are some out there that just won’t be an option, there are still many cards that offer great rewards, and waive the fee for the first year. We’ve used several of these type of cards and before the first year anniversary hits we simply downgrade to the no annual fee card.

If there is a card you do want that does carry an annual fee, then you can do something like limit yourself to one per year so you can still benefit from the rewards but not pay too much in fees. Of course, this should be balanced in light of your budget.

Travel hacking can be fun but does not necessarily need to be held back by being on a budget. That said, if you’re struggling with debt, then travel hacking should be the last thing on your mind as no free trip is worth the added debt.

What are some unique ways you handle travel hacking while on a budget? How do you meet the minimum spends?

Image by 401(k) 2013 / Flickr