A friend asks: Do you pay cash or use frequent flyer miles to travel?
I hope someone appreciates my humor and (lack of) Photoshop skills.
Anyways, my friends ask me how I can afford to travel so much (having a lot of free time comes in handy), but it is very simple to understand. I try to stick with this basic strategy, outlined in this simple chart.
| |
“Cheap” Flights |
“Expensive” Flights |
| Earn “A Few” Miles |
50 / 50 |
Use Miles |
| Earn “A Lot” of Miles |
Pay Cash |
50 / 50 |
Your definition of cheap, expensive, a few, and a lot depends on your point of view, but it ultimately comes down to the cpm (cents per mile). Here are some examples:
A $100 flight from LAX to JFK and earning 2,500 miles versus redeeming 12,500 American Airlines miles – I would pay $100 and earn the miles, which I value at $50 (2 cpm). If I used miles for the trip, I would get $100 / 12,500 miles = 0.8 cpm. If I value AA miles at 2 cents each, and sell them to AA for 0.8 cents each, I have lost value.
A different flight from LAX to SEA costs $500 and earns 1,000 miles. In this case, I would use the AA miles since I would get $500 / 12,500 = 4.0 cpm. If I value AA miles at 2 cents each, and sell them to AA for 4 cents each, I have got a great deal.
As you can tell from the chart, there are 2 sections that are 50/50, meaning I would have to crunch the numbers and see if it makes sense to pay for the ticket or use miles. If the first flight cost $200, or $300, or $400, I would have to see if it makes sense. Likewise, for the second flight, if it cost $100 or $200, I would have to see if it makes sense.
As you can tell, there is no one perfect way, it just depends on what you think. Tell me what you think in the comments below. Do you agree or disagree with my thinking?
