Our family travel budget
Introduction
One of the most frequent questions we are asked is, “How in the world can you afford all of the travel that your family does?!” For those who don’t know us personally, the assumption is that we make a ton of money from our day jobs. The reality is: Courtney is a stay-at-home mom and I have the epitome of a middle class salary! So, how did we make trips to Turkey/Italy/Austria, Peru, Charleston, the Bahamas, Austin, Northern Michigan, Switzerland/Lake Como, Seattle, and Arizona all happen in the last 12 months, if not for a $10k yearly travel budget?!
Since you are following our blog, you probably already know the answer: travel rewards! We would not even remotely be able to travel the way we do today if it wasn’t for points and miles. Period. I can say it that confidently because there was a time less than a decade ago that we were making a similar amount of money as we are now (when Courtney was an elementary school teacher) and we were only taking 1-2 trips a year. Our income hasn’t dramatically increased since that point and the amount allotted for travel in our monthly budget hasn’t dramatically increased either. The only variable that changed is that we went all-in on points and miles.
Our travel budget before diving into points and miles
Before we dove all-in to points and miles about 8 years ago (we used to just do cash back), we budgeted around $4,000 for a few trips a year: usually an international trip (like a week at an all-inclusive in the Caribbean) and a domestic trip (like up the coast of California). That $4,000 would quickly disappear with flights, lodging and experiences, even for just 2 trips!
Our travel budget now
Guess how much we budget for travel 8 years later, with 7 more trips a year?
$4,177.
A budget increase of $177 8 years later for an additional 7 trips a year! With inflation, the equivalent purchasing power of $4,000 in 2015 would be $5,149 today, so we’re actually spending a little less than a thousand dollars per year comparatively, for 7 more trips.
So, how do we make it happen?
We have simply transferred a majority of the money that we used to spend on actual travel expenses and transitioned it to paying for travel credit card annual fees, which we then use the sign-up bonuses and earned points/miles to book the travel instead.
Here’s how it all breaks down for us
156.68/month: Credit Card Annual Fees (Cards that we keep open every year)
American Express Personal Platinum - $695/yr. ($57.92/mo.)
American Express Business Platinum - $695/yr. ($57.92/mo.)
Capital One Venture X - $395/yr. ($32.92/mo.)
Chase World of Hyatt - $95/yr ($7.92/mo.)
*Note: Although we have 3 Business Platinums opened currently, for the last 2 card openings, we have transferred 69,500 of the sign-up bonus to our American Express Business Checking Account at 1 cent/point to reimburse ourselves for the annual fee. Although it ABSOLUTELY pains me to get that kind of value from an American Express Membership Rewards point, it’s simply a cash flow decision for us. This is one of the ways we’ve made this all work for us on a middle-of-the-road budget!
24.75/month: Credit Card Annual Fees (New Cards that we open in the budget year)
This year, we have budgeted to open three new credit cards with annual fees of $100 or less, but have only opened one with an annual fee so far:
American Express Hilton Business - $95 annual fee ($7.92/mo.)
However, we have opened 4 cards so far this year. What gives? Two of them have waived annual fees for the first year (CitiBusiness AA Platinum Select & the American Express Business Delta Gold) and the other, like I mentioned earlier, was the American Express Business Platinum, which we reimbursed ourselves for the substantial annual fee.
So what does that mean? It means we can still open up another two credit cards with $95-99 annual fees and stay in budget! Also, we still have the option to open up more cards that have no annual fee or waive the annual fee for the first year!
166.67/month: Misc. Travel Expenses
The reality is: Points and miles can’t pay for everything. And we don’t have an unlimited amount of them. And sometimes the value just isn’t there to justify using them. So, there are times that we need to pay using cold, hard cash.
Here are some examples of travel expenses that we have paid for out-of-pocket recently:
Airbnb in Switzerland (there were no hotels available on points in the area we wanted to stay)
An expensive meal in Vienna (at least by our standards - ha!)
ATV Tour in Peru (we pay for most of our experiences/activities out-of-pocket)
Courtney and I on our ATV Tour in Peru.
We don’t spend a ton on activities, to keep ourselves in budget and because there are usually so many free options wherever we go (like hiking, museums, beaches, etc.) However, when the price is right and the experience will be extremely memorable, we splurge!
One caveat is that we have a daily budget of $50 that we start out with each day when we travel before we dip into this travel budget. This is the amount that we have confirmed is our variable spending that doesn’t happen because we aren’t at home: electricity that we aren’t using, groceries we aren’t buying, restaurants we aren’t frequenting, and water that isn’t flowing. The mortgage still needs to get paid whether we are in town or not, as well as payments for things like insurance and internet service, so we don’t count those in this daily $50, only the budget items that flex based on whether we are at home or not.
One last note here: sometimes we strategically use the Capital One Travel Eraser at 1 cent per point to reimburse ourselves for travel expenses as well. That’s another way we book Airbnbs on points or purchase airfare that is a better deal in cash than points. (Don’t know how to discern if it’s better to pay in cash or points? Check out this post where we tackled the topic.)
Conclusion
Our situations likely vary wildly. You have your own travel goals. You have your own income and expenses. However, the biggest lesson learned here is: if you are strategic, and transfer the money that you have historically spent on actual travel and pull some of that and spend it, instead, on travel credit card annual fees (as long as you pay off your credit cards IN FULL each month and don’t spend more than if you were using cash or a debit card!), you will be able to travel way more for a similar amount in your budget!
