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Are you an average American with average monthly bills and expenses who wants to travel more? Do you feel like you just don’t know how to make your travel dreams come true and pay your bills at the same time?
No, this is not another travel blog post telling you to give up your morning coffee in order to travel more. I’ve written about the reasons why I travel hack and why you should, too.
I’m a teacher who regularly uses miles and points to travel the globe. I don’t travel regularly for work. Nor do I have a corporate card where I can rack up miles and points on my company’s dime.
This means, my everyday spending is the key to my long-term miles and points earning success.
There’s no denying credit card sign-up bonuses are like sprinters, boosting loyalty program accounts quickly. But, it’s more than possible to effectively earn and redeem miles and points for travel with almost no credit cards.
Everyday spending is the marathon runner that’ll continually grow your miles and points balances steadily over time with the money you already spend. What’s better, you can do it with what an average American regularly spends each year on their bills and expenses.
In this post, you’ll find out what everyday spending is, look at average American household spending data, and how to make your travel dreams come true with money you already spend. Discover ways to use the miles and points you’ve earned and begin crossing destinations off your travel bucket list.
How to Make your Travel Dreams Come True
with Money You Already Spend
Part 1: What is Everyday Spending?
Before looking at actual numbers and award travel examples, let’s make sure it’s crystal clear what I mean by everyday spending.
Everyday spending refers to all your bills and regular expenses.
How can everyday spending get me closer to my travel goals?
By making every possible dollar spent work harder and bring some value back in return. For me, the value comes in the form of credit card, airline, and hotel miles and points. Others focus on cash back rewards or saving for college tuition. Either way, the principle is the same. Spend smarter, not more. And, certainly, don’t send your hard earned money out into the world without getting something back!
So, what exactly does this look like in everyday life?
This means, put your debit card away (cash, too!) and use travel rewards credit cards to pay for everything possible.
Of course, you must be a financially responsible person who doesn’t overspend and who pays their bills on time. This includes paying off whatever amount you put on your credit card(s) in full each month. Otherwise, the interest you spend on credit card debt will take value away from any miles or points you’re earning.
What if I don’t have a travel rewards credit card?
You can earn miles and points for travel without flying and even without a credit card by using dining programs and shopping portals. But, to maximize your everyday spending, you’ll need to get started with at least 1 travel rewards credit card.
Based on bank rules, there are important strategies to know about the first cards to get. My perennial recommendation is, begin with the Chase Sapphire Preferred. After approval and meeting the minimum spend requirement, you’d have no less than 54k Ultimate Rewards points which could eventually be transferred to any of Chase’s 11 airline or hotel partners.
The sign-up bonus is great, but using the card for your everyday spending is how to make your travel dreams come true again and again in the long run.
Part 2: Average American Monthly Bills and Expenses
Not every bill or expense can be paid by credit card, but many can.
So to start, you need to change your motto when it comes to your everyday spending.
Think of your everyday bills and expenses in terms of miles and points.
For the sake of using real numbers, I’ve used the Consumer Expenditures report for 2015 (latest available) put together by the U.S. Bureau of Labor Statistics. The data shows everything from average American expenses to income to population demographics. Luckily, I don’t teach statistics so I promise I’m not going to bore you with all the details. 😉
Instead, I’m going to highlight the expenses from the report that can be paid for with a travel rewards credit card.
According to the report, here’s what you, an average American, might spend in a year.
- Groceries: $4,015
- Eating Out: $3,008
- Utilities, Fuels, & Public Services: $3,885 (includes cell phone charges, cable & internet)
- Household Operations, Supplies, Furnishings, & Equipment: $3,782 (things like cleaning supplies, smoke alarms, lawn supplies, carpets, moving fees, dishes, and closet organization tools.)
- Apparel & Services: $1,846
- Gas, Motor Oil, Other Vehicle Expenses: $4,846
- Public Transportation: $661
- Healthcare: $4,342
- Entertainment: $2,842 (includes toys, pet care & supplies, new electronics & gym memberships)
- Personal Care Products & Services: $683 (includes toiletries, haircuts & childcare!)
- Reading: $114 (includes newspaper, magazine & e-book subscriptions)
- Education: $1,315 (includes tuition)
- Insurances: $6,349
- Alcohol & Smoking: $864
- Miscellaneous: $871
This adds up to just under $40k! But, obviously, these numbers are a nationwide average and your own everyday bills and expenses are unique to you. What do you notice from the list that looks high or low for your monthly bills and expenses?
For me living in NYC, my public transportation expenses are higher and gas and vehicle costs lower. Fortunately, my healthcare costs are less, but my personal care products & services are higher, even without childcare costs.
Now, if you’re thinking of everyday bills and expenses as miles and points, that’s nearly 40k you can earn each year just for paying the bills and buying the food, clothes, haircuts, etc, you were already planning to buy anyways.
More importantly, if these expenses and bills would normally be paid for with a debit card or directly debited from your bank account, there’s no reason you wouldn’t be able to pay off the same amount on a credit card in full at the end of each month.
The BIG difference is with a travel rewards credit card you’re earning a return on your money, but with a debit card, your money leaves forever without so much as a wave goodbye.
What about expenses that are missing?
Your biggest monthly expenses, mortgage or rent and car payments, are not included on the list. These bills typically can only be paid with a credit card via a third-party bill pay service like Plastiq or RadPad. These services charge fees which are better to avoid unless you’re trying to meet a credit card minimum spend.
How can I get even more from my everyday spending?
The best part is those 40k miles or points can actually be much more if you make the most of bonus categories, dining and shopping rewards, and promotions.
The above calculations assume you’ll only earn 1x point per $1 spent. However, credit cards like the Chase Sapphire Preferred earn 2x the points on travel and dining. Travel even includes things like public transportation, highway tolls, and parking fees.
In fact, most travel rewards credit cards offer permanent or promotional bonus categories on everything from groceries to drug store purchases and gas. Bonus earn rates can go as high as 6x the points regularly and 10x the points during promotions.
Dining rewards can also earn an additional 3x-5x the points for every $1 spent at participating restaurants. So, let’s look at the $3,008 the average American spends on eating out each year. If that person paid with the Sapphire Preferred, she’d earn 6,016 Ultimate Rewards points. If even half of that spending was at dining program restaurants, that could earn an additional 4,500-7,500 miles or points.
Similarly, the $1,846 on apparel and services could earn well more than the typical 1x the points per $1 if you use shopping portals. A $100 pair of Nike sneakers bought in the store would earn just 100 points or within a shopping portal at an earn rate of 8x the points for 800 points! Which sounds better to you?
Part 3: What do all these miles and points get you?
In order to show some award travel possibilities, I’m going to make the assumption you have and use the Sapphire Preferred for all of your everyday spending.
At the end of a year, you’d have earned the 54k Ultimate Rewards points from the sign-up bonus and meeting the minimum spending requirement. Using these average American expense numbers, you’d have earned at least 40k points, give or take for your personal adjustments.
It’s also safe to add in another 10-20k points depending on how well you maximized bonus categories, dining rewards, and shopping portals.
Using these modest numbers, you’d have up and over 100k Ultimate Rewards points to redeem for award travel. Not too shabby for signing up for 1 credit card and using it for all your everyday spending.
- Transfer 60k points to United for a round trip flight from the U.S. to Europe. Take advantage of their Excursionist Perk and open-jaws to visit 3 European cities, like Amsterdam, Paris, and Rome for the same price as visiting just 1 city!
- Transfer 35k points to Air France/KLM’s Flying Blue program to fly Northern South America. Depart from a city like Chicago, stopover in San Francisco for a couple days, before continuing on to Lima, Peru.
- Make use of transfer partner, British Airways, to fly to Hawaii from the west coast. For just 25k points roundtrip, you could (depending on availability) fly a family of 4 to Hawaii.
Of course, these are just a few of the many possibilities. Even the biggest miles and points skeptic must admit the simplicity of a single credit card used for everyday spending.
The point is, there are no more excuses. You can travel for much less by making your everyday spending work harder. This is how to make your travel dreams come true!
Are your expenses higher or lower than an average American? How will you maximize your everyday spending?
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