Putting it Together

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Is this an early retirement blog? Or Is it a travel hacker blog?

Well yes….. Just like a Reese’s Peanut Butter Cup is chocolate and peanut butter.

There’s a certain synergy to these two fields.

When you put 2+2 together, in this case, you get at least six.

And the dial on the MD Squared Amplifier definitely goes to 11.


This Blog’s Artist in Residence:  Nigel Tufnel

And the reason is simple.

Travel hacking by itself leads to outsized rewards. But outsized rewards can lead to the unintended consequences of lifestyle inflation and diminishing returns. So it becomes more and more difficult to gain pleasure out of reward travel. Not ideal.

And the early retirement lifestyle by itself can be a TurboPowered ride towards freedom. But by being an early retirement enthusiast who chooses not travel hack, one leaves tons of value on the table. And in so doing, risks being wasteful with a resource that is readily available.

But to combine the two is to amplify the power of each so that you can simultaneously live better, live cheaper, avoid the perils of lifestyle inflation, and achieve freedom sooner.

A travel hacker who pursues early retirement is likely to get more value out of each mile that he earns.

While an early retirement enthusiast who harnesses the power of travel hacking is likely to retire much earlier, and live fuller and richer life in the mean time for the same amount of money.

Don’t believe me? Let’s do some back of the envelope calculations to flesh this out.

First let’s start with the assumptions.

  • Each mile or point earned is worth one cent. (This is a big understatement. Most miles are worth at least 1.5 cents, and are often worth ((and sold for)) upwards of 2.5 cents each.)
  • Each credit card churn yields 250,000 Miles/points. In my five churns to date I have never earned less (and have always earned more.)
  • A married couple churning cards can complete four churns each/year (or eight churns total a year.)
  • In order to complete spending requirements the married couple gets 2 bluebird cards and loads them with $10,000 of manufactured spend a month.
  • I am not counting any points earned by the manufactured spending itself! (I am deliberately underpromising in my estimates here.)
  • All of the money earned is invested and a total stock market fund at an assumed 7% gains per year.
  • The couple plans on living a luxurious early retirement lifestyle by spending $35,000 a year.

So how much richer is this Dividendian couple at the end of 10 years?

The math is simple.

8 (churns) x 250,000 (miles)= 2,000,000 miles per year.

2,000,000 miles equals $20,000.

$20,000 per year divided by 12 months equals $1667 Per month.

$1667 invested each month for 10 years at 7% return yields $252,292.

And $252,292 divided by $36,000 a year equals a little bit more than seven years of retirement income.

That’s right, just by playing the miles game you could be seven years closer to retirement after 10 years.

What’s that you say? Despite my conservative assumptions, I’m still overestimating the value of earning lots of miles? A mile isn’t necessarily transferable to a cent?  And Jet travel is a first world indulgence?

Well, in my defense miles are often transferable for statement credits or cash value. Ultimate rewards points from Chase, for instance, can be redeemed for one cent each (So the ink card with its 50,000 ultimate reward bonus is worth at minimum $500.) And American Express membership rewards can be redeemed for 0.6 cents each. Furthermore there are a plethora of cashback cards with lower spending requirements and bonus rewards.

But I take your point.

Let’s come up with a gloomier scenario then for a true early retirement extremist couple.


We’re vegan after 6:00 too

This couple eats tomatoes grown from the tomato seeds harvested from last years tomatoes grown in their front yard.

Their bicycle tires are made from rubber that they manufacture biodynamically from a rubber tree next to their house.

Their clothes are all 100% hemp. Which they grew, hand weaved into fabric, and sewed themselves, using cactus spike needles.

They would no sooner get on a jet plane, then take up spotlight hunting deer while off-roading.

But so ready are they to quit their jobs in corporate America as a software engineers, that they’re willing to hold their noses while applying for credit cards, manufacturing spend, and entering (shudder) Walmart.

What are the assumptions?

  • Each churn yields 120,000 miles or cashback points.
  • Because the spending requirements are much lower for low bonus cards they are able to complete both spousal churns on one months manufactured spending of $10,000.
  • They average three points earned per manufactured spending dollar the rest of the time.
  • They have 2 bluebird cards and manufacture $10,000 spend a month.
  • Though they feel wasteful, they live on $12,000 a year. (Carbon offsets and Kombucha aren’t free, you know.)

The math here is equally easy.

8 churns times 120,000 points equals 960,000 points earned per year. (Or $9600 a year.)

$9600 per year divided by 12 months equals $800 earned per month.

And $800 per month invested in the stock market at 7% assumed returns will equal $138,400 at the end of 10 years.

And $138,400 divided by $12,000 expenses per year equals over 11 1/2 years of retirement income earned by playing the cashback game for 10 years.

But wait we’ve forgotten something haven’t we?

What about the manufactured spending that they complete in between the credit card churns?

$10,000 spent times two months yields $20,000 spent additionally Per churn cycle. There are 4 churn cycles per year so this nets $80,000 manufactured spending dollars per year.

At three points earned per manufactured spending dollar this would yield an additional 240,000 points per year (Which is equal to an additional $2400 cashback per year or $200 per month in manufactured spending income.)

And this $200 per month invested will yield an additional $36,400 at the end of 10 years. Or more than three additional years of early retirement income!

So just by playing the cashback game, our early retirement extremists have moved the early retirement finish line more than 14 1/2 years closer to today.

Note: I did not include the fees of manufactured spending which can be assumed to be about a 1% drag on each dollar of manufactured spending. This is not insignificant. (But it is likely offset by the conservatism of my above assumptions.)

So if you’re an early retirement enthusiast my only question is, “Why not become a bit of a Milesian and retire even earlier by playing the miles game?”

And if you’re a miles game player, my question is,”If you enjoy traveling so much, why become a bit of a Dividendian and retire earlier so you that you can have more time to travel?”

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