#1 – Exploit airline mileage credit cards
Airline mileage credit cards are invaluable for saving money on travel. They are worth thousands of dollars in free flights. If you manage your credit cards wisely you can potentially never have to pay for flights again, or rarely. Most of the best mileage cards have offers of 40,000- 50,000 miles (occasionally as high as 60,000) when you sign up for the card and spend a certain amount of money on the card during the first three months. If you channel most of your monthly utilities and other recurring payments through your new credit card and are diligent in paying for everything you can using the card, it is usually pretty easy to spend the required amount to get the free miles. Once you have satisfied the monetary spend requirements to gain the free miles, you can apply for another card and move on to funding that card, and so on and so on. Usually these cards are free for the first year and then you are charged a fee for subsequent years, so prior to the end of the year you can cancel the card. Some cards charge a first year fee, usually under $100, and sometimes the miles offer is good enough that it’s still worth signing up for the cards. For example, at the time I’m writing this we have a new Southwest card that costs $95 for the first year and rewards 50,000 miles for spending $3000 in the first three months. Southwest has a great mileage plan which allows cancellations and rescheduling without penalties, free bags, and requires fewer points for trips to Mexico than other airlines, so it’s worth it to us to pay the first year fee. Of course you also earn miles for purchases you make using the credit card, but these miles usually are only a small amount compared to the free miles you get for opening the account.
Some people have claimed that opening and closing credit cards yearly can hurt your credit rating. We have been doing this for over 10 years and our credit ratings are both over 800, so I think the effect on our credit rating has been minimal. Don’t feel like you are abusing the credit card system by doing this. The reason for the minimum spend requirement to earn the miles is that the credit card companies are using their annual fees and commission on the money you spend during the first three months to help fund the miles they give back to you. They are well aware that some people are managing their mileage cards in this manner. Be advised that since they have gotten more savvy about people doing this, some banks, such as Chase are now tracking how many cards you have applied for in the last year and refusing to issue cards to people who have opened too many cards. Also, some banks will not issue a mileage card to people who have received a card from them in the previous 24 months. For a couple, you can alternate the person who is the primary account holder for the card each year and put your spouse on as a secondary account member. Since there are numerous banks offering mileage cards, you can just move to a different bank while you wait for the 24 month lockout to end.
There are many websites out there that address the issue of managing credit cards to obtain airline miles, hotel points, reward points for cash, etc. I recommend looking at <thepointsguy.com> as a starting point.
#2 – Be flexible on your travel dates
It probably comes as no surprise that it’s cheaper to travel to certain destinations during certain times of the year and on certain days of the week. It’s very important also to choose your flight dates so that your arrival and departure dates don’t occur during peak holiday times, both in your country and the destination country. Often leaving just a week earlier or later can save you a lot of money. For mobile semi-retired people, this is usually pretty easy to do, since you are not tied to a particular work schedule. Also, plan to fly on days that are low traffic days. The cheapest flights usually depart on Tuesdays or Wednesdays, occasionally Thursdays, sometimes even Sundays. If you are using miles from your airline mileage plan to book travel, choose the “flexible dates” option on the airlines scheduling app and it will usually show you the dates with available rewards travel available as well as the number of points for each of the possible travel dates.
Also you should book far enough ahead that you don’t pay extra for booking at the last minute. If you a watching the mileage plan sites you will find that the miles needed for a particular destination sometimes fluctuate a lot over the several months before your proposed departure window. If you keep checking in on the site you will have a good chance of jumping on a low fare when it appears. An article on cheapair.com says that best window to book flights for cheapest fares is 27-114 days in advance with 47 days being the optimum, based on 1.5 billion airfares tracked.
You can save a significant amount of money, often up to 50% by traveling during the off seasons in the countries you are visiting. If you are visiting several countries in a geographical region, or different parts of the same country, often you can time your months in each country, or the same country, to give you the best weather possible and still save a bunch of cash. For example, in Mexico, tourists (both from the US and Canada as well as Mexicans themselves) flock to the beaches in December and early January. If you planned to visit Mexico from December through February, you might spend December in the central highlands and then visit a beach town starting in mid-January when the rents have dropped substantially.
#3 – Stay longer in each place and rent by the month
It’s a savvy traveler’s maxim that the faster you travel and the more you move around, the more it costs. Your two biggest costs while traveling will be accommodation and food. You can drastically reduce your cost of accommodation by renting a condo or apartment by the month either directly from the owner (via craigslist or other method) or by going through one of the online companies that specializes in these types of rentals, such as airbnb.com, homeaway.com, vrbo.com, ownerdirect.com, tripping.com, etc. Our own experiences in renting by the month vs paying by the day for hotels is that we save at least 2/3 per day. In other words, if we spend $1000 for 10 days in a hotel we would expect to spend the same renting a condo for a month, and often it will be even cheaper than that.
Even if you are staying in a destination for less than a month, you will still save money by renting an apartment or condo for a week or two as opposed to staying in a hotel. The only time we typically stay in a hotel is if we are only staying in one place for a day or two.
We will pay a little extra if necessary to find a place that has a patio with a decent view or garden, where we can sit outside and have a drink or a meal that we’ve prepared. This makes us less likely to want to find a restaurant or someplace else where we will pay to sit and have a view.
#4 – Cook your own food
An additional benefit of renting a condo or apartment for the month is that you will get a kitchen…at least we recommend that you rent one that has a furnished kitchen. This allows you to significantly cut down on your second big expense, eating out. Buying food locally and preparing at least two of your daily meals for yourself will save you a bunch of money. If you travel for a long time you will find that eating all your meals in restaurants is not only expensive but also often inconvenient. Being able to cook your own meals allows you to experiment with local ingredients and try learning to make dishes that you discover when you are eating out locally. We both love to cook and, for us, learning local recipes is a big part of the fun of traveling in a new country.
Alternatively, if we don’t feel like cooking, we look for prepared food from local shops or street stands that we can use to throw together easy meals. Often in less developed countries prepared foods sold in shops or market stalls are much cheaper than similar foods sold in restaurants. For example, in Mexico we have found wonderful pork carnitas sold by the kilo with all the salsas, limes, and tortillas included that would last us for several meals. Also, roasted chickens with all the trimmings for very little money. Add a salad, some fruit, and a bottle of wine and you have an effortless meal for much lower cost than going to a restaurant.
It’s nice to eat out, but we don’t need to eat out for 21 meals a week to appreciate the local cuisine. Typically, we budget to eat out about 5-7 times per week, usually for lunch or dinner, only occasionally for breakfast just to see what the locals are eating in the morning. If we were eating out for every meal our daily food and drink costs could easily be $60-90 per day in a country like Mexico, even shopping around for good value restaurants. By eating out less often we typically cut our food costs at least in half.
#5 – Go Native!
By this we mean learn the language, befriend the locals, try to fit in and be as culturally sensitive as you can. The more you appear to the locals to be an expat resident, as opposed to a tourist just passing through, the less likely they are to try to take advantage of you, for example, by imposing a “gringo tax” on your purchases. Of course, speaking the language will automatically give you some help in avoiding getting charged a different amount from the locals, because you can observe the sellers’ prior transactions with the locals and observe the price the locals paid before you purchase the same items yourself. If you are able to make friends with local people they will most likely point out to you when you are being taken advantage of and you can always ask them the correct price for items if they are available. But saving money isn’t the only reason to go native. Do it because it’s the best way to experience and appreciate the local culture.
How much can you save?
It’s common to read posts on travel sites where a couple will say something like “we took a two week trip to Mexico and the whole trip only cost us $5000 If you were going to Puerto Vallarta, Mexico during the Christmas break, staying in a decent hotel, and eating all your meals out, this would actually be a very reasonable amount to spend, maybe even a bit on the cheap side.
Here’s what that $5000 budget might look like:
Hotel $1700 ($130 per night)
Food\Drinks $1700 ($120 per day)
Taxis, local transportation $ 200
Misc purchases $ 200
Traveling the way that we travel, waiting to travel until two weeks after Christmas week to avoid higher mileage and lodging costs, here’s how we would spend the same $5000:
Airfares $ 0 (using free miles)
Condo rental (2 months) $1500 ($750 per month)
Food\Drinks (2 months) $2700 ($45 per day)
Taxis, local transportation $ 450
Misc purchases $ 350
The difference is two month of travel vs two weeks of travel.