Today I’ll get a little more in-depth as to why it is important to spend miles rather than hoard them. The obvious reason to spend miles is to travel. This action can be seen as destructive towards all those miles–but what you’re really doing is setting them free. In technical terms you’re realizing a return on your investment of time and money.
I was very serious yesterday when I said that we’re not supposed to be in the business of collecting miles–we should be in the business of traveling with miles. Collect anything else you’re interested in, just don’t hoard your miles.
Besides this first reason, there are three more, constructive reasons Milenomics wants you to start using your miles: to get a better idea of what they’re worth, to be a better earner of miles, and to be a better spender of miles.
Spending Miles Gives You an Idea of What They’re Worth to You
Since you’re the one traveling with your miles, you’re the one who will decide when, where and how to use them. By not using them you’re holding them hostage–maybe you’re telling yourself that you’re keeping them for a rainy day. Maybe you’re not sure how to use them and want to learn more about it before you make a mistake. Whatever the reason you might not be spending them–once you do start to spend them you’ll start to see how they work best, you’ll also get to know what miles are worth to you.
Yesterday we talked about redeeming at or above your Cost Per Mile. What about those times when there just aren’t award seats on any flights? We’ve worked out ways to address that, with the Low Level Hedges, but still Frequent Flyer Miles are really “Flexible Flyer Miles,” meaning you need to have flexibility to use them. Flexible in time, destination, or class of travel are the three big ones. There very well could be a cost to this flexibility, be it an extra night in a hotel, an extra day off of work. It is better to find this out early, by using miles, than to continue to earn more and more miles, only then to find out you’re not the mile using type.
If miles aren’t for you, try a different strategy: From the current US Airways share miles promotion, to the constant deals coming out of Lifemiles, you can buy miles for between $.0113 and $.015 outright. This could mean that all your churning could be on cash back cards, and then you buy the miles you need outright with cash. This would give you the flexibility to buy paid fares when your dates aren’t flexible enough, and still the ability to use miles for higher value trips. I covered this about two weeks ago when the US airways share promotion was first advertised, as well as when I declared that Miles are Dead, long live cash fares!
Spending Miles Makes You Better at Earning Miles
When you’re flush with miles you’re more likely to be lazy with your MMRs. When you’re hungry for miles you’ll (hopefully) think of ways to make more miles very quickly. That may mean you realize new ways to double dip, or ways to drive your purchase costs down to near $0 (or even make money on purchase).
The times I’ve needed to earn lots of miles quickly is when I’ve sat down and really focused on ways to increase my mileage earning. Prior to that, when my balances were always high, I was doing the same things everyone else did, CVS–>VR–>BB–>Bill pay. Stopping that thinking unlocked many, many more opportunities for mileage earning.
I’ll let you in on a secret: I haven’t bought a single VR this year (2013). Sure I’m tempted to go back to them, and if I ever needed to I could pick them up easily. But they’re not the best way to earn miles for me, and are pretty limited. They’re sort of like a single scoop of Vanilla. (soory, couldn’t resist).
Spending Miles Makes You Better…at Spending Miles
Seems a little odd doesn’t it? But the more miles you spend the more you realize how precious (and useful) they are. Ideas like the Hybrid System, Low Level Hedge or Operation Twist, were founded by my redeeming miles and figuring out that a mile saved is a mile earned. These may be “nonstandard” ideas, but these kinds of ideas are borne out of necessity.
When you have large Mile balances you’re less likely to care about each individual mile. By spending those miles you’ll come to treat them as precious. You’ll give each one a purpose. Milenomics doesn’t advocate hoarding of miles. In fact our philosophy should be to gauge our demand for miles, and track our supply of miles to that demand. The more you read here and practice those skills the closer you’ll get to equilibrium, and then you can switch to making money instead of miles.
Follow me on Twitter, @Milenomics.[rule]
– Written by Sam Simon. All ideas are my own, but I encourage you to see my point of view and I promise I’ll try to do the same. Connect with me on Twitter @Milenomics.