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The Other Tax-Free Portfolio

I‘ve been a voracious reader of online content relating to the FIRE movement for the last few years. My original goal was to read everything I could about saving and investing money so we could leave our jobs as soon as our investments were generating enough passive income to cover our yearly expenses. But there’s a second topic popular among FIRE bloggers that also appeals to me – travel hacking. Now that we are full-time travelers I’m always searching for ways to maximize our money for life on the road.

Our conventional accounts and sources of income for the future include our 401k’s, Traditional IRA’s, Roth IRA’s, our taxable investment account, and social security. The other important account type that we draw from on a regular basis are mileage accounts. I track our “points portfolio” with the same type of enthusiasm I have for our other accounts.

There are two things I love most about our points portfolio. First, we are still in the accumulation phase since the portfolio grows based on our spending as we travel. And second, we don’t have to wait until age 59.5 to start reaping its rewards tax free. We are using our points portfolio right now!

All we have to do to build and maintain our points portfolio is use a few strategically selected credit cards for all of our recurring and normal monthly spending, and pay off the balance of every card every month. All of the points we earn from our purchases, along with signup bonuses from each card, help cover our travel expenses. To clarify, we are extremely mindful about staying out of credit card and consumer debt. But we are comfortable using credit cards as a means for accumulating travel points, which allows us to book flights and hotels around the world at massive discounts.

Understanding the relationships that exist between the various credit card rewards programs, hotels, airlines, and alliances creates a unique formula we can use as a powerful money saving system to support ourselves as full-time travelers after FIRE.

The Benefits of Work Travel

We have a long history of maximizing our travel points since Ali’s career involved about 10 years of regular monthly travel. From day one of her travel-related job Ali had selected one airline (Alaska Airlines), one hotel chain (Hilton Hotels and Resorts), and one rental car company (National Car Rental) that meshed with her company’s requirements to use with extreme loyalty. During that happy stretch of her career she banked many hundreds of thousands of miles within those programs while traveling for work, and we used those miles to save money during our personal vacations.

Thanks to Ali’s travel for work, we had a routine of booking free flights every year to visit our family members either in California, Arizona, or Georgia. We also booked free flights every couple years for vacations in New York, Alaska, Hawaii, and Paris. On our trips we either stayed with family or we booked free rooms in Hilton Hotels and free cars with National Car Rentals. We also enjoyed using the annual companion passes from Alaska Airlines if we were paying for flights with real dollars. After we “graduated” to taking bigger vacations in Europe we used Alaska Air miles to book flights with travel partners like Icelandair and Condor Airlines.

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Finding Deeper Value

For our full-time travels today we are much more focused on using Chase Ultimate Rewards points. That’s the program that helped us find the United Airlines Excursionist Perk, which might be the ultimate use for our points portfolio so far. We have only used the Excursionist Perk once so far, to book the main flights for our current five months of travel in Asia. This first experience with this perk was mind blowing as it allows you to fly one free leg on a multi leg trip!

One Free Leg!

It’s hard to find the text that will precisely and accurately explain the rules for using this Excursionist Perk. Maybe it’s a bit mysterious on purpose. Maybe United wouldn’t want to encourage the widespread use of this amazing dollar saver. Who knows! Regardless, we have found it and we plan to keep using it!

If you are banking large numbers of points within the Chase Ultimate Rewards program, United Airlines is one of the travel partners you can transfer points to. Turns out United Airlines is an impressive airline for international award travel options, including the Excursionist Perk. United Airlines divides its rewards map into 17 regions around the world. The idea is to fly out of one region and then at a later date fly back to the original region, with a mid-trip flight contained in one region included in your trip for FREE!!!! Mind blowing right?

Putting It All Together

Using United’s search engine, you can build your itinerary and search all their partner airlines quite easily. For us, meeting the first criteria of flying in and out of the same original region was easy as we were starting and then returning to America.

As we selected our destinations cities in Southeast Asia, I noted the number of points we were going to need less the leg that would become the free Excursionist Perk fare. Once we had a solid itinerary, I transferred the points from our Chase Ultimate Rewards points to United Airlines. The transfer was practically instantaneous. As soon as the points hit the account I started entering the flights I wanted into the booking tool. For the Excursionist Perk booking you need to plan at least 3 legs. In this trip we planned to fly 4 legs as anchor flights. As you book each leg the tool gives you the exact points and fees for each one and if you have the options setup correctly you’ll see that the mid-trip leg (that occurs solely in one region) shows up as free with no points or dollars required other than taxes.

We were able to plan the major cities in Southeast Asia we wanted to visit as well as the countries we would travel through. The way our route was coming together, we could see the best use of a mid-trip flight to book for free would be from Chiang Mai in Thailand to Ho Chi Minh City in Vietnam. And bingo, we booked that as our “free” Excursionist Perk.

Here’s a snapshot of how it worked for us. This was all one booking:

• Leg 1: Flights from America (Region 1) to Singapore in Southeast Asia (Region 2), including two flights from Phoenix to San Francisco and San Francisco to Singapore.
• Leg 2: Free mid-trip Excursionist Perk flights (all in Region 2) got us two flights from Chiang Mai to Bangkok in Thailand and then from Bangkok to Ho Chi Minh City/Saigon in Vietnam.
• Leg 3: Two flights from Hanoi in Vietnam (Region 2) to Seoul in South Korea and then from Seoul to Osaka in Japan (Region 3).
• Leg 4: Flights direct from Tokyo in Japan (Region 3) back to San Francisco in America (returning to Region 1).

After the booking was complete and paid for we had spent 210,000 Chase Ultimate Rewards points and $192 in fees/taxes. The value of our booking was $4,832 for all of these flights for the two of us. That’s a savings of $4,640 for this one trip including 7 flights each for two through 3 regions spread over 5 months of travel had we booked and paid cash through United. I imagine it might be possible to get some of these individual flights very cheaply compared to the points value on United Airlines, but in the end when we look at real dollars spent we got this travel package for 2 people for $192. I am VERY happy with that!

Here’s a breakdown of the cost and value of our complete trip package for two travelers:

In the table above showing our complete trip, Leg 2 is our Excursionist Perk booking. Remember, in order to take advantage of this travel hacking bonus our trip had to include at least 3 legs, we had to fly out of one region and then at a later date return to that original region, and our mid-trip perk flight had to be contained wholly in one region. To clarify, we could not have used our side trip to Japan for the perk since those flights are from one region to another region.

Mix and Match

For fun, I have built one more example route (pictured below) showing a more complex trip we could book using the Excursionist Perk. In this example there are 2 round trip flights within the U.S. set for the beginning and the end of the year. And then a 3rd trip midway through the year within Europe that includes 3 flights around the region. I have not booked this example trip but I have tested it from start to finish within the system, all the way through to the page that would allow me to purchase the flights. Which means this complex example trip works within the Excursionist Perk parameters. The crazy thing is that I can use the Excursionist Perk this way, booking 2 U.S. trips and getting 3 shorter flights in Europe for free. I really can’t wait to book our next trip using the Excursionist Perk!

Here’s a breakdown of this example:

Now Go Plan Your Next Trip!

There are tons of different ways to mix and match flights and trips using your points and taking advantage of the Excursionist Perk. We will continue using this perk through our Chase Ultimate Rewards points portfolio though you can take advantage of this travel hack if you just have United points.

I am also including a few articles I have read and enjoyed, linked below. Each of these articles from other bloggers helped me learn about the Excursionist Perk and the United Airlines tools for booking award travel. Each of these articles from other bloggers also includes affiliate links that help these bloggers make a little money through referrals if you use their links to apply for credit cards, so remember you can use their links or find those credit cards on your own. It’s up to you!

Million Mile Secrets: All-New Ultimate Guide to United Airlines Miles: Part 6

The Points Guy: Maximizing United’s Award Routing Rules

In Points We Trust: Transfer Partner Matrix