Travel Hacking in the New Year

There’s a quote that goes something like, “travel is the only thing you can buy that makes you richer.” If you have a bad case of wanderlust, or know the value of experiencing new places and people, you may agree -- but your budget may not.

Unfortunately, the cost of airfare, hotel stays, and tours can get pricey. But here’s the good news if one of your resolutions for 2015 is to get out there and see more: you can actually hack your way to some lower travel costs if you know how to do it.

It’s called travel hacking, and it’s one way for frugal folks -- or young professionals starting out on a smaller income -- to get in more travel experiences without paying for it in cash.

Here’s what you need to know about travel hacking your way to more adventures in the New Year and how you can get started if you decide this method makes sense for your situation.

What Is Travel Hacking?

Travel hacking is the process of racking up reward points and miles from loyalty programs and credit card bonuses. These rewards are used to pay for flights, accommodations, and other travel expenses, instead of using cash.

Frequent fliers earn rewards by being loyal to a particular airline or hotel chain. They amass a ton of points that they can then turn around and redeem for free (or steeply discounted) trips.

But you don’t have to be a frequent flyer or rack up a ton of mileage or purchases via business travel in order to successfully travel hack your way to free trips in 2015.

Here’s how you can make it work with your everyday spending and the travel you normally do:

How Travel Hacking Can Work for You

The first step to successfully travel hacking your 2015 trips is to identify one airline and one hotel chain that will work for most of your travels.

Someone flying out of Hartsfield-Jackson in Atlanta, for example, may choose Delta because it has a hub there, or they may choose the recently-expanded Southwest Airlines for their domestic trips because of the better rewards program offered by Southwest.

Do your research and identify companies that offer rewards that you value the most -- and companies that you'll most likely have access to for the majority of the trips you plan to take. Then sign up for your chosen airline’s and hotel’s loyalty programs.

Continuing the Southwest example, you’d sign up for a Rapid Rewards account and use that account number every time you book a flight to start racking up miles.

Of course, unless you’re flying every week (and if you are, hopefully it’s on a company dime!), it’s going to take a long time to accumulate enough points for a free flight.

Using Credit Cards to Help You Hack

The easiest way people can earn massive amounts of points with everyday, planned spending is to take advantage of credit card reward offers. These are usually in the form of sign-up bonuses.

The first place you should look is, again, to your chosen companies. Hotels and airlines offer branded credit cards and those usually come with some sort of sign-up bonus.

You’ll have to spend X amount of dollars in X amount of months, and if you do you’ll receive a big, one-time deposit of reward points or miles to your account.

For example, you might take out an airline card that has you spend $3,000 in the first 3 months of signing up for the card. (Most people can hit that spending requirement by planning ahead and putting all your fixed and flexible expenses, along with everyday spending, on the card.) Your bonus is 50,000 points -- which may be enough for several round-trip flights or one international flight.

Keep in mind, that’s just a quick example for the sake of this post. You always need to do your research to identify the best deal both for you and for the trip you want to plan.

Make this easier on yourself by using online tools that will help you compare products, or curated lists of great cards, like these:

• NerdWallet's travel credit card comparison tool
• Top 10 travel cards, according to MoneyCrashers
• Top 5 travel cards, according to WiseBread

Most card sign-up bonuses will allow you to get at least one free round-trip flight, a few nights at a hotel, or a few hundred dollars’ worth of statement credits to put towards travel expenses. This is the easiest way to start travel hacking and get your free trip in 2015.

Pitfalls with Travel Hacking to Understand Before You Start

Keep in mind this is a basic overview of travel hacking, and barely scratches the surface of this topic. It’s a bit of a rabbit hole if you start exploring the subject online -- but it’s important that you continue to do your research and learn more.

That’s especially true since there are some pitfalls aspiring travel hackers need to be aware of. Unless you’re doing this the old-fashioned way -- accumulating miles when you fly, or points when you stay somewhere -- then most travel hacking requires that you open and use new credit cards.

This is a slippery slope for anyone who has debt or has experienced trouble in managing their money and credit in the past. You need to ask yourself the following questions before trying to travel hack in the new year:

• Do I pay off all my balances in full and on time?
• Do I know how to successfully manage my money so that I never spend more than I earn?
• Do I have a plan for limiting my credit card spending to only what I would normally purchase (to avoid making purchases just to get reward points)?
• Do I already have good or excellent credit?

If you answered anything less than a resounding YES! to all these, travel hacking using credit card bonuses is probably not the best option for you.

Want to learn more? Check out these resources to help you get started:

• How to Start Travel Hacking: Fly for Little or Nothing from MoneyUnder30
• Travel Hacking Resources from Chris Guillebeau
• A 60-Second Guide to Travel Hacking from Forbes

Do you travel hack? Where would you love to go for free (or cheap!) in 2015?

About the Author: Michael Solari, CFP® and XY Planning Network member, is the founder of Solari Financial Planning. He provides, reliable, affordable advice to young professionals, and feels passionately about helping people build the right financial foundation while balancing their personal lives.