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Travel Rewards 101: British Edition

Travel Hacking Tool Kit

I covered travel rewards a few weeks ago and commenter Mr. Robot asked:

This sounds pretty awesome but I’m guessing this only applies to US residents and not European?

The answer is yes, though with some caveats:

  • Two of the major flexible rewards providers, Chase and Citi, do not offer points outside the US.
  • The sign-up bonuses are not nearly as good as the American cards.

However, it’s totally possible to travel hack a free trip with cards. I thought I’d take the opportunity to demonstrate one with the same tools I used before in my previous post, though with different cards. This time, we’ll take a trip from London, England to Prague, Czech Republic.

Flights

Award Hacker flights to Prague from London

We can use Awardhacker and see how many miles we’ll need. For short distance trips in Europe, an airline that uses Avios like British Airways will generally always be the best option for your points. You can read more about it here (for fun also check out the Avios calculator to see how much it costs to fly to other destinations). As you can see, it’ll cost about 9000 points for a round trip off peak (in other words, not the busy season).

Hotels

Our possible Hotel in Prague uses SPG.

Looking at Awardomatic, we can find one Sheraton Hotel, which uses Starwood Preferred Guest (SPG) points. Since SPG is a partner of American Express, that becomes very useful as we can see after this.

Credit Cards

American Express is really your best option for travel rewards in the UK.  Two cards to use would be British Airways card and the Starwood Preferred Guest card there.  Note, however, you are better off not signing up with the links on the American Express site itself, but rather with a referral link as those will give you a better bonus along with the person who referred you.  I’d recommend asking on Head for Points for a referral link if you don’t know anyone who has these cards.

Conclusion

If you want to read more about collecting points in the UK, check out Head for Points, the premier travel hacking blog for the UK.

Got anymore travel hacking tips for Europe and the UK? Let me know in the comments below.

Corey’s Financial Independence Update – July 2018

journey to FI on a winding road

Welcome to another post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This month, I am covering July of 2018.

I want to follow this particular format in these posts:

  • Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.
  • Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.
  • Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.
  • Looking Forward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.

Before diving in, I just want to give you a heads up on what you are going to read. This month, the main focus was experiencing life a bit more than usual. My wife and I had some profound conversations about money and life, which was reflected in July’s overall spending. I’ll explain more below!

Taxes and Investing as an American in the UK

As I mention in my last post, I currently live in London, England. However, as an American citizen living abroad, reaching financial independence becomes more difficult as I describe below. So what does that mean for folks who want to be financially independent? I’m going to run down the steps I’ve gathered from information sources around the net and speaking to several advisors. Hopefully this helps you with your investments like it did for me.

(Disclaimer: Please note the standard disclaimer here applies. I am presenting my own experiences that have been presented to me by others who have researched this topic. I have done my best to distill it down as a simple action plan. However, as I illustrate below, there are a surprisingly large amount of people willing to trade their time to help you. Please do consult a professional with your situation.)

The Main Problem – Taxes

If you could boil it down to one problem, though, it would have to be taxes. Unlike most countries in the world, the United States government taxes its citizens and residency card holders even when they are not living in the US. (Side note: the only other country that does this is Eritrea.) So Americans working and living abroad have to worry about taxes in two different tax jurisdictions. Also because of the tax reporting requirements of American citizens living abroad, most investment companies (even American ones like Vanguard), don’t want to deal with Americans living abroad. There are also all sorts of tax rules involving investing in index funds in other countries, which can negate the gains (I don’t want to go into it here, because I don’t really understand it well, but look up Passive Foreign Investment Company when you get the chance).

The FI community starts with a do it yourself attitude, and while admirable, this is not a place for it. Your UK taxes will be easy as the government does your taxes for you. However, you are going to want help filing your tax returns in the US from one of the US expat tax firms out there (there are a few of them out there).

Corey’s Financial Independence Update – 2018 Part 1

Welcome to the first post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This being the first post in the series, I will cover the entire first half of 2018, so it might be a longer one. Every post after this will cover one month, with the next post covering July.

I want to follow this particular format in these posts:

  • Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.
  • Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.
  • Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.
  • Looking Forward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.

Tips for Reaching the Pillars of FI in the UK

As you can see from my bio, I’m currently living in London, England. In the UK, there appears to be less of a FI presence than in the US, but it is growing as the meetups show (the picture above is me at one of the FI London meetups). That said the overwhelming amount of FI resources are for the US, and I thought I’d take a stab at trying to take a starting point of FI and make it more UK friendly, that starting point being the Pillars of FI.

I’ve talked about the pillars of FI from a personal stand point, but today I want to try to approach them from a person living in the UK. Please note though, that as an American citizen living anywhere else in the world, there are complications, so this post is not for them. Next week, I will write up one a post on being an American and trying to achieve FI in the UK. For now though, let’s go through the Pillars of FI in order and see what they are like in the UK.

How Tax Reform Changed My IRA Strategy

retired couple relaxing on a bench

Retirement accounts are key to achieving financial independence. However, with all of the different types of accounts, it can be challenging to know which ones to use. Throw taxes into the mix and retirement planning gets even more complex! Throw early retirement into the mix and now you are royally screwed! The good news is that this post is going to discuss two types of accounts: Traditional IRA and Roth IRA. Specifically, how the new tax reform changed my IRA contribution strategy.

Brief Lesson On IRAs

Before I get into tax reform, let me give you a refresher on IRAs.

Travel Rewards 101: Planning Your First Trip Using Travel Rewards

Travel Hacking Tool Kit

As I’ve mentioned in my New Year’s Resolution/intro to the Pillars of FI post, travel rewards were basically my gateway into the FI community. After I had made my first trip to London, I sat at the airport and got curious about optimizing travel spend.  Sure enough, a couple of web searches lead me down the travel rewards rabbit hole and then the FI rabbit hole.

So what am I talking about with travel rewards? Basically, the idea is earning and building up enough miles to fly and stay at hotels for a heavy discount. You maybe saying, “doesn’t it takes forever to earn flights and stays at hotels even if you are a frequent traveler?” and you are correct. However, we can boost our points balances in a big way using one simple method: credit card sign up bonuses. You simply get the credit cards you need, earn the bonus by meeting the spend requirements, and that trip is yours.

(Important: Pay your credit cards on time and in full. Do not go into debt and spend more than your normally would to meet the minimum spend requirements. Everybody who advocates this method of earning points recommends this as debt avoidance is paramount to hitting FI.  The interest payments will immediately wipe out any gains you made from the bonuses.)

How can we do this? I’m going to demonstrate how I use four travel tools to plan a trip with flight and hotel paid for. In this example, I’ll pretend I’m going to fly from Seattle, Washington to Honolulu, Hawaii for a 3 night stay. Then I will show you a tool find a credit card for this trip and finally a way to track your points progress.

Personal Finance 101 – Starting Your First Budget

balancing your budget

The FI equation can be summed up as IncomeExpenses = Net Income. From there, net income (whatever is left over) can be invested into assets that grow, which eventually grow large enough to allow you to retire. One issue here is that too many people focus on the income side of the equation and completely forget about the expenses side. This makes sense, as income is easier to understand because it typically comes from one source (a job) while expenses come from many. Well, it’s time for you to start focusing on the expenses side with the use of a budget.

A large majority of Americans do not budget. According to Hanscom Federal Credit Union, 41% of Americans in 2014 said they used a budget. While this number was up from 2013, I believe we can do better. Creating a budget and sticking to it is a key practice of financial independence. It not only helps achieve FI, it also helps you stay FI. You want to keep the wealth you have worked so hard to build, so you need to make sure you budget.

If you don’t have a budget, you’re in the right place. I hope that you are ready to create your budget after reading this post. The art of budgeting can be split up into two main activities: tracking and evaluating.

Before I continue, let me just say that tracking and evaluating are typically done on a monthly basis. I’ll explain more below. Let’s dive into each category and help you start your first budget!

FI Lessons From Media – The Gina Linetti Guide to FI (Brooklyn Nine Nine)

Jake and Gina discuss their finances in <em>The Apartment</em>
Jake and Gina discuss their finances in The Apartment

The FI community doesn’t encourage a lot of TV and movie watching (remember one of the pillars of FI is cutting cable). However, I find there are some ways that entertainment can explain the concepts of FI pretty well. The Escape Artist’s top 10 tv shows on financial independence did something like this before and has served partially as inspiration for this series. With that, we started a series of posts that highlights those examples, which we’re calling FI Lessons from the Media.

Premise

Brooklyn Nine Nine depicts the antics of a fictional New York City police precinct (affectionately nicknamed the Nine Nine). We mainly follow Jake Peralta, one of the best detectives at the Nine Nine, but shown to be immature personally and professionally. Gina Linetti, a childhood friend, serves as the eccentric personal assistant to the precinct’s captain after Jake had gotten her a job there (fun fact: both the actors who play Jake and Gina, Andy Samberg and Chelsea Peritti, also grew up together). As the show progresses, Jake grows increasingly more mature, but not without learning some important lessons first as this early episode below shows.

Car Ownership: The True Cost and Why I Sold My Car

car - black mercedes benz

Let’s face it: you probably need a car, but you probably don’t need your current car. If you commute to work, run errands, or do anything else, then a car makes your life significantly easier. But do you need a flashy, expensive car to accomplish those things? Having said that, do you really know how much your car is costing you? If you knew, would you still be driving it? Would you downgrade?

Look, I am not going to tell you to sell your car and only ride your bike everywhere. I am also not here to shame you for owning a car. Financial Independence is about creating the life you want to live. If cars are one area of your life you do not want to change, then that is ok! All I hope to do is expose you to some of the hidden costs to car ownership. This post aims to give you my perspective on car ownership, what it truly costs to own, through specific examples from my life. My hope for you, dear reader, is that my experience will help you evaluate your current car situation.

If I had to summarize this post in one little TL;DR blurb, it would be the following: your car’s hidden expenses are costing you much more than the obvious expenses. With that, let’s dive in!