Saturday, April 8, 2017

Twelve Non-Financial Books That Will Help You Cultivate a Mindset of Financial Independence

Over the years, I’ve written about many personal finance books that have been incredibly valuable to me and to many others in terms of helping them figure out their finances and build a path to a strong retirement or even to financial independence / early retirement. Perhaps the most in-depth list was this one, where I outlined fifteen essential personal finance and career books.

As time as gone on, though, I’ve come to realize that many of the best lessons I’ve ever learned about the mindset and other life choices needed to get you to a state of financial independence have come from books that aren’t strictly about finances or careers. They’ve come from a wide variety of other fields – philosophy, psychology, time management, personal growth, and so on.

Today, I want to share twelve of those books with you. These books won’t directly provide financial advice, but what they will do is help you to figure out what you want out of life and how to prioritize the many different demands that you face so that you can begin to make better decisions – financial and otherwise – that will lead you to the kind of life you want to live. These books are packed with ideas, so expect thoughtful reading where you pause a lot to think about the ideas presented, whether you agree with them, and how they impact your life.

A Guide to the Good Life: The Ancient Art of Stoic Joy by William Irvine

A Guide to the Good Life focuses on applying the principles of the philosophy of Stoicism to modern life, redirecting them to help with navigating such modern difficulties as achieving one’s life dreams and ambitions, staying under emotional control, and avoiding distraction.

The core idea of the book is that the only thing you can really control are the thoughts in your head and the actions you take and that by practicing control over those things and evaluate your impulses and emotional responses and whether they make sense, you can discard less helpful thoughts and impulses and cultivate more helpful thoughts and impulses.

I have found incredible value in the ideas of Stoic philosophy over the years. In fact, I would attribute many of the good things I have in my life to using those ideas in my day-to-day living. In fact, at least two other books on this list at least touch on Stoicism.

Three Lessons from A Guide to the Good Life

Practice negative visualization on occasion. Imagine losing the things in life that you value the most: the loss of loved ones, the loss of our own faculties, the loss of our career, the loss of our most valuable possessions. We often take all of those things for granted, and spending real time visualizing and thinking about life without those valuable things helps us appreciate them and the bounty that we really do have in life.

Focus on internal rather than external goals. Internal goals are ones entirely governed by your own thoughts or actions, while external goals are affected by what others can do and have control over. Make it your goal to, say, study ten hours a week rather than earning an A in a class, because earning a good grade is an inevitable outcome of the studying, whereas the grade itself is outside of your control.

Practice daily reflection. Spend some time each day reflecting on your behavior and your life choices. What could you have done better? Consider those situations and conceive of better ways of handling those kinds of situations. Journaling is a great way of doing this, because writing down thoughts forces you to slow down, deeply consider what you’re thinking about, and really hammer the solutions you conceive of into your head.

Voluntary Simplicity: Toward a Way of Life That Is Outwardly Simple and Inwardly Rich by Duane Elgin

voluntary simplicityThe idea behind this book is that choosing a simple life – one free from a lot of distractions and redundant physical possessions – is incredibly life-affirming, though he is very clear to separate the idea of voluntary simplicity from forced simplicity (i.e., poverty). Choosing simplicity means you get to choose how to simplify and in doing so you’re able to let go of the things that are a net negative to you. Rather than being a prison of limited means, it’s incredibly freeing.

To me, Elgin’s message ties in closely with the idea of minimalism, in that it’s a noble goal to reach a point where every possession of yours has a purpose that’s meaningful to you, as does every bit of time you spend. If your possessions and uses of time don’t have purpose and aren’t contributing value to your life or contributing to your greater purpose, then they’re a distraction and ought to be cut away.

I’ve written about Voluntary Simplicity in the past, if you want a more in-depth summary.

Three Lessons from Voluntary Simplicity

Choosing simplicity is exerting decision-making power over your life. It’s a pure embodiment of the fact that you control the realities of your life. Quite often, the time we waste and the things we own but do not use are examples of how we allow our own impulses to run the show, and those impulses often run counter to our true life goals and dreams and desires. Choosing simplicity is centered around exerting control over those impulses and putting our big life dreams and ambitions front and center.

More income does not equal more happiness once you’re above a certain level of basic income. There comes a point – and it’s a surprisingly low point – where additional income does not contribute to additional happiness. Additional income might unlock access to some pleasures that aren’t otherwise accessible, but you pay a high cost in terms of stress and time to unlock those things, a cost that often counterbalances the unlocked pleasure. Finding happiness and joy in things that do not have a financial cost to unlock tends to be an incredibly powerful source of lasting joy and happiness in life.

Actions and purchases that promote passivity and dependence are usually mistakes. When you start buying things that require you to maintain a certain level of income, you become dependent upon the safety of your job and career. When you start relying on others to take care of your basic needs because you’re just too busy, you become passive and struggle to maintain your life on your own. Both are mistakes because they put you at a tremendous disadvantage if anything in your life doesn’t go perfectly.

Meditations by Marcus Aurelius

Marcus Aurelius was a second century Roman emperor; Meditations is simply a collection of his personal notes that he wrote for himself. Marcus Aurelius is considered to be the last of the “Five Good Emperors,” in that he was a part of a succession of Roman emperors who led the Empire at the height of its strength and good governance. Many consider Rome’s decline to have begun shortly after Marcus Aurelius left the throne.

So, what’s the value in the notebooks of a Roman emperor? The notebooks trace the internal thinking of Marcus Aurelius as he attempted to both be a good person and a good emperor, so he internally sought out principles by which he could achieve both aims. He was heavily influenced by stoicism (see the first book on this list for more on that) but sometimes branches out into other useful schools of thought.

More than anything, it’s about his struggle to maintain good values and judgment in a world of distraction, something that many modern people can identify with.

Three Lessons from Meditations

Don’t waste your time worrying about people who have no positive impact on others; save your time and attention for those who do. Make an effort to fill your life with people who have a positive impact on you and on others and slowly divest yourself of relationships with people who do not. There are always negative people in life; don’t spend your time or energy on them unless absolutely forced to.

Seek peace within yourself, because you will never find it outside of yourself. The only way to find true peace and happiness in the world is finding it within yourself. You must be the source of your own contentment and joy, because the world will not consistently provide it for you.

Don’t resent people for their character; instead, treat their character as simply who they are, accept it, and make choices accordingly. Don’t get caught up in negative feelings toward other people because of their character flaws. Accept those flaws, then take action to minimize the negative impact of those flaws upon you. You cannot change the flaws of others; you can only work to change your own flaws.

How I Found Freedom in an Unfree World by Harry Browne

Although this book is somewhat couched in libertarian political principles, the focus of the book is really on being radically honest with ourselves as well as others (noting, of course, that “radical honesty” doesn’t mean negativity).

Browne’s core argument is that a sense of freedom comes from within and we choose within ourselves how much power that we allow the outside world and the prevailing culture to have over our lives. We have a great deal of control over our own choices, but we often let outside forces steer those choices into a comfortable channel for them but not necessarily for us.

The solution, then, is to have a strong understanding of ourselves, first and foremost. What do we value? How do we wish to be treated? Those types of questions are internal, but the answers help bring us to how we act in the world.

Three Lessons from How I Found Freedom in an Unfree World

Every second trying to pretend to be something you’re not is a second of your life wasted. Whenever you bend your core values in order to accommodate the desires of others and what they want you to be, you become a weaker version of yourself. Don’t bend your core values, but instead reflect and observe the world to strengthen the ones that continue to resonate.

Understand your emotions, but don’t act on them when they are surging. This is a bit of stoicism, but it’s incredibly important and valuable advice. Sometimes in life, our emotions get the better of us and we become impulsive, driven by desires in that moment without any thought as to the long term. Don’t let that happen. When you feel a surge of desire within you, recognize it and remember it but don’t act on it. Reflect on it later when you’re calm and outside of that emotional flood, then figure out what to do about it with a cool mind.

Don’t make decisions today based on what you’ve invested in the past. Many times in life, we sink time and money and effort into things only to find that they don’t produce any real fruit for us. When it comes time to make a decision, always choose the one with the best outcome, not the one you’ve invested the most in to this point. Consider that investment to be a sunk cost, one that brought you to the point where this decision was available, but don’t let it make your decision for you. Don’t walk away from a friend in need just because you spend $50 on tickets for a concert tonight unless you value $50 more than that friendship.

Making It All Work: Winning the Game of Work and the Business of Life by David Allen

making it all work
This is David Allen’s lesser-known book; he’s generally better known for his book on personal productivity, Getting Things Done (which I’ve written about extensively).

I view Making It All Work as something of a bird’s eye view of Getting Things Done, in that it shares most of the key ideas of GTD, but then backs off and looks at it from a broader perspective. Yes, you have tools for getting things done in your daily life, but what does that really mean in terms of your life as a whole? That’s what Making It All Work really tackles. It provides some great productivity tips, but then it puts them in context of a broader life.

I’ve written an extensive review of Making It All Work if you’d like more details on it.

Three Lessons from Making It All Work

Trying to remember things for later breaks your focus, so you should record the thoughts you want to visit (or do) later in some external way that you’ll review often. This is a good principle to use no matter what it is that you happen to be doing in that moment. You’re going to do your best at that task if you give it as much of your focus as you can and things that pop into your head or things that you are trying to remember for later are mere distractions that eat away at that focus, so get them out of your head. Write them down somewhere, in a place that you’ll look at again soon. I like to use a pocket notebook for this. Then, when you do review that space where you jotted down that note, you can take appropriate action on it. This keeps you having things slip through your mental fingers and maximizes your focus on the moment.

Organizing without perspective is useless and generally causes more problems than it solves. You can make endless lists of tasks, but if those tasks aren’t broadly pointing you toward big goals in life, those lists really aren’t very meaningful. The tasks you add to that list should be things that are of genuine importance to what you want to achieve in life, not busywork foisted on you by others and by unwanted responsibilities dumped on you.

A good life connects the “meaning of life” to the little things you do every day. All of the things you do in a given day should be tied to the big things you want in life. Discovering those connections – or recognizing that some things don’t have a connection – is deeply valuable, as is the time spent figuring out how to divest yourself of the things dumped on you that don’t have any connection to your broader life’s purpose.

Self-Reliance and Other Essays by Ralph Waldo Emerson

Self-Reliance is probably the most impactful essay I’ve ever read, and it’s one I re-read quite often. It spells out the importance of being able to rely on yourself, your thoughts, and your judgment outside of others, because when push comes to shove, it’s your thoughts and your judgments that define the path you’re going to be taking in life.

Emerson’s other writings are similarly powerful; though they perhaps don’t resonate quite as strongly as Self-Reliance does for me, very few things do in life. I consider a healthy collection of Emerson’s essays to be some of the best reading a person can take on if they’re reflecting on their life and their life’s choices.

A while back, I wrote a three-part essay on Self-Reliance that you may find valuable: part one, part two, and part three.

Three Lessons from Self-Reliance and Other Essays

Save your energies for the things you truly care about and don’t waste your time, money, and energy giving only a token appearance or a token effort toward some thing you think you’re supposed to care about. If something you don’t care about is eating any significant part of your life in terms of time or effort, it’s well worth your time to find some way to minimize the impact of that thing. A life full of things that matter to you is the best life.

Contradictions between our true values and our behaviors are a huge part of why we don’t succeed. We often fail because we didn’t give our best effort, and we often don’t give our best effort because the thing we’re doing isn’t in line with what we really value or care about in life. When we try to exhibit behaviors that aren’t in line with our true values, those behaviors are usually weak and clumsy and we end up undermining ourselves with them. You’re better off behaving in line with a less popular value that you hold dear than you are faking a behavior in line with someone else’s more popular value.

Try something new. The worst thing that can happen is that it doesn’t go perfectly, in which case you’re usually right back where you started. Failure at something new rarely puts you in a significantly worse place than you started, and success at something new almost always improves your standing. The only “risk” in many such new things are false risks that we invent when we’re afraid of change or of something new.

The Wisdom of Frugality: Why Less Is More – More or Less by Emrys Westacott

This is a philosophical approach to the idea of frugality; it’s perhaps more in the normal area of a book I might write about on The Simple Dollar than almost anything else on this list, but it doesn’t get into practical frugality tips at all.

instead, the focus of the book is on the why of frugality, not the how. Why would a person choose to be frugal beyond the straightforward financial benefits? This book provides a thorough coverage of those questions and brings up some interesting points.

Honestly, I will probably do a thorough review of this book in the coming months on the site, but it will definitely merit a re-read first.

Three Lessons from The Wisdom of Frugality

Frugality is an act of appreciation for the bounty you have in life, not a denial of what you do not have. Many people think of frugality as denying yourself things that you might want. The focus is on the things that you do not have. Westacott argues that the reverse is true, that thoughtful frugality places the focus of your life on the things that you actually do have and encourages appreciation of them. Rather than accumulating more stuff, it’s all about appreciating the untapped bounty that you already have in your life.

Frugal living makes the world better for everyone by minimizing the use of nonrenewable resources. Frugal living typically centers around having fewer possessions and finding lots of uses and extending the lifespan of the things that you do have. That results in less waste, which means less junk in landfills and less pollutants in our land, our air, and our water. This creates a better natural world for all living things.

Using frugal principles frees your mind from decision stress, enabling you to make better decisions in other areas of your life. If you use frugality as a guiding principle in your life, you’re often diverting yourself away from unnecessary purchases and thus away from thinking about where to put things and what to do with things. Given that people only have so much mental energy for decisions in a given day, frugality frees up that mental energy for other uses, such as living a fuller life.

The Art of Learning: An Inner Journey to Optimal Performance by Josh Waitzkin

Josh Waitzkin is a former chess champion and was the subject of the film Searching for Bobby Fischer. Later in life, he chose to step away from competitive chess and instead became a world champion level practitioner of tai chi.

In doing so, he realized that there was a great deal of overlap in the process of learning and thinking about both chess and tai chi, enabling him to use many similar principles in two very disparate fields.

The Art of Learning is a distillation of those shared principles. It looks at how people learn: how similar techniques can be used to learn very different things and how knowledge and experience from other areas can be applied to your new area of focus.

Three Lessons from The Art of Learning

Transferring knowledge and experience from different spheres of your life is the biggest key to deeper understanding. Waitzkin’s core argument is that the process of learning a new subject is made much easier when you recognize that you are able to draw on other areas to enhance and speed up your learning. Looking for familiar patterns in a new subject that allows you to pull in ideas from other subjects you already know about enables you to unlock a great deal of knowledge and understanding fairly quickly when approaching something new.

Developing and strengthening basic skills, such as reading ability, basic mathematical ability, reasoning ability, and so on, makes everything in life easier to tackle. These are effectively transferable skills in that they’re useful in almost everything that you want to do and learn in life. Being able to process and retain what you read, being able to handle basic mathematical principles, being able to reason effectively, and many other fundamental skills are the foundation for learning almost anything, and the stronger those basic skills are, the easier it becomes to tackle something new and the more effective your time and focus will be.

Invest in loss when learning a new skill by learning from mistakes and resisting old habits. Failure is the best teacher of all because it tells you that you’re clearly doing something that isn’t working and needs to be corrected. Success never shows you what you are doing wrong. When you fail, you can take that information, evaluate where you went wrong, and try again, resulting in better performance.

The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph by Ryan Holliday

Most of the time, we view life’s obstacles purely as something in the way of where we want to go, but the reality is that quite often, the obstacle itself is the key part of the path and it is through overcoming that obstacle that we actually reach our destination.

For instance, you might view a difficult person as an obstacle to completing a team project, but often it is handling that person that is the true value in the project, not the project itself. You might view the pain of exercise as a giant obstacle for fitness, but it is actually that pain that is building your fitness.

In other words, don’t view obstacles as things that are preventing you from achieving. Instead, view obstacles as the things that are the fundamental building blocks of achievement.

Three Lessons from The Obstacle Is the Way

Pushing yourself through difficult things – building willpower, in other words – is a fundamental skill that will help you in virtually everything that you do. It is much easier to give up on a goal than it is to keep pushing forward when success isn’t coming easily. Often, it is that obstacle that keeps other people from easily finding success and it is through cracking that obstacle that you’ll find what you’re looking for.

Failure is more valuable than success if you pick yourself up when you fail, figure out where your misstep occurred, and move forward with that in mind. You’re going to try things. You’re going to fail. The question that matters is what you do next. Do you give up? Or do you reassess, figure out what went wrong, and try again?

Bad moments are painful, but the biggest positives in life often come out of the ashes. You’re going to fail. You’re going to hurt. You’re going to sometimes feel like there is no path forward. The thing is, it’s often in those lowest moments when the most unexpected good things happen. Never give up.

Shop Class as Soulcraft: An Inquiry into the Value of Work by Matthew Crawford

I don’t think this list would be complete if I didn’t include Matthew Crawford’s two books. This was his first.

The focus of this book was on how thinking is relatively valueless unless it leads to doing. You can theoretically think out everything you want, but until you do it, you won’t know if it’s practical. You can daydream about goals all you want, but until you start working on them, they won’t come true.

That core principle – that actual work is central to a joyful life and to any real success – is expanded upon throughout the book in countless ways, from the usefulness of sustained work in achieving something meaningful to the peacefulness that comes from focusing on a task at hand.

Three Lessons from Shop Class as Soulcraft

The most meaningful things in life are the ones you have invested a lot of yourself into in the form of consistent work and effort. The feeling you get from having achieved something of true quality on the back of your sustained skill and effort over a period of time is almost unmatched in the world. It’s not easy to attain, but it provides a peak like little else in life. The process of actually investing yourself in your work has inherent value, too, and also feels good. I identify with this greatly, as I’ve come to recognize that a “flow” state, where you lose track of time because you’re so mentally and physically engaged in the task before you, is perhaps one of the most enjoyable states a person can be in.

Separating “thinking” from “doing” is a trap that causes people to develop and enforce ideas that don’t really work. You can have lots of great ideas, but they really don’t matter too much until you put them to the test and see if they work. Separating thought from work often leads people down paths that simply don’t function in the real world.

Put your ideas into actual practice as frequently as you can and revise from there using the feedback from that practice. If you have an idea, do it and see if it works. If it does, then you can use that going forward; if it doesn’t, learn from what went wrong and formulate new ideas. It’s that constant cycle between ideas and action that makes great things happen.

The World Beyond Your Head: On Becoming an Individual in an Age of Distraction by Matthew Crawford

Crawford’s second book extends his thoughts on the value of translating thought into effort and work to the idea of focus and distraction. His core argument here is that it is focus that allows us to create successful and unique things and it is distraction that causes us to become less distinct in our thoughts and actions.

Creating things of value requires doing things in a way that’s different than everyone else, and that takes a lot of effort and focus. Distraction breaks that focus and stuffs us with ideas and concepts of others. That can be good in small amounts, but consistent distraction tears down our ability to focus on the reality of the world around us and damages our ability to have unique thoughts and translate those thoughts into the real world.

In other words, focus is an absolutely essential tool for anyone who wants to create something meaningful and great.

Three Lessons from The World Beyond Your Head

Intense focus on a task anchors you to the real world and is the foundation of lasting success. Focus is a bridge between your mind and soul and the real world, and it is the expression of our mind and soul that is the source of the creation of truly worthwhile things. When we allow ourselves to deeply focus, we put ourselves in position to use all of our abilities and unique talents to create great things. (Again, this ties into the idea of a “flow” state, which I talked about above.)

Modern culture steers us all toward being very similar, but there is little value in being similar. Most of modern culture is distracting and serves to break our focus and fill us with ideas and thoughts that are very similar to everyone else. We’re left with a reduced ability to focus and a reduced set of our own ideas to draw upon, which means a much smaller window to create things of value.

Applying intense focus to the world often reveals other options that aren’t readily apparent. Another challenge of distraction is that it cuts out opportunities and options by either filling our minds with thoughts of only certain options or by harming our ability to focus intensely enough to see other options. Eliminating distractions takes care of both things at once.

Man’s Search for Meaning by Victor Frankl

This book tells Frankl’s story as the survivor of the concentration camp at Auschwitz during World War II and what psychological tools he and others used to survive that kind of intense trauma. In the end, Frankl’s main conclusion is that what helped him and others survive was a central sense of purpose and meaning that they were striving for.

Thus, Frankl’s argument is that the most powerful thing we can have for ourselves in terms of surviving the challenges of life is a central purpose, one that drives our actions and convinces us to push through whatever challenges may fall in that path.

Different people may have vastly different central purposes and meanings for their lives, but it is the mere presence of that central purpose that can provide a central drive for our life.

Three Lessons from Man’s Search for Meaning

Man’s deepest desire is to find meaning and purpose for themselves and the world around them, but life does not owe us an answer. That’s the key thing – we are not owed an answer to the key question of what our life purpose and meaning is. We must put in the effort to seek it out for ourselves, and it is the discovery of that meaning that gives us a driving sense of purpose and a will to overcome great challenge and hardship. It is a journey, not an answer merely given to us.

The world is a mixture of good and bad and seeing elements of it as strictly good or strictly bad leads us down a path of failure. It’s often easy to fall back on a sense that the world is made up of things that are good and things that are bad. The truth is that almost everything in the world is a mix of the two and when we choose to see things as only good or only bad, we are intentionally not seeing the whole picture, and when we stop seeing things as they actually are, we tend to start making large judgmental mistakes which lead us down negative paths.

The most effective way to overcome pain and suffering is to figure out a purpose for pushing through the suffering. Everyone deals with some kind of pain and suffering – emotional, physical, mental, or otherwise. Frankl argues that the most effective way for people to deal with their own pain and suffering is to be on that journey to figuring out their meaning and purpose, because knowing that purpose or even being well on the journey to it can provide a deep motivation to overcome pain and suffering and challenge in life.

Final Thoughts

If you spend the next twelve months reading these twelve books, you’ll find yourself with a much more powerful understanding of the world, your place in it, and the personal, financial, professional, social, and spiritual choices you’ll make in your daily life.

If I had to pull one message out of all of these books, it’s this: spending reasonable time reflecting on your own life, particularly in reviewing your mistakes and how you could improve upon them so that they’re not repeated, is perhaps the most valuable thing you can do. It is perhaps the most profound thing I’ve come to understand about myself in my adult life and it’s the one lesson I desperately want to pass along to my children as they grow and to every reader of The Simple Dollar. Such reflections form a vital backdrop to every financial decision that you make, as well as the other choices you make in every part of your life.

Good luck.

The post Twelve Non-Financial Books That Will Help You Cultivate a Mindset of Financial Independence appeared first on The Simple Dollar.

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Friday, April 7, 2017

Some Thoughts on the Battle Between Minimalism and Preparedness

One of the biggest struggles I have in my life is this constant battle between two guiding values: minimalism and preparedness. I see great value in both of these things.

In minimalism, I see the value of having fewer things to worry about and take care of, leaving me more time to actually do things instead of having to maintain stuff. It also leads to more financial flexibility because I’m spending less money on stuff overall, and my natural tendency is to spend my time making things or exploring nature, neither one of which is very expensive for the most part.

In preparedness, I see the value of having more things so that I can handle unexpected situations with grace and effectiveness. Whenever a situation comes up that I am not properly equipped to handle, I feel a great sense of frustration and disappointment.

Those two things obviously come into conflict rather often. One pushes me toward owning more things (and thus investing my money in those things and perhaps sometimes saving money due to being prepared for an unexpected event), and the other pushes me toward owning fewer things (and thus investing my money in experiences and in savings for the future). They push against each other constantly, a debate that boils down to the simple question of whether or not I actually need to own a particular item.

Do I really need this thing? Owning it makes me more prepared for whatever may come. Not owning it means I have more money and flexibility and have less stuff to take care of.

Which is the right path to choose? Quite often, whichever path I choose, I feel like I’m making something of a misstep.

Over time, I’ve come to realize that having a well-thought-out set of guiding principles in life for situations such as these makes it much easier to make those decisions with confidence and without guilt. I’ve been spending a lot of time reflecting on those principles over the past few years so that I can simply trust those principles when it comes to decisions like this and know that I have made a well-considered decision, even if I happen to make it quickly.

Here’s what I’ve come to realize is true for myself in this battle between minimalism and preparedness.

First, being prepared doesn’t mean more and more and more stuff; it means having items that serve real purposes that aren’t met by other items. Being prepared means I am ready to handle a particular challenge that comes into my life. It doesn’t mean having every possible color of pen ink or two hundred games on my game shelf or a ton of books on my bookshelf. It means having a reliable pen or two for taking notes and drawing. It means having a game or two to choose between depending on the guests (I think it’s reasonable to have fifteen or twenty games when it’s your hobby, because different games work best with different situations and different people and different player counts). It means having books on your shelf that you actually turn to for reference beyond what you can find with an internet search.

I use this principle when I’m tempted to buy another board game or another pen or another book. Do I really need these things? Are there situations where I would want to have these things right at hand to meet some situation that isn’t already largely met? Couldn’t I just borrow this item or use something similar in such an event?

This keeps me from buying a game similar to one I already have or buying more pens unless I’m running low (I write a lot, so this happens) or buying many books.

Second, the purpose that I have items for are actually real purposes, not fancies of the imagination. When I’m in a hardware store, it’s easy for me to visualize uses for many of the items in there, but are those scenarios that are even remotely likely to actually happen? Probably not. The same is true when I’m at a tea shop – I’m surrounded by delicious teas, but am I really going to drink any of those teas in a period of time when they’re actually fresh? Probably not – I do drink some tea and/or coffee most days, but that doesn’t mean I go through the stuff very fast.

It’s very easy for an active imagination to visualize scenarios in which you’ll really want or need a particular item, but the thing to remember is that most of those visualized scenarios will very likely never happen. Stopping and recognizing the reality of such scenarios is absolutely vital in fighting this battle.

Third, items that can handle lots of tasks are far better purchases than items that do only one or two things. A smartphone is better than an alarm clock, for example – I actually use mine as an alarm clock, among other purposes. A griddle is better than a sandwich press, and a sandwich press is better than a breakfast sandwich maker. Why? You can make anything on a griddle (within reason) that you could make on a sandwich press and more, and you can make anything on a sandwich press (within reason) that you could make with a breakfast sandwich maker and more.

What happens when you have items in your house that serve lots of purposes is that you eliminate the preparedness argument for large swaths of items. I wish I had thoroughly understood this principle ten years ago when we were stocking our kitchen with cooking supplies, as we still have quite a few things that are basically redundant buried in the back recesses of our kitchen cabinets.

Fourth, hobby supplies are fine if you’re actually replenishing something you’re going to use in the near future and not just buying something that’s a somewhat redundant replacement for something you already have. For example, I’m completely fine buying a new notebook for myself if I’m within a month or two of running out of notebooks to fill up (again, I fill up a lot of pages with handwritten notes, as it’s how I learn about topics and how I process my life and ongoing projects and think through things), but if I have a bunch of notebooks already, buying more is silly unless they’re like 90% off. The same is true for pen ink (lately, I’ve moved to using pens that last and just replacing the ink in them as the cost is lower over the very long haul). With board games, though, I’m not really replenishing anything, so buying a new game means that I’m either tired of a game I already have (in which case I should sell it) or I really have a niche in my life for playing games that isn’t already fulfilled.

If I had to boil these principles down to a single statement, it would be this: unless there is a high likelihood that I will be using this item in the next month for a purpose that isn’t fulfilled by something else I already own, I shouldn’t be spending my money on it. This even goes for fun things – if I’m not actually going to use it soon or I already have something similar, there’s no reason to buy it. The thing is, I already own items that fulfill almost every need or want that I actually spend time on in a given month and I already have most realistic emergencies covered, so I really don’t have much purpose to buy many things for myself.

For me, the challenge is now turning toward the “paring down” problem. If I have multiple items that meet the same need, why do I need to keep all of them? If I have more books than I will ever read in the next ten years, why do I need to keep them?

The purpose here is to reach a happy medium between preparedness and minimalism, where I’m prepared for almost anything I might want to do and any situation that might realistically come up in the near future, but nothing more than that. That way, whenever I do buy an item, it’s a purposeful purchase and a sensible use of my money, but I’m still spending a minimum amount of time taking care of the stuff I have and keeping it organized. I’m spending my time right now inching closer and closer to that happy medium, and it’s actually a joyful journey.

So, what can you take away from all of this? Whenever you’re considering a purchase, just ask yourself whether you’re really going to use this item in the next month for a purpose that isn’t already met by something you own. If you’re buying something that is already fulfilled by another item, why have that other item? Then, do the same thing with your possessions whenever you go through them – is this item one that I’m actually going to use sometime in the next few months that isn’t already met by something else?

If you take those questions seriously, it’s very likely that you’ll slow down on your purchasing and find yourself, when you do make a purchase, buying things that are purposeful and don’t fill you with regret. Similarly, you may also find yourself slowly paring down the number of items you own, which will make you a little pocket money as you sell them off and also reduce the time you need to spend maintaining and storing them and the space you need to devote to housing all of your stuff.

There is a happy medium, and it’s a journey finding your way there, but that journey is a rewarding one in many ways. Good luck!

The post Some Thoughts on the Battle Between Minimalism and Preparedness appeared first on The Simple Dollar.

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Thursday, April 6, 2017

Best Travel Credit Card for 2017

Airline cards, hotel cards, travel rewards cards… frequent travelers have many options when choosing a new card. While some travel cards offer redemption options like gift cards, merchandise, etc., you’ll usually get the most favorable redemption rate when redeeming points for travel. Some travel cards also offer a higher rewards rate on travel-related purchases.

The best travel credit cards meet one or more of the following criteria:

  • An attractive rewards rate of 1.5X points per dollar (or greater)
  • A significant signup bonus
  • Travel perks for cardmembers, like seat or room upgrades, or free in-flight Wi-Fi
  • Flexible points redemption
  • Redemption bonuses

Take our top pick, the Chase Sapphire Preferred® Card. It’s consistently at the top of our list because it offers 2X points on travel and dining (that will come in handy for your next trip!) and boasts one of the most impressive signup bonuses available today.

Our top travel rewards credit cards for 2017

With this card, you’ll enjoy access to the popular Chase Ultimate Rewards program, with 1:1 points transfer to leading airline and hotel loyalty programs. For even greater rewards potential, consider pairing the Chase Sapphire Preferred® Card with the Chase Freedom®. (Points are transferrable between the two, and the Chase Freedom® gives you 5% cash back in rotating bonus categories.)

Our next recommendation, the Discover it® Miles – Unlimited 1.5x Rewards Card, is a relatively new travel credit card option. While it offers 1.5X miles per dollar (a bit lower than the Chase Sapphire Preferred® Card’s 2X points), you’ll get that rate on every purchase you make on the card.

Plus, you’ll get a nice bonus: Discover will match any miles you’ve earned at the end of your first year. That’s a pretty unique offer that could go a long way toward helping you earn free travel!

Not sure which card fits your needs best? Browse our top picks to find your ideal card, and apply online in minutes.

The Simple Dollar’s Best Travel Credit Cards of 2017

Our Favorite Travel Credit Card

Chase Sapphire Preferred® Card

Apply Now on Chase.com’s secure website

For frequent travelers, it’s tough to find a card that’s more well-rounded than the Chase Sapphire Preferred® Card. Cardmembers earn 2X points per dollar on travel and at restaurants worldwide (plus 1X points on other purchases), but the rewards potential is just the beginning. Since you’ll get a 25% points bonus when you redeem for travel through Chase Ultimate Rewards℠, the 50,000 point signup bonus is worth $625 toward your next trip (as long as you book through the rewards portal).

This card also boasts extremely flexible rewards redemption. Cardmembers can transfer Chase Ultimate Rewards℠ points 1:1 to leading airline and hotel loyalty programs, like Marriott Rewards® and United MileagePlus®. For that reason, the Chase Sapphire Preferred® Card (rather than a more specific airline or hotel card) is the best fit for most people. That flexibility — combined with the large signup bonus and rewards potential — is well worth the $95 annual fee (which is waived for your first year).

Traveling abroad? Bring the Chase Sapphire Preferred® Card along for the ride. It features $0 foreign transaction fees to help you get the best exchange rate on every purchase you make. And because this card is backed by Visa, it will be accepted almost anywhere.

How To Use It
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  • Use this card for everyday purchases to earn 1 point per dollar.
  • Use this card especially while traveling and dining to earn 2 points per dollar.
  • Consider pairing with a card with rotating bonus categories like Chase Freedom®. Points are transferrable between Chase cards.
  • Get 25% more points value when you book travel through Chase Ultimate Rewards℠.
The card has a $95 annual fee (waived for the first year). For many, the earning potential, flexible redemption, and signup bonus will justify the fee. If you’d prefer a card without an annual fee, check out the Discover it® Miles – Unlimited 1.5x Rewards Card.
With the signup bonus alone, you’ll already have $625 toward travel booked with Chase Ultimate Rewards, with no blackout dates or travel restrictions. And, you have the flexibility to transfer your points 1:1 to your favorite airline and hotel rewards programs.

Best No Annual Fee Travel Credit Cards

Discover it® Miles – Unlimited 1.5x Rewards Card

Apply Now on DiscoverCard.com's secure website

Want to earn travel rewards without tracking spending in certain categories? If so, the Discover it® Miles – Unlimited 1.5x Rewards Card could be just the ticket. While many cards offer high rewards rates on certain types of purchases, this card makes earning rewards very straightforward, with 1.5X miles per dollar on every purchase, every day. Its lack of an annual fee makes it an even more low-maintenance option.

The Discover it® Miles – Unlimited 1.5x Rewards Card also features a unique first-year rewards bonus. At the end of your first year, Discover will match any miles you’ve earned, doubling your travel rewards automatically. Put another way, with Discover Match® program, you’ll essentially earn 3X miles per dollar instead of 1.5X. (Of course, you’ll have to wait a year to get the bonus — but those additional miles will go a long way toward a free trip!)

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Card Highlights Provided by Discover:
  • Unlimited 1.5x rewards on every purchase, every day. For every $1 you spend, you earn 1.5x Miles.
  • Get a mile-for-mile match of all the rewards you’ve earned at the end of your first year, automatically.
  • Redeem your rewards in any amount for cash or a travel credit. You’ll always get $1 for every 100 Miles you’ve earned.
  • Get your FICO® Credit Score for free on monthly statements, on mobile and online.
  • 100% U.S. based customer service. Talk to a real person any time.
  • No Annual Fee.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Discover Match® details & other information.
  • Earn unlimited 1.5x rewards on every purchase, every day. For every $1 you spend, you earn 1.5x Miles.
  • Redeem your points for travel purchased with your Discover it® Miles – Unlimited 1.5x Rewards Card, or get a cash back statement credit ($1 for every 100 Miles).
You have to wait one full year before receiving your mile-for-mile match. Additionally, Discover cards aren’t accepted as widely as cards backed by Visa or MasterCard. A flat rate of 1.5 miles is easier to manage than different points levels for different categories, but you may earn fewer rewards on certain categories like travel and dining. For potentially greater earning potential, we recommend the Chase Sapphire Preferred® Card.
With the Discover it® Miles – Unlimited 1.5x Rewards Card, you can use your points for any travel purchase or get a statement credit; it’s completely up to you where and when you redeem your points. You also get your free FICO® credit score with every statement, so you easily monitor how your score changes over time. Discover’s customer service team is 100% U.S.-based, and you can talk to a real person at any time.

Best Fixed-Value Travel Credit Card

Barclaycard Arrival Plus™ World Elite MasterCard®

Apply Now on FindMyBarclayCard.com's secure website

The Chase Sapphire Preferred® Card gets a lot of attention for its rewards structure and flexible redemption options. But the Barclaycard Arrival Plus™ World Elite MasterCard® has a lot to offer, too. With this card, you’ll also earn 2X points per dollar — but you’ll get them on every purchase, not just on travel and at restaurants. This flat rewards structure is very convenient and is popular with travelers who’d prefer not to track their spending in select bonus categories.

And its rewards redemption is flexible in a different way. Instead of booking travel through a rewards portal or transferring points to a loyalty program, the points you earn with the Barclaycard Arrival Plus™ World Elite MasterCard® are good for a travel credit.
That means you can book the itinerary of your choice, regardless of the airline or hotel you choose — then pay yourself back with a statement credit. With this card, you can even book your trip through a discount travel site like Expedia or Travelocity to stretch your rewards even further.

Don’t want to redeem your rewards for travel? Other redemption options include merchandise and gift cards — but keep in mind you’ll get the best redemption rate for travel. (Travel redemption rate is one cent per point, while redemption for gift cards, etc. is closer to one half-cent per point.) Make the most of your rewards points by redeeming them for travel statement credits.

How To Use It
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  • Use this card for all of your everyday purchases to earn 2x miles.
  • Transfer balances from other credit cards to get 0% introductory APR for 12 months.
  • Redeem for travel or cash back statement credits, gift cards and merchandise (redemption values vary).
This card has an $89 annual fee (waived the first year). If you transfer a balance, you must pay either $5 or 3% of the amount of each transfer, whichever is greater.
The Barclaycard Arrival Plus™ World Elite MasterCard® makes it easy to earn 2X points on every dollar you spend. Plus, cardholders enjoy 0% introductory APR for 12 months on balance transfers. Every time you redeem your miles, you’ll get a 5% back toward your next redemption. Unlike some other rewards programs, your miles never expire as long as your account is open, active and in good standing.

Best BofA Credit Card

BankAmericard Travel Rewards® Credit Card

Apply Now Learn more about this card

The BankAmericard Travel Rewards® Credit Card is a newer addition to our shortlist. It’s notable for its rewards potential, which is pretty exceptional for a card without an annual fee. Unlimited 1.5X points per dollar spent on all purchases means you won’t need to track spending in certain rewards categories — or try to hit certain spending benchmarks to justify an annual fee. You’ll simply earn flat-rate rewards on every purchase you make with the card. You’ll also get 3X points on purchases you make in the Travel Center. Many cards out there offering a similar rewards structure charge an annual fee for rewards like this.

This card is an even stronger contender for current Bank of America® customers. If you have an eligible Bank of America® or Merrill Lynch account, you’ll enjoy a 10% bonus on each purchase. That’ll make the rewards stack up even faster.

Additionally, because points are redeemable for a travel statement credit, you won’t have to contend with blackout dates or travel restrictions when you’re booking a trip. Simply book your desired itinerary with the airline, hotel chain, etc. of your choice, then reimburse yourself with a travel statement credit. (You will have to pay for the trip up front; if this is a drawback for you, consider a card like the Chase Sapphire Preferred® Card, which will allow you to book trips with points directly.)

How To Use It
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  • Use this card to make all of your everyday purchases and earn 1.5 points for each dollar you spend.
  • Redeem points for a statement credit to pay for flights, hotels, vacation packages, cruises, rental cars, or baggage fees.
You earn 20,000 bonus points after you make at least $1,000 in purchases in the first 90 days after opening your BankAmericard Travel Rewards® Credit Card. Though this card offers added points earning opportunities for Bank of America customers, the fixed rewards rate and sign up bonus for the Barclaycard Arrival Plus™ World Elite MasterCard® are more robust, in general.
The BankAmericard Travel Rewards® Credit Card offers flexible travel rewards with no annual fee and no foreign transaction fees. Use this card to book your trips how and where you want; you’re not limited to specific websites with blackout dates or restrictions. Cardholders with a Bank of America® checking or savings account get an additional 10% customer points bonus on every purchase. And If you’re a Preferred Rewards client, you can increase that bonus to 25% – 75%.

Best Airline Credit Card

Southwest Rapid Rewards® Plus Credit Card

Apply Now on Chase.com's secure website

The Southwest Rapid Rewards® Plus Credit Card is ideal for people who 1) travel frequently and 2) always book flights with Southwest. That’s because you’ll earn 2X points on Southwest® and eligible Rapid Rewards® purchases (plus 1X points on other purchases). This card also offers Southwest-specific perks, like free checked bags. (That perk will save a family of four about $200 per trip!)

Another important note: because the Rapid Rewards® program is fare-based, choosing your travel dates strategically and booking during Southwest fare sales can help you stretch your points as far as possible. There are no blackout dates for rewards redemption, so if you start booking your trip far enough in advance, you’ll have a good chance of booking the itinerary you want!

Note: points you earn with the Chase Sapphire Preferred® Card transfer 1:1 to Southwest Rapid Rewards®. Consider pairing the two cards to combine the Chase Sapphire Preferred® Card’s flexibility with this card’s Southwest-specific perks!

How To Use It
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  • Use this card to make everyday purchases (1X points) and when buying travel with Southwest Airlines or Rapid Rewards® Hotel and Car Rental partners (2X points).
  • Redeem your travel rewards when you book a flight with Southwest airlines or book travel with Rapid Rewards® Hotel and Car Rental partners.
  • Consider pairing this card with the Chase Sapphire Preferred® Card. Chase Ultimate Rewards points transfer 1:1 to Southwest, so you can earn free trips even faster.
Travel rewards can only be redeemed for purchases with Southwest Airlines and other Rapid Rewards® Hotel and Car Rental partners. If you’re planning to use this card abroad, take note: Southwest charges a 3% foreign transaction fee. You may want to pair this card with the Chase Sapphire Preferred® Card to avoid foreign transaction fees and to maximize the number of Southwest Rapid Rewards points you have on hand.
There are no blackout dates or seat restrictions for travel booked with Southwest Rapid Rewards® Plus Credit Card rewards. As long as your account is open, your points will never expire. Plus, you’ll enjoy free checked baggage and no flight change fees as a cardholder. If you prefer traveling with Southwest, this card makes a lot of sense.

Best Hotel Credit Card

Starwood Preferred Guest® Credit Card from American Express

Apply Now on AmericanExpress.com's secure website

If you love staying at Starwood properties and/or flying with Delta, this card boasts significant rewards potential with many flexible redemption options. If you choose the Starwood Preferred Guest® Credit Card from American Express, you’ll earn 2 Starpoints® per dollar on eligible purchases spent at participating SPG® & Marriott Rewards® hotels, plus 1 Starpoint per dollar on other purchases.

You can redeem points earned with this card at over 1,300 participating hotels and resorts or for flights with 150+ airlines. You also can transfer points 1:1 to several popular airline programs. And for yet another option, if you pair this card with the Gold Delta SkyMiles® Credit Card from American Express, Skymiles and Starpoints are transferrable via the Crossover Rewards™ program. That level of flexibility is rare among hotel cards (and airline cards!), and it makes the Starwood Preferred Guest® Credit Card from American Express really stand out from the crowd.

How To Use It
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  • Use this card for everyday purchases (1X Starpoints) and at Starwood hotels and resorts (2X Starpoints).
  • Redeem your Starpoints® for stays at participating SPG® & Marriott Rewards® hotels and resorts, or to book flights with participating airlines.
  • Consider pairing this card with the Gold Delta SkyMiles® Credit Card from American Express. Skymiles and Starpoints are transferable between accounts via the Crossover Rewards™ program, so you can earn rewards even faster.
This card has an annual fee of $95 (waived for the first year). Additionally, American Express cards may not be as widely accepted as travel credit cards issued by Visa or Mastercard. For a widely-accepted card with no annual fee, we recommend the BankAmericard Travel Rewards® Credit Card.
Earn hotel and travel rewards faster when you combine the Starwood Preferred Guest® Credit Card from American Express with SPG loyalty programs. With properties in over 100 countries, you’ll have plenty of hotels and resorts to choose from when it’s time to redeem your rewards points.

Best Travel Credit Cards: Summed Up

Travel Credit Card Best For…
1 Discover it® Miles – Unlimited 1.5x Rewards Card No Annual Fee Travel Credit Card
2 Chase Sapphire Preferred® Card Travel Credit Card
3 Barclaycard Arrival Plus™ World Elite MasterCard® Fixed-Value Travel Credit Card
4 BankAmericard Travel Rewards® Credit Card BofA Credit Card
5 Southwest Rapid Rewards® Plus Credit Card Airline Credit Card
6 Starwood Preferred Guest® Credit Card from American Express Hotel Credit Card

Research the 42 Best Travel Credit Cards

Below is a directory of the most popular travel credit cards. I used this directory as a starting point for my research and analysis on travel cards. The directory is updated weekly to reflect any new changes, to add new cards, and to remove expired cards.

The travel credit cards directory is a sub-directory of rewards credit cards. This directory highlights the most important features specific to travel cards and displays all important information about each card.

Travel Credit Cards Directory

The travel rewards credit card directory lists every travel credit card and high level information for each of the cards, so you can make quick comparisons. In order to rank and value each of these cards, certain features were weighted accordingly based on overall importance to the prospective cardholder.

Sort, filter, or search for what matters most to find the best travel credit card for you.

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Common Filters

Rating Methodology

To develop an overall rating for each travel credit card, we used the features and corresponding data from the directory above. To better describe the ratings of each card, there were a number of elements to consider. Some of the valuable information is displayed in the directory, while additional information is outlined below.

Rewards Rate

Rewards Rate refers to the actual rate at which you can earn rewards using the travel rewards card. This rate, typically 2% or higher, will usually be highest on travel-related purchases. Travel credit cards usually have a base rate of at least 1% which enables you to earn points on everyday purchases as well. The very best travel credit cards will have an incentive to book travel through their own travel portals.

Some of the best rewards rates are on hotel, airline, or travel site cards. These cards try to entice you to only use that specific hotel, airline, or travel site. If you travel often and prefer one brand over others, this approach is fine. Others who prefer flexibility in how they travel will want to consider a more general rewards program that still carries a generous Rewards Rate on travel.

Rewards Categories

Rewards Categories are the spending categories in which your travel card earns greater than 1%. Most travel cards offer better Rewards Rates in certain categories. The more ways you can earn greater than 1% in rewards, the better a card will score in Rewards Categories.

For example, the Chase Sapphire Preferred® Card offers 2% rewards on travel booked through the Ultimate Rewards platforms and 2% for dining out. The card earns 1% on all other purchases. The Barclaycard Arrival™ World MasterCard® has the same structure — 2% rewards on travel booked through Barclaycard and 2% on dining.

Sign-up Bonus

Sign-up Bonus is the amount of extra points each card offers to a new cardmember when signing up. Sign-up Bonuses can be very lucrative on travel cards, with the best travel cards offering around 40,000 bonus points. That translates to at least $400 of cold-hard cash to spend on travel. If you’re strategic about redeeming the points, you can turn those points into much more.

The important thing to note about Sign-up Bonuses is that there are usually certain spending requirements to make before you actually earn the points. It’s common for credit card issuers to require you to spend $4,000 in the first three months you have the card before you get your Sign-up Bonus.

Sign-up Bonus carries a high importance rating because it’s a quick way to grab a large chunk of points to use for an upcoming travel adventure.

Redemption Options

The best travel rewards cards give you a number of ways to redeem your lucrative points. These Redemption Options can dramatically impact how much your points are worth. Top cards like Chase Sapphire Preferred® Card use the Chase Ultimate Rewards platform to help you book travel. When you redeem your points through Chase Ultimate Rewards for travel, your points are worth 25% more. For example, you can redeem 40,000 points for $500 in airfare instead of the usual $400.

Most cards also allow you to redeem points for non-travel. You may redeem points for gift cards and merchandise, but this is not recommended because points on the best travel credit cards are usually more valuable when used for travel.

Your third option on several of the best travel credit cards is to transfer your points to a partner airline, hotel, or other partner. This is where the point geeks go crazy to maximize and hunt for last-minute point deals. American Express allows point transfers to many partners as does Chase Sapphire Preferred® Card.


There are some additional benefits of owning a travel credit card that become important when you’re actually traveling. A huge benefit for Chase Sapphire Preferred® Card cardholders is that foreign transaction fees are waived. The Gold Delta SkyMiles® Credit Card from American Express offers priority boarding, and free checked bags.

Additional benefits of top cards include 24/7 customer service, car rental insurance, and emergency travel assistance. Benefits are of medium importance when compared to how points can be accumulated by the card, but Benefits can often swing a decision between two comparable cards.

Ongoing APR

APRs on travel credit cards are of low importance, mainly because we always recommend paying off your balance each month. Interest charges negate point accumulation, so it never makes sense to have a travel credit card if you plan to carry a balance.

Travel cards have ongoing APRs that range as low as 10.99% and go beyond 20%. The key determinant of your ongoing APR is usually your credit score and history. If you have good credit, the APR rate for you will be on the lower end. If you need a low-interest rate card, consider one of the best balance transfer cards on the market today.

Resources for Frequent Travelers

Once you master the art of credit card rewards, you might be tempted to trot all over the globe and never look back. However, it’s crucial that you understand not only how credit card rewards work, but how to protect yourself while you travel. The following resources can help you maximize travel rewards while also protecting yourself from financial losses.

Using a Travel Credit Card to Save Money

Not only do travel credit cards offer perks that can help make travel easier and safer, but most offer certain types of rewards that you can redeem for free hotel stays, airfare, or cash back. And that’s what most people have trouble understanding. If you know how to use them, travel credit cards can actually save you money.

Here are some features of travel credit cards that help you save money:

  • Opportunities to earn points you can use to pay for travel
  • Flexible choices for redeeming points across travel networks
  • Travel insurance and extra protections
  • Concierge services
  • No foreign transaction fees
  • Large sign-up bonus incentives

5 Steps to Use Credit Cards to Save Money on Travel

Step 1: Learn about the different types of travel credit cards available. The good news is, you’re in the right place to start your research. Cards and their benefits differ, so you need a good comparison site. For instance, if you’re more interested in free hotel stays than airfare, look for a hotel credit card that offers rewards specific to a hotel loyalty program at a chain you like. Or if you want more flexibility with your rewards, look into cards like the Chase Sapphire Preferred® Card. Make sure you understand how the rewards program works before you choose to sign up.

Step 2: Meet the minimum spending requirement. Most travel rewards cards offer a sign-up bonus to customers who can meet a minimum spending requirement during a specific timeframe, usually around three months. A typical sign-up bonus is worth $300-$500, and a typical minimum spending requirement is between $1,500 and $3,000 within the first three-month period. For most families, this is attainable — and even if you never charge another dollar after this, you’ll still receive the bonus.

Step 3: Use your card for everyday spending. In order to earn as many rewards as possible, you’ll want to use your card for all of your everyday expenses. Use it for groceries, gas, insurance, miscellaneous expenses, and anything else that you would be purchasing anyway. No matter what, always pay your balance in full in order to avoid paying interest.

Step 4: Use your rewards to pay for travel you were going to book anyway. Here’s where the savings come into play. Once you’ve earned a considerable amount of rewards, use them to book travel you planned to book regardless. Using your points for free hotel stays or airfare helps you save on the total cost of your trip.

Step 5: When traveling abroad, use a card that doesn’t charge foreign transaction fees. Most credit cards charge a foreign transaction fee, usually around 3%, on purchases made in another country. However, the best travel cards waive this fee, and this feature can save a considerable amount of money when you travel internationally.

If you want to save as much money on travel as possible, it helps to have a rough idea of where you plan to go ahead of time. That way you can tailor your strategy to your ideal itinerary. And, as I mentioned above, it is crucial that you never pay interest on your purchases if your goal is saving money. When you choose to carry a balance, the interest you will inevitably pay will likely cancel out any rewards you receive.

How Credit Cards Protect You While You Travel

Decades ago, people used a combination of cash and traveler’s checks when traveling abroad. Unfortunately, carrying around a ton of cash comes with certain risks, and exchanging currencies in each new country can be a huge pain.

Modern travelers still carry some cash, but as more of a novelty than anything else. Instead, they make the majority of their international purchases with travel credit cards that not only reward them for making purchases, but also protect them from fraudulent charges and other pitfalls. Here’s how credit cards can protect you (and save you money) while you travel:

  • Use a card that offers no liability for unauthorized purchases. When traveling abroad, you want to make sure you use a credit card that won’t hold you accountable if someone gets ahold of your card and starts making purchases. The Discover it® Miles card, for example, comes with no liability for unauthorized purchases and no foreign transaction fee, making it a good option. Just make sure the country you’re traveling to is prone to accept Discover since international acceptance varies.
  • Carry your credit card contact information separately from your card. Most credit cards let you call collect from anywhere in the world if your card is lost or stolen. Obviously, you won’t have access to their number if you no longer have your card, which is why most experts suggest keeping these important contact numbers separate from your credit cards in case of loss or theft.
  • Choose a card with free travel insurance. If you want to take advantage of free travel insurance, make sure to book the major components of your itinerary with a credit card that offers excellent travel and trip cancellation insurance, like the Chase Sapphire Preferred® Card. Doing so can mean getting reimbursed if your trip is cancelled due to flight interruptions, a natural disaster, or other unexpected events.

Do You Need Additional Travel Insurance?

Although it’s easy to brush off travel insurance as an unnecessary expense, you should always give it a second look. With all the upheavals that can unravel your travel plans, not to mention your own personal health, you might be wise to purchase a simple travel insurance plan – or at least pay for your trip with a credit card that offers this benefit for free.

For starters, you should determine whether your health insurance will cover you if you need to see a doctor abroad. Since many policies do not cover doctor or hospital visits outside of the country, a medical travel insurance policy might be a good bet. It’s also important to note that Medicare doesn’t cover health care expenses outside of the U.S., although some Medigap policies might. Before you go anywhere, you should always verify whether or not you will have coverage and consider purchasing a policy for your trip if you do not.

Outside of major medical, you may not need to purchase comprehensive travel insurance at all. That’s because certain type of travel credit cards offer certain travel benefits to cardholders. Take the Chase Sapphire Preferred® Card card, for example. Premium travel insurance, including trip cancellation, is included as a card member benefit. If you wanted to take advantage of this perk, all you would need to do is use your card to purchase your airfare and accommodation.

Other types of travel insurance your credit card might offer include trip interruption insurance, which can reimburse you for nonrefundable travel expenses if you end up getting sick before your trip or it gets cancelled for almost any other reason. Different cards offer different versions of trip cancellation or trip interruption insurance, so make sure you understand your card’s policy before you count on it for coverage.

You can usually buy travel insurance at the same time you purchase airfare or book your hotel. If you want to compare travel insurance policies, check out our post on the best travel insurance options currently available.

Just remember, travel insurance only seems frivolous until you need it. If your trip gets cancelled, travel insurance could protect you from thousands of dollars in losses. Some common events that are covered with various types of travel insurance include personal illness or illness of a family member, natural disaster, emergency evacuations, or even lost or stolen baggage or belongings. Obviously, none of those events are ones you can plan for ahead of time, so it’s best to be adequately insured instead.

10 Questions to Ask Yourself When Buying Travel Insurance

Before you hit “buy,” on your next travel insurance plan, ask yourself the following questions:

  1. Is the region I plan to visit considered “high-risk?” Potential issues can vary depending on where you are going. And if you’re visiting an area deemed “high-risk,” your travel insurance policy may deny coverage altogether. Before you set sail or get on that plane, check your travel insurance policy to see if your intended destination is, in fact, covered. Also check for travel advisories that might alert you to any upcoming safety concerns you need to be aware of.
  2. Do I travel often enough to consider a long-term policy? If you travel more than once or twice per year, you may be better off buying a more comprehensive, multi-trip plan. This type of coverage is great for families who travel or vacation often, those planning multi-country or extended trips, last-minute travelers, or those who travel often for business.
  3. What will my current health insurance cover if I become injured or get sick abroad? Assuming that your health insurance will provide coverage overseas is always a mistake. The fact is, many health insurance plans don’t provide comprehensive coverage outside of your home country or territory. Medicare, for example, never provides coverage overseas. If you want to ensure that you’re covered, a travel insurance plan that includes major medical is always a good bet.
  4. Do I have any pre-existing conditions that might flare up? If you do purchase a travel insurance plan that includes medical coverage, it’s important to note that pre-existing conditions are rarely covered. If you have a medical condition that is prone to act up, your trip abroad might pose a greater risk than you realized.
  5. Do I plan on bringing anything expensive with me? Baggage insurance protects you from financial loss if your valuable items become lost or stolen. If you plan on bringing expensive items with you, it might be a good idea to buy travel insurance that includes this perk. Likewise, if you aren’t bringing anything valuable with you, you might consider opting out of this specific coverage.
  6. How likely is it that I will need to cancel my trip? When you’re traveling with kids or aging parents, the likelihood of a trip cancellation due to illness or injury increases. However, the risk still exists when you leave those same loved ones at home. If something happened, you might need to cancel your trip to take care of them. Trip cancellation/interruption insurance can help mitigate those risks for you.
  7. Do I want to be able to cancel my trip for “any reason?” Some types of trip cancellation or trip interruption insurance require you to prove your cancellation was due to unforeseen circumstances such as an illness, a death in the family, or a job loss. Meanwhile, other policies let you cancel for “any reason” — even if you just changed your mind. Make sure you know the difference, and buy a policy that offers terms you can live with.
  8. Will I be driving a rental car? Some travel insurance policies offer either collision coverage on rental cars or other types of rental car coverage. However, others do not. If you plan on driving during your stay and don’t have coverage otherwise, you might want to seek out a travel insurance policy that offers this perk.
  9. Do I plan on doing anything risky? If your trip involves any adventurous activity such as rock climbing, cross-country biking, or skiing, you need to ensure that your travel insurance provides coverage for those activities. Never assume it does, and always check to make sure.
  10. Do I already have life insurance? Some travel insurance policies offer extra coverage that basically amounts to life insurance that pays out only if you die. If you already have life insurance (as you should), you may not need this additional coverage and may not want to pay extra for it.

Strategies to Maximize Travel Rewards

When I was younger, I didn’t travel that much. My job didn’t require it and, aside from the occasional vacation, I was usually too busy to explore the world. I could always afford a single round trip ticket, so I was never looking to “earn” my occasional travel.

Now that I have kids, the prospect of $1,000 (coach) airfare + car rental + hotel every time I want to take my family somewhere had me scrambling to learn the ins and outs of travel rewards maximization. This guide is meant to bring a travel rewards novice into the 21st century world of travel rewards so that you can start being more strategic about accumulating and using your travel points.

Strategy #1: Start By Earning Points Everyday

Experienced business travelers already know their preferred airline, hotel, and rental car agency, and they stick with these to earn maximum points on their travel. But what if you’re just starting to increase your travel? Where should you start?

Find the Best Travel Credit Card

Getting a really good travel rewards credit card is your first step to accumulating points to use for travel. Only the best travel rewards card lets you start racking up points for everyday purchases and earn more when you finally do travel. The best travel credit cards have a base rate of 1% and the opportunity to earn at least 2% on travel. Many of these cards also have point and redemption bonuses to enhance your earnings power.

Use the guide above to research the best travel credit cards. The guide goes into great detail on each of the best travel credit cards. Use it to get an idea of which card might be best for you. Here are a few other tips to help you decide:

Tip #1: Pick One Card

Expert travelers often recommend having all sorts of cards and combining points in the most efficient manner. We want to work you up to that level, but the best starting point is to pick just one card. The main reason is that most travel cards charge an annual fee and you don’t know how much you’ll be traveling yet.

Using a secondary card to earn more points in different categories seems like a good idea, but paying two annual fees might not make sense. If you were to pay two $95 annual fees that equals $190 per year, that wipes out 19,000 points! You’d better be a big spender to justify carrying the additional card.

That’s why starting with one card is important. Any annual fee card will beat out a no annual fee card when it comes to rewards. That’s why, if you’re going to go for one card, my top pick is the Chase Sapphire Preferred® Card.

If you must have a no annual fee card, a good choice is the Barclaycard Arrival™ World MasterCard®.

Tip #2: Go for Flexibility

I often hear about people signing up for an airline miles credit card they received on a flight. For anyone other than expert flyers, these offers are usually not optimal because the opportunity to earn good travel points is usually confined to purchases on that airline. Options for redeeming points are also limited. You may be able to transfer your points to partner airlines or hotels but at less desirable transfer rates.

If you’re unlikely to have an alliance to any one airline or hotel chain, find a travel card with flexible earning and redemption programs. My absolute favorite right now is the Chase Sapphire Preferred® Card because it comes with the ultra-flexible Ultimate Rewards program from Chase.

Through Ultimate Rewards, you can book any airline and, when you do, your points are worth 25% more and it’s NOT dependent on which airline you choose. Also, through Chase Sapphire Preferred® Card, you can transfer your points to any one of its partner airline frequent-flyer programs at a 1-to-1 ratio. This is a unique feature the pros take advantage of all the time.

Tip #3: Make sure your points never expire

Working hard to accumulate points is only valuable if the points are there for you to use when you want to travel. Many frequent-flyer programs and frequent-guest programs have points that expire, blackout dates, or other restrictions on usage. If you were to solely rely on frequent-flyer or frequent-guest programs for your travel rewards, you will surely find some of your points expiring at the end of each year.

The best travel credit cards, on the other hand, usually have points that never expire so they’re always there when you need them. Some cards like Chase Sapphire Preferred® Card let you transfer points to frequent-flyer partners. This can be done to keep the balance of your frequent-flyer points fresh.

Strategy #2: Get Familiar With Loyalty Programs

Your next strategy for getting your frequent traveler training wheels off is to get familiar with loyalty programs and alliances. Frequent-flyer/guest programs are opportunities for you to double dip on points. The pros know the ins and outs of each program, where and when you can transfer points, and what the best programs are for their frequent routes and dream travel destinations.

Every airline and hotel chain has their own program. When you travel on an airline or stay at a hotel, you earn points and other perks you can use in the future. Here are some common ones:

  • Starwood Hotels Starpoints
  • Delta SkyMiles
  • United MileagePlus
  • Hilton Honors Rewards

Additionally, many of the large airlines are part of travel alliances. These alliances allow you to transfer points to other partners more easily.

Below are two of the largest programs and their partners.

Oneworld Partners (and Affiliates)

Airberlin (NIKI)
American Airlines (AmericanConnection, American Eagle®, US Airways, and US Airways Express)
British Airways (BA Cityflyer, British Airways (BA) Limited, Comair, OpenSkies, and SUN-AIR of Scandinavia)
Cathay Pacific (Dragonair)
Finnair (Flybe Finland)
Iberia (Iberia Regional Air Nostrum, and Iberia Express)
Japan Airlines (JAL Express, J-AIR, and Japan Transocean Air)
LAN (LAN Argentina, LAN Colombia, LAN Ecuador, LAN Express, and LAN Peru)
Malaysia Airlines
Quantas (QantasLink and Jetconnect)
Qatar Airlines
Royal Jordanian
S7 Airlines (Globus, LLC)

Star Alliance Partners

Adria Airways
Aegean Airlines
Air Canada
Air China
Air New Zealand
Asiana Airlines
Brussels Airlines
Croatia Airlines
Copa Airlines
Ethiopian Airlines
LOT Polish Airlines
Scandinavian Airlines
Shenzhen Airlines
Singapore Airlines
South African Airways
TAP Portugal
Turkish Airlines

Strategy #3: Upgrade or Add a Card As Needed

Once you travel a few times and get a handle on how you spend your travel dollars, you’ll have a much better feel for you preferred airlines, hotels, and some of the tricks of the trade. You can use this information to add a second travel rewards card to your arsenal. You have two objectives with a secondary travel rewards card:

  • Capitalize on other spending categories your current card does not max out.
  • Capitalize on carrier-specific deals with airline or hotel credit cards you use exclusively for your travels.

Cover Your Spending Categories

Travel credit cards do a great job of earning points on travel but are usually limited when earning rewards in other spending categories. For instance, my top pick, the Chase Sapphire Preferred® Card, earns 2X points on travel and dining at restaurants & 1 point per dollar spent on all other purchases worldwide. You could earn much more travel rewards if you find another card that earns in different categories like gas or groceries too.

Personal + Business Cards

A great strategy is to open a business credit card. Many people are self-employed, but you don’t need to own a business to qualify for a business credit card; you simply use your Social Security number. I use the Chase Ink® line of cards to supplement my Chase Sapphire Preferred® Card spending. The Ink Plus® card earns 5X on cable/Internet, landline, and cell phone bills and at office supply stores. It also earns 2X on gas and hotel stays. This combination of cards maps well to my spending categories so I’m able to max out my non-travel related points and sock them away for my next trip.

The best part of this strategy is that both cards use the Chase Ultimate Rewards program, so my points can be combined and used together, netting me a 25% savings when I redeem them for travel.

Combine General Travel Rewards With Carrier-Specific Cards

You also have an opportunity to combine your general travel rewards with more targeted travel cards that airlines and hotels offer. These cards often have upgrades like first-class boarding or room upgrades, which can make travel more pleasant. These cards also let you earn much more for purchases on their airlines or at their hotel properties.

Two great programs are:

  • Delta Skymiles
  • Starwood

Starwood offers up to 5 points per dollar spent on Starwood properties, which include Westin and W Hotels. I have already pointed out how you can double dip between Delta and Starwood.

Several airline cards are perfect to combine with Chase Sapphire Preferred® Card because you can transfer Chase Ultimate Rewards points 1:1 to airline miles programs like British Airways, United and Southwest.

Add a No Annual Fee Card

As I said before, the main reason not to add multiple cards when you first start out is because most travel credit cards carry an annual fee, and having multiple fees can knock out a lot of points. A notable exception is the Barclaycard Arrival™ World MasterCard®. This card does not have an annual fee and earns 2X points on travel and dining just like the Chase Sapphire Preferred® Card.

I do not use this card because Chase Ultimate Rewards points are much more flexible and worth more when redeemed for travel. However, if you already have a carrier-specific card such as a Starwood Hotel card, adding the Barclaycard Arrival™ World MasterCard® with no annual fee is a great option to boost your rewards with no additional cost or commitment.

Bringing It All Together

If you take anything from this guide of tips, take this: The travel rewards landscape is difficult to understand, so you need to be armed with a strategy and then learn as you go.

The best way to avoid getting travel credit cards you don’t use, or committing to an airline you will come to hate, is to do the following:

  1. Start earning travel points with the most flexible travel rewards card
  2. Learn about loyalty programs and find your preferred airlines and hotels
  3. Add a more targeted travel credit card using what you’ve learned

By keeping it simple and taking it slow, you’ll graduate from being a novice traveler in no time, and you’ll soon be experiencing first-class travel for less — just like the pros!

The post Best Travel Credit Card for 2017 appeared first on The Simple Dollar.

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