Before Starting the Points Hobby | Preparing for Credit Cards & Free Travel

Hi there, it’s Ernest from Trip Astute.
Today, we’ll be talking about getting started in the points hobby. (light chiming music) There are a
ton of blogs out there with lots of information on how to get started in
this hobby. Here are my quick tips. Tip number one is to get organized. Now what
I mean by that is that you need to have your entire financial house in order. You
need to make sure that you can pay your bill every month. You don’t want to carry
a balance with any credit cards because that will negate the value of any points
or rewards that you earn. Now the best way that I know of to do this is to use
a financial system or software in order to track your expenses and your budget.
There are two tools I recommend for this. One is A lot of my friends are
looking for ways to automate their budgeting and finances, and Mint has a
pretty good solution. It basically connects to all your bank accounts and
credit cards, and it pulls data from them every time you log in. This will give you
a picture how much you’re spending and whether you’re staying within your
budget. The second tool that I’ll recommend is You Need a Budget, or YNAB,
for short. I’ve been using YNAB since 2009 and I love it. It’s a program that
requires a little bit more work than Mint in that you have to enter your
transactions and you have to reconcile them against your actual budget
categories. What I love about the program is that I always know that whatever i’m
spending on my credit cards, that I actually have that money to pay
it off. It becomes more about how much I’m spending per category versus on
which, you know, credit card i’m using or whether I’m using cash. It really becomes
about whether I’m actually spending the amount of money that i budgeted. When you
get into this hobby, it’s really important to know how much you’re
actually spending on your daily expenses. Do you spend a lot for groceries? On
gasoline? On dining out? Knowing these things can be really helpful. So,
structuring your budget and understanding your finances is crucial. Some credit cards
offer bonuses on certain catgeroies, so understanding your daily spend
definitely helps you match up the right card and the right program. The idea is
that you want to maximize your points through all your spend, and by
understanding where you’re spending the most money, you can find the right card
and the right program. Tip number two is determining your travel goals. It’s
important to understand your goals and preferences before you start getting into
this hobby. Here are a list of questions to consider before you actually start
applying for cards. Do you want to focus on airline miles, hotel points, or both?
What part of the world are you planning to travel to? Are you hoping to stay
domestic or travel internationally? What airlines serve your home airport? When
flying, are you looking to fly first class, in business class, or is economy
class sufficient? Now that may seem like a silly question. For me, it’s all about
getting as much travel as I can with as little points as I can. But for other
people, it can be about trying to get the most luxurious travel they can get.
Lastly, tip number three is to know your credit score. Understanding where you are
on the spectrum of credit scores can be really helpful to know whether you have
a high chance of getting qualified or disqualified for certain cards. Certain
premium cards such as the Chase Sapphire Reserve or the American Express Platinum
do require a pretty high credit score. Understanding whether you have a low
score or high score can definitely help with determining your strategy for
applying for cards. So, those are my top three tips. I’ll be diving deeper into each one
of the topics in future videos. Now I can’t stress enough tip number one. I see
a lot of folks who make the mistake of jumping into the hobby, applying for
credit cards when they already have a lot of credit card debt, and they’re not
able to manage their finances. I’m not trying to be a downer, but I just want to
make sure that you don’t put yourself into a deeper hole. This is such a fun
way to travel for free, but it has risks, and if you don’t have a good sense of
your finances, it can put you in a deeper hole. This is a
disclaimer I give to all my friends and family members, so I want to make sure
that I tell you the same thing. Also, I’ve included a link to both You Need a
Budget and in the description below. If you liked this video please hit
the “like” button below, and I’d love it if you subscribe as well. Until next time,
travel safe and travel smart.

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