Few weeks ago I published a post on my dilemma of redeeming Southwest Rapid Rewards points vs. using 2 for 1 certificate from Alaska credit card. I ended up burning Southwest currency (for now). But that’s not what this post is about. I’ve mentioned that I speculatively value Rapid Rewards points at around 1.2 cents each. I got an interesting comment and wanted to share it, as well as my response:
The reader was 100% correct in saying that you can get around 1.4-1.6 cents per point towards Southwest flights. And that’s the problem. While many people fly Southwest quite often, we don’t. All of my husband’s immediate family lives right here in Florida. So, we don’t technically have to fly anywhere aside from Europe, where I grew up. And Southwest doesn’t fly to Europe, at least not yet.
All of our flights on Southwest fall into “non-essential” category. In the last few years we have flown to Buffalo as well as Jamaica, twice. In those cases, burning Southwest currency was by far the best option. That said, we recently flew to Newark and used Spirit due to off-peak award redemption. I’m also intrigued by Jet Blue because it has a really good coverage from Florida to Caribbean. As I’ve said last week, I have 122k points hopefully coming my way soon. Yay!
The biggest reason for my conservative valuation is the fact that we don’t have any firm plans to use Rapid Rewards points within the next few years. We are looking into flying to Halifax, Canada as well as visiting my family in Belarus. Oh, and I have a dream of visiting Costa Rica. I can’t think of any instance where Rapid Rewards stash would come in handy.
Obviously, things can come up unexpectedly. But booking Southwest flights last-minute is usually not the way to go because prices tend to be quite high. The program works best for leisure trips that you book way ahead. In most cases, traditional miles will be a better fit in the case of emergency as long as there is award availability. See my related post for overview of best last-minute mileage options
So, my point is, I can’t really say my Rapid Rewards are worth 1.5 cents each right now. They aren’t. If someone offered them to me at that price, I wouldn’t pay it. No one would. Hence, the need for a more realistic number. In fact, the more I started thinking about it, the more I realized that I wouldn’t buy Rapid Rewards points for 1.2 cents apiece (again, right now). I’m not sure I would even pay 1 cent. Which brings me to my next point…
Walmart gift cards: Now or never
I’ve mentioned before that some of you may want to renew your Premier version of Chase Southwest credit card, especially if you don’t have an emergency fund. The reason? Ability to redeem the points for valuable gift cards (like Walmart, Target and Amazon) at a favorable rate.
I actually decided to renew my husband’s Premier card for that very reason. We do have an emergency fund, however, we are also spending an unusual amount on travel over the next year. Add to it a few medical emergencies, and out savings account is in a very lean shape at the moment. We are not poor by any stretch of imagination. We also don’t have any mortgage or debt aside from 0% loan on my husband’s fancy Ford Mustang.
We are, however, a one-income middle-class family (my blog brings in profit, but this could change tomorrow, so I cant’t count on it). We also live in a rural area with very few decent jobs. Off topic, but if you are in the same spot, please, make sure to buy a term life insurance for both you and your spouse! Do it TODAY because you never know what will happen tomorrow.
The trip to South Pacific next year is putting a serious strain on our finances, to the point that I’ve decided to forego contributing to an IRA for 2017 (we do still contribute to my husband’s 401(k) up to company’s match). So, I’m seriously thinking about redeeming 90k Rapid Rewards Points towards $900 in Walmart gift cards. The latter would be almost as good as cash to me.
As a result, it will allow me to contribute $1k to an IRA. Boom. Yes, I know I could get around $1,350 in Southwest flights from those 90k points. But guess what? The IRA will probably be worth at least triple that amount in few decades. My husband’s Southwest card will be up for renewal in a few months, so I have to decide what to do with the points before canceling it.
Obviously, I’m hesitant to cash out my stash for the purpose of funding an IRA (how boring!) But it just feels right.
Staying in my own lane
I’ve been thinking about something Nancy said in one of her recent posts: “As a miles and points travel blogger, I immerse myself in the industry news. I’m bombarded by photos and videos of travel bloggers living it up in first class suites and lie-flat seats. At times it’s hard for me to step back and look at things from a beginner’s point of view or for the average American family.”
While my post isn’t focusing on first class vs. coach debate, I think the principles still apply. We simply can’t afford to take trip after trip after trip (like most other miles and points bloggers do) without severely damaging our finances. I’m happy for those who can, of course, but that’s just not my reality.
As nice as it is to burn Southwest points rather than spend cash, I won’t fool myself into thinking that my flight is free. Not if I had the chance to burn points on Walmart gift cards and failed to do so. As much as I love travel, I love being financially responsible even more. I feel like I owe it to my children.
Readers, what are your thoughts? Am I crazy to let go of my Southwest stash?
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Leana is the owner and founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.