Author Topic: Need to fly first class? Just renovate your house!  (Read 3789 times)

Abe

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Need to fly first class? Just renovate your house!
« on: March 28, 2018, 11:53:15 PM »
https://www.nytimes.com/2018/03/20/realestate/paying-for-renovation-with-rewards-credit-cards.html

For those who don't have access, summary is rich people spent $75-$100k renovating their houses, used credit cards (which they did pay off, and the article makes it clear that's important), and they got to fly to various places first class! Brilliant! One person spent so much money on doorknobs they got an airline ticket. Apparently doorknobs can cost more than $1 each. Or they have a house with 5000 doors!

Every once in a while the NY Times sticks its head up its ass with articles like this, or "woe-is-me-and-my-$500k-salary" interviews and I want to burn a stack of papers.

 

RFAAOATB

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Re: Need to fly first class? Just renovate your house!
« Reply #1 on: March 29, 2018, 11:17:18 AM »
Once my income got high enough, I stopped worrying so much about grocery store coupons and gas prices and just bought what I wanted for the most part.  How high income would I need to just buy first class tickets when I wanted without worrying about credit card gimmicks?

I have a feeling anyone who can afford those renovations wouldn't bother with flying coach to begin with.

How rich do you have to be for private aviation to make sense?

Abe

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Re: Need to fly first class? Just renovate your house!
« Reply #2 on: March 29, 2018, 08:17:23 PM »
Good points. I think you're looking at >$10m to start flying private jets. I wouldn't do it because of safety concerns, at any price.

nick663

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Re: Need to fly first class? Just renovate your house!
« Reply #3 on: March 29, 2018, 08:47:00 PM »
The first class portion is stupid but travel hacking an expense that you would have incurred anyways is not a bad idea.  I have a trip booked in May that is 100% paid for by credit card rewards.

sokoloff

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Re: Need to fly first class? Just renovate your house!
« Reply #4 on: March 29, 2018, 09:13:15 PM »
How rich do you have to be for private aviation to make sense?
I think you need to be $5MM plus net worth to get into a legacy Citation or similar and have it make sense for domestic personal travel. $10MM or more for a more modern jet. Probably $7-8MM for a jet card to make sense. $30MM or more for trans-oceanic capability. (Honestly, for trans-ocean, first class is reasonably cheap and often “better” in that you’ll have a stand up cabin, Mach 0.82 or better, catering, and not needing to worry about the airplane or crew while on your trip.)

You could be in the high 6 or low 7 figure level for a light piston or turboprop airplane, but there you’re probably doing it because you are personally a pilot and enjoy flying.

If you’re using it to make money, it can pay for itself in growing your business; that’s a different question entirely.

Jet powered private aviation is pretty damn safe; for a crewed (not owner-flown) jet, the fatality rate per mile is lower than driving. Turbo prop (jet engine(s) driving propeller(s)) is less safe, but still quite good. Pistons, typically owner flown, are about as safe as motorcycles, but the risk profile is quite different, in that 3/4 of the risks are weather and fuel mismanagement. Stay out of heavy weather and keep fuel going to the engine(s) and your back near the level of private car travel.

Just Joe

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Re: Need to fly first class? Just renovate your house!
« Reply #5 on: April 02, 2018, 09:05:17 AM »
How rich do I need to be to fly a kite? Or a hang glider?

Cromacster

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Re: Need to fly first class? Just renovate your house!
« Reply #6 on: April 02, 2018, 09:13:41 AM »
How rich do you have to be for private aviation to make sense?
I think you need to be $5MM plus net worth to get into a legacy Citation or similar and have it make sense for domestic personal travel. $10MM or more for a more modern jet. Probably $7-8MM for a jet card to make sense. $30MM or more for trans-oceanic capability. (Honestly, for trans-ocean, first class is reasonably cheap and often “better” in that you’ll have a stand up cabin, Mach 0.82 or better, catering, and not needing to worry about the airplane or crew while on your trip.)

You could be in the high 6 or low 7 figure level for a light piston or turboprop airplane, but there you’re probably doing it because you are personally a pilot and enjoy flying.

If you’re using it to make money, it can pay for itself in growing your business; that’s a different question entirely.

Jet powered private aviation is pretty damn safe; for a crewed (not owner-flown) jet, the fatality rate per mile is lower than driving. Turbo prop (jet engine(s) driving propeller(s)) is less safe, but still quite good. Pistons, typically owner flown, are about as safe as motorcycles, but the risk profile is quite different, in that 3/4 of the risks are weather and fuel mismanagement. Stay out of heavy weather and keep fuel going to the engine(s) and your back near the level of private car travel.

I think even beyond NW most people who own private jets look at the time savings.  From what I've heard/read, on paper owning a Jet hardly ever makes sense.  But for these high powered individuals time is valuable.  If they can save 2 hrs every flight by flying private, they can probably make up the costs.

sokoloff

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Re: Need to fly first class? Just renovate your house!
« Reply #7 on: April 02, 2018, 09:35:56 AM »
I think even beyond NW most people who own private jets look at the time savings.  From what I've heard/read, on paper owning a Jet hardly ever makes sense.  But for these high powered individuals time is valuable.  If they can save 2 hrs every flight by flying private, they can probably make up the costs.
Exactly, but more. It's not so much the "save 2 hours", but that it literally enables trips that you otherwise couldn't do.

Have an important customer with a problem, or an important prospect that has a last second glitch in their competitive bake-off? If they're 750 miles away, you can potentially be at their site in 3 hours from getting the call. None of your airline-using competitors can.

Have 3 factories across several states to visit? Make it a long day, but you could leave at 6 AM and be home for dinner. 4 sites could easily become a one-overnight trip instead of a week-long adventure on the airlines.

My figures above were to justify "[domestic] personal travel". For personal travel, it's very, very hard to justify owning any airplane as a smart use of funds. (I still do it [piston engine], but it's clearly a hobby.)

Private travel to enable a business can be done with far less current net worth if you can make the business case to yourself/your board.

honeybbq

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Re: Need to fly first class? Just renovate your house!
« Reply #8 on: April 02, 2018, 11:37:05 AM »
The first class portion is stupid but travel hacking an expense that you would have incurred anyways is not a bad idea.  I have a trip booked in May that is 100% paid for by credit card rewards.

Agree. We used miles and rewards for 2 round trip overseas trips this year. Being smart with your credit cards is a good idea if you spend a lot of cash.

And I do pay extra for first class when it's relatively cheap - like when I fly for work and a 4+ hour flight has a first class ticket for $100 more. I'm all over that.

But I haven't renovated my kitchen. :D

I'm a red panda

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Re: Need to fly first class? Just renovate your house!
« Reply #9 on: April 02, 2018, 11:48:15 AM »
I think most people who fly in private jets don't own them.

I have a friend who always flys private. She has a service with a company that makes it available to her. She pays them a fee per month and gets a certain amount of use; there are also unlimited plans.
From what I can tell, there are TONS of services like this in her area (Dallas) that have various deals available. I don't know if she has to schedule ahead of time, or if she can call with only a small amount of notice.

It is basically just private charters.

kina

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Re: Need to fly first class? Just renovate your house!
« Reply #10 on: April 02, 2018, 12:06:44 PM »
How rich do I need to be to fly a kite? Or a hang glider?
If you have to ask, you can't afford it.

Jrr85

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Re: Need to fly first class? Just renovate your house!
« Reply #11 on: April 02, 2018, 12:09:05 PM »
Good points. I think you're looking at >$10m to start flying private jets. I wouldn't do it because of safety concerns, at any price.

If you use a net jets type subscription, I think the safety is close to commercial airliners and definitely better than traveling by car. 

Syonyk

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Re: Need to fly first class? Just renovate your house!
« Reply #12 on: April 02, 2018, 09:53:18 PM »
How rich do you have to be for private aviation to make sense?

That depends.  How many people are you moving, on what schedule/notice, from where to where?

Once you've got more than 3-4 people going from Point A to Point B, especially if those points are not near large commercial airports and/or the nearest airports are spokes and not hubs (so you're transferring), it starts to look fairly reasonable.

Even pounding along in a piston single, you can beat the airlines on cost and time (assuming you're instrument rated and a bit flexible on schedule to avoid really bad weather) if all 4 seats are full.  For anything under about 1000 miles, 120kt will beat commercial.

Plus you can often save time if you don't live near a major airport by flying into the little town airports nearer your destinations.  You can get a turboprop or light jet into basically anything with a 5000' runway.

For business travel, if you've got a group of people going, the same applies, but it's better because you can actually work on the plane.

You could be in the high 6 or low 7 figure level for a light piston or turboprop airplane, but there you’re probably doing it because you are personally a pilot and enjoy flying.

You don't need high 6 figures to fly single engine piston... mid 5 figures is fine if you're in a good flying club, and I know quite a few owners on limited budgets.  You just buy what you can afford to reasonably fly, and if that's a 152, well, you know, it's still got wings!

Quote
Pistons, typically owner flown, are about as safe as motorcycles, but the risk profile is quite different, in that 3/4 of the risks are weather and fuel mismanagement. Stay out of heavy weather and keep fuel going to the engine(s) and your back near the level of private car travel.

Quite.  I ride motorcycles as well, so... yeah.  Lots of risk factors in my life I try to mitigate.  The NTSB reports for single engine piston aviation are just a laundry list of bad decisions.  "Didn't refuel because it was going to be a short flight, landing gear had problems, ran out of fuel and crashed into a forest."  Pretty much anything at night with clouds - I flat out won't fly at night unless it's severe clear and most of a moon because I don't (yet) have my instrument ticket.  Running out of fuel.  Basic failures to fly the airplane.  Kicked the tires, lit the fires, figured out the controls were wired up wrong at 100' instead of during the runup.  Water in the fuel (failure to sump the tanks).  Stuff like that.

Sane instrument flying, during weather your plane can handle, is pretty reasonable.  And, TBH, I'm happier to be part of a good flying club than I would be to own a plane, because the engines get flown constantly.  They don't sit for weeks on end - someone or other is out flying them, and that's a great way to get reliable engines.

Anyway.  </Aviation ramblings>

alanB

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Re: Need to fly first class? Just renovate your house!
« Reply #13 on: April 03, 2018, 09:30:16 AM »
First class is dumb.  Lots of pontification about the "cash value" of miles and optimal redemptions (whoa 2.6 ˘/mile!! let's take a spontaneous trip to Maldives!  wow we are saving so much money), meanwhile the CC issuers and airlines are laughing it up.  Does no one remember that they used to give away unbooked first class seats as free upgrades?

Great job you savvy consumers on "hacking" your CC rewards, too bad 90% of you forgot to cancel your card before your annual fee hit: https://www.doctorofcredit.com/chase-sapphire-reserve-statistics-90-retention-rate-39000-annual-spend/

sokoloff

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Re: Need to fly first class? Just renovate your house!
« Reply #14 on: April 03, 2018, 11:43:15 AM »
Does no one remember that they used to give away unbooked first class seats as free upgrades?
They still do. I travel a lot for business, and I rarely fly in coach on Delta anymore for a domestic flight. Almost always get free upgrades.

The difference from before is the airlines are getting better at trying to monetize that upgrade with better yield management analysis software (by selling it to someone for $200 before the window where they'll give it to me for free).

honeybbq

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Re: Need to fly first class? Just renovate your house!
« Reply #15 on: April 03, 2018, 11:49:41 AM »
First class is dumb.  Lots of pontification about the "cash value" of miles and optimal redemptions (whoa 2.6 ˘/mile!! let's take a spontaneous trip to Maldives!  wow we are saving so much money), meanwhile the CC issuers and airlines are laughing it up.  Does no one remember that they used to give away unbooked first class seats as free upgrades?

Great job you savvy consumers on "hacking" your CC rewards, too bad 90% of you forgot to cancel your card before your annual fee hit: https://www.doctorofcredit.com/chase-sapphire-reserve-statistics-90-retention-rate-39000-annual-spend/

I didn't want to cancel before my annual fee hit. I love my chase sapphire card and between the points and the travel rewards, I find it one of the best out there for people who travel a lot like me (for work and for pleasure).

I also love going in the lounges before flights (which is free and included with the card) and getting snacks or meals and a drink. I often grab extra snacks for the flights as well.
When my family was traveling through Denver earlier this year, the cc covered a $35 tab at a restaurant in our terminal free and clear. We got a couple beers and an ice cream sundae for my kid for free. Just a nice perk.

You seem very angry. Do you have a personal vendetta against credit card companies?
« Last Edit: April 03, 2018, 11:54:49 AM by honeybbq »

honeybbq

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Re: Need to fly first class? Just renovate your house!
« Reply #16 on: April 03, 2018, 11:53:14 AM »
Does no one remember that they used to give away unbooked first class seats as free upgrades?
They still do. I travel a lot for business, and I rarely fly in coach on Delta anymore for a domestic flight. Almost always get free upgrades.

The difference from before is the airlines are getting better at trying to monetize that upgrade with better yield management analysis software (by selling it to someone for $200 before the window where they'll give it to me for free).

When it's cheap to upgrade - I'm all over it for 2 reasons- first, comfort, enjoyment, and a small bit of luxury when I'm traveling for work

Second, when work pays for the ticket (say a 750$ 4 hour flight that is reimbursed) if I upgrade for $100 (which I pay OOP and not reimbursed) I usually get 50-75% more miles, which I can use for my own vacations.

I live in a city where it's hard to have airline loyalty, so I don't get upgraded or have status on any one particular airline.

Is it super mustachian? No, probably not, but it's worth it to me.

alanB

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Re: Need to fly first class? Just renovate your house!
« Reply #17 on: April 03, 2018, 12:59:38 PM »
Does no one remember that they used to give away unbooked first class seats as free upgrades?
They still do. I travel a lot for business, and I rarely fly in coach on Delta anymore for a domestic flight. Almost always get free upgrades.

Oh that is great!  I'm jealous, I never get upgraded...  Maybe the routes I fly are too popular.

You seem very angry. Do you have a personal vendetta against credit card companies?

Haha nope, love credit cards and am super happy :)  I also love having $450

Dragonswan

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Re: Need to fly first class? Just renovate your house!
« Reply #18 on: April 04, 2018, 01:10:33 PM »
It isn't that they renovated their house so they could get free flights.  Even rich people like to get something for nothing.  Sometimes it's the art of a well negotiated deal in the boardroom - getting a company valued at 40 million for 35 million, and sometimes it's getting free first class flights from churning the cards.  And sometimes, rich people style frugality is why they stay rich.

bacchi

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Re: Need to fly first class? Just renovate your house!
« Reply #19 on: April 04, 2018, 01:58:28 PM »
First class is dumb.  Lots of pontification about the "cash value" of miles and optimal redemptions (whoa 2.6 ˘/mile!! let's take a spontaneous trip to Maldives!  wow we are saving so much money), meanwhile the CC issuers and airlines are laughing it up.  Does no one remember that they used to give away unbooked first class seats as free upgrades?

A lot of those brags are indeed pretty stupid, like flying to Dubai for a weekend just to experience Kris first class. What a waste (of time, fuel, and miles, even if you're doing MS). But you get to brag about it on reddit and instaface.

Quote
Great job you savvy consumers on "hacking" your CC rewards, too bad 90% of you forgot to cancel your card before your annual fee hit: https://www.doctorofcredit.com/chase-sapphire-reserve-statistics-90-retention-rate-39000-annual-spend/

Yep. Paying $450 for 100k UR points and airline credit/tsa is one thing; paying another $450 the next year doesn't make any sense. As mentioned in the article you posted,

https://www.doctorofcredit.com/keep-downgrade-cancel-chase-sapphire-reserve/

wbranch

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Re: Need to fly first class? Just renovate your house!
« Reply #20 on: April 04, 2018, 02:02:58 PM »
I think even beyond NW most people who own private jets look at the time savings.  From what I've heard/read, on paper owning a Jet hardly ever makes sense.  But for these high powered individuals time is valuable.  If they can save 2 hrs every flight by flying private, they can probably make up the costs.
Exactly, but more. It's not so much the "save 2 hours", but that it literally enables trips that you otherwise couldn't do.

Have an important customer with a problem, or an important prospect that has a last second glitch in their competitive bake-off? If they're 750 miles away, you can potentially be at their site in 3 hours from getting the call. None of your airline-using competitors can.

Have 3 factories across several states to visit? Make it a long day, but you could leave at 6 AM and be home for dinner. 4 sites could easily become a one-overnight trip instead of a week-long adventure on the airlines.

My figures above were to justify "[domestic] personal travel". For personal travel, it's very, very hard to justify owning any airplane as a smart use of funds. (I still do it [piston engine], but it's clearly a hobby.)

Private travel to enable a business can be done with far less current net worth if you can make the business case to yourself/your board.

Yep, I worked at a CPA firm with a few privately held business that had private jets. Also had a client that owned a charter jet business. One business owner spent 1M+ annually on living expenses, which included personal use of the company jet. Some were 2-3+ hr drive from a major airport and local airports and needed to travel quite bit out of state. Not sure it was always justifiable, as one business owner flew a big customer 400+ miles to Chicago for dinner and theater and came back that night. 

One large client switched over completely to charter jets after owning their own 20+ years. When they were looking at replacement the $ did not make sense anymore.

There was a client with a high W2 income that spent around 150k+ a year on charter jets annually for family vacations. He tracked all of his spending, so maybe he was on the path to mustachianism?

tralfamadorian

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Re: Need to fly first class? Just renovate your house!
« Reply #21 on: April 04, 2018, 05:50:46 PM »
How rich do you have to be for private aviation to make sense?

NetJets smallest fractional ownership is $550k one time fee plus $9,600 monthly fee and $1,950/hr flying time fee up to the max of 50 flying hours/year. So, if you use all 50 hours, that would be $762,700 total for the first year or $15,254/hr.

Next is how much of your net worth do you think should be thrown into it? 1%? 5%? That would be $76M+ and $15M+ net worth, respectively.

sokoloff

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Re: Need to fly first class? Just renovate your house!
« Reply #22 on: April 04, 2018, 06:47:45 PM »
At the end of that year, you still own an asset (a fraction of an airplane).
If you want to do a straight expense and walk-away calculation, look at something like the Marquise Jet card, which is $120K for 25 hours or just shy of $5K per hour