Three Money Lessons From My Hawaiian Vacation

Late last year, I took my first trip to Hawaii. It’s officially the furthest West I’ve ever been.

And it wasn’t just me. My wife and three kids were right there with me. For most of the trip, we were traveling alongside another family of five.

Specifically, we went to one particular island on the Hawaiian archipelago called Kauai.

It was an amazing trip. It was also a very expensive trip.

Since I write about money, the financial side of the trip was of great interest to me. I’ve spent some time thinking about the lessons I learned and there are three that I definitely want to share.

1. Miles and Points Are Amazing

My take on credit cards is that they are both dangerous and essential.

They are dangerous if you don’t know how to use them and get yourself into debt. They are essential because they are by far the best and safest way to pay…and you get bonuses just for using them.

Sometimes these bonuses are in the form of cash back. Other times they are rewards points or airline miles.

My favorite flavor of points are the Ultimate Rewards Points from Chase. You can use these for cash back, but that’s the least profitable way to redeem them. If you book travel through the Chase portal, your points are worth 1.25x what they would be for cash back.

But there’s still a better way to redeem them. If you have a Chase card that has an annual fee, you can move your points to one of several other rewards programs, such as World of Hyatt. This is what I did and I’ll show you why it’s such a good deal in a minute.

First, I want to make sure I tackle the fact that there are two incredibly important benefits to points:

Points Are Free

You get points when you spend money. You would spend money whether or not you got points for it, so you might as well get the points.

But the money you get back for each transaction isn’t the best way to get points. Not by a long shot.

The best way to get points is through sign up bonuses.

Earlier this year, I signed up for a Chase card that was offering a 100,000 point sign up bonus if I spent a certain amount of money in the first three months. How much is 100,000 points? Well, if you redeem it for cash back it’s worth an extra $1,000 right into your bank account. I’m not joking. $1,000 for free.

But of course, that’s not how I redeemed my points. Which leads me to my next point:

Miles and Points Are an Alternate Currency

Yes, your miles and points have a cash equivalent, but they aren’t actually cash. Why is this important? Because it can lead to some truly wild deals.

As an example, we used the points I earned from my most recent sign up bonus as well as some other points we had hanging around for our flights and our stay at the Grand Hyatt.

Let me tell you about the Grand Hyatt.

This was probably the nicest place I’ve ever stayed at. Here’s some stuff that we got for free when we checked in:

• We each got a Lei (made of real flowers)
• They gave us sparkling cider because my wife and I were celebrating an anniversary (they offered champagne, but my wife doesn’t drink)
• In the room waiting for us were some macadamia chocolates
• In the crib that they set up in the room was a stuffed animal parrot that we got to keep

What’s with the stuffed animal parrot? Isn’t that a little random? Well, not really. There are parrots on the property. In fact, there are parrots in the lobby. Here’s one of them:

This handsome fella is named Duke. He’s a kind of parrot called a macaw. The stuffed parrot we got for free was named after this guy.

I’m not the kind of guy who usually stays at swanky resorts with multiple pools and lazy rivers and water slides and large lobbies with hybrid indoor/outdoor spaces and koi ponds with black swans. So this was quite the nice expereince for me.

And it was made possible by miles and points.

Small Money, Big Luxury

I looked at how much a room at the Grand Hyatt normally costs, and it can easily be $900 a night, plus a $40 resort fee (and probably taxes too):

So how much did I pay? Well, I used points, so I didn’t use any of my own money. But of course, I could have redeemed the points for cash. I spent 25,000 points a night, which is the equivalent of $250 in cash back.

Let’s look at it this way. Here’s what one night costs most people:

• They have to go to work to earn money to spend
• They’ll be taxed on their income, so they’ll need to earn more than $900 to pay for a one-night stay
• And actually, they’ll need to earn way more than $900, because in addition to income tax, they have to cover the resort fee and sales tax

Here’s what one night would cost me:

• I’d have to sign up for a Chase credit card that gives a good sign up bonus
• I would earn the bonus by spending like normal
• I’d transfer my Chase points to Hyatt (unfortunately, you do need a card that has an annual fee to do this)
• It would cost me 25,000 points, which could have been $250 cash back
• There are no resort fees or taxes
• There is an $89 annual fee for a Chase credit card that can transfer points to Hyatt

It’s big luxury for small money.

Actually, it’s big luxury for no money at all. Big luxury for miles and points. It’s like some kind of spooky voodoo magic. It’s next-level ninja stuff. I almost can’t believe it’s even legit.

You can get the luxury experience without the luxury price tag. And speaking of experiences:

2. Experiences > Things

It’s important to remember that you aren’t just one “self,” you are a composite of at least three selves:

• The remembering self who looks to the past
• The experiencing self who lives in the present
• The anticipating self who looks to the future

My trip to Hawaii was a gift to all three selves. As we planned the trip, the anticipating self had months of excitement to enjoy. During the trip, the experiencing self was able to be fully present and enjoy new things. Since the trip, my remembering self has had so much fun looking back at photos and reminiscing.

Money Spent on Memories is Money Well Spent

As an adult, it’s amazing how sometimes the days can drag despite the fact that the years keep rolling by.

How is it possible that the days are so long when the years are so short?

It can be chalked up to the concept of memory sinks. I first learned about this idea from a book called Off the Clock by Laura Vanderkam (who also wrote All the Money in the World, a book I’ve reviewed).

The idea is that if your commute is the same every day, your brain can store thousands of commutes as one commute. As adult life becomes monotonous and enough sameness stacks up, you can lose years to memory sinks.

The way to give your life a sense of fullness is to fill it with unique memories.

Hawaii was certainly a unique memory for me and my family. While I was there, I made sure to do as many unique and fun things as possible to make sure I walked away with lots of memories.

Here were some of my favorites:

ATV Tour

We drove over fields and up and down mountains. The last stop was a waterfall where we got out and swam (which was especially nice because it hadn’t rained that day and we were getting dust kicked up all over us as we drove).

My wife and I left the kids behind for this one.

Small Plane Tour of Kauai

All three kids fell asleep on this one, but it was well worth it. The views were unbelievable. It was nice that we did this one later in the trip, because we were able to recognize from the air many of the places we had visited on the ground.

Luau

Good food, a good show, and there was even a train tour of the ranch where the Luau happened and we got to step out and feed some of the animals

The Kalalau Trail

All those other events were relatively pricey. But one of my favorite memories was extremely cheap.

On the northern coast of the island of Kauai, there is a trail called the Kalalau. We didn’t do the whole trail, but we did the four mile round trip to the beach and back. Four miles doesn’t sound like a lot, but four miles of switching between ascending and descending on muddy and/or rocky terrain while traveling with kids is quite difficult.

And the key word is “difficult.” That’s actually one of the things that made it so memorable. It was hard work to get our party to the beach and back.

Of course, it’s a memorable hike anyway. You are hiking through the mountains right at the coast. As you head toward the beach that is the first major landmark on the trail, there are mountains on your left and the Pacific Ocean on your right.

The last step before the beach is to cross a creek with water that is flowing pretty swiftly towards the ocean. I took a picture of it later during our small plane tour:

The only way to access this beach is by making the hike. So when you see other people there, you know they worked hard to get there. It’s a peaceful little beach that makes for a nice little reward for a difficult hike.

The problem with buying stuff is that you get used to it very quickly. Having newer, nicer toys doesn’t fill your life with a sense of fullness. But having a treasure trove of memories does.

You don’t need to break the bank to make great memories, but it doesn’t hurt to invest some of your hard-earned money into something truly memorable every now and then.

3. Savings = Security

One issue with spending a lot of money on a vacation is the question of whether you can afford it.

Obviously, the most important question to ask yourself is if you are spending less than you earn. If you are, but still aren’t sure if it’s a good idea to use your surplus towards something big like a Hawaiian vacation, the best peace of mind you can have is to save a cash cushion in a savings account.

Having an emergency fund means that you are on solid financial footing and have some degree of protection against risk.

Measure it in months

The number of dollars isn’t what is important when it comes to your emergency fund. What matters is the time that those dollars represent.

Imagine all of your income vanished tomorrow. How long could you go before you ran out of money?

The answer to this question is simple:

Savings account balance / Average monthly spending = Months on hand (MOH)

So for example, let’s say that you have $6,000 in the bank and spend $3,000 a month. You have two months on hand ($6,000/$3,000).

What if you think you could trim your expenses to $2,000 a month in an emergency? Just run the numbers both ways: “We have two months saved up ($6,000/$3,000), but we could make it last three in an emergency ($6,000/$2,000).”

For me, here are the big milestones for your cash savings:

• 1 MOH
• 3 MOH
• 6 MOH
• 12 MOH

As soon as you hit any of those milestones, you can feel really good about yourself. At the time we took our Hawaiian vacation, we were sitting at roughly three months on hand in our emergency fund.

This allowed me to feel confident pulling the trigger on a memorable experience for my family.

You don’t have to do things the way that I do, but if you are prone to worry, this can help. Pick a target and rest assured that when you come back from your trip you will still have money in the bank.

How Big Should Your Emergency Fund Be?

Final Thoughts

Yesterday I brought up the pictures from our trip and we looked through them as a family. We had so much fun reminiscing.

My kids are only young once and I want to give them some memories that can last a lifetime.

Next up, Italy.