True but valuations are subjective; I value my house at 10M but I paid 700k for it. I think the lost cash is the best metric as it is most objective.
I cannot take the most expensive house in the neighborhood as comparison, so I cannot take the listed cash price of tickets.
Originally Posted by
SteveinA2
Valuation does not equal cost
(And your Bask bank calculations are off - you get 2.5 miles per dollar and the $0.42 per mile is the taxable part - not their cost)
Thanks for catching that - it is worse than I thought - btw, it is 0.42c each (not $0.42 each = 42c)
Bask bank - 2.5 miles +2.5x0.42c = 1.10c = 1$ kept for 1 yr = 5.25c in T bills.
When they send a 1099 for 0.42c, you have to pay tax on it both Fed and State ; you do not pay state tax on T bills - only Fed - so Max 37% tax
so you get 2.5 miles + a liability of 1.1c income for taxes - instead of getting 5.25c from T bills
Pretax 2.5 AA -(1.1c) = 5.25c so 2.5 miles = 6.35c real cost 2.52c pre tax
Post tax comparison @ 40% tax (state+fed) 2.5 AA miles + paying taxes of 0.44c (40% of 1.1) = 3.5c after tax
so 2.5 AA miles - 0.44c cash paid out = 3.5c cash; so 2.5AA = 3.94c after tax = cost of 1.58c
To rephrase
AA sells miles routinely at 1.88c every yr- so I use that as my real "valuation"
My cost to get the miles "valued" at minimum 1.88 by the printer of the currency varies depending on the method.
Just becuase I got them for SUB at 0.3c does not mean I think of them as value of 0.3c, as I can not do this in unlimited quantities
I did buy a couple of MM miles during the trees MC promo 2 yrs ago- (should have bought another 5MM more )
- so at times I know I paid a lot less for them, but to me their "value" is 1.88c each still.
I do not want to redeem them for 1c each on domestic flights
I think in 2-3 yrs = most programs will go full cash value 1c per mile for partners awards too and will just sell the tickets to you at cost price, similar to DL now with AF.
Then it is time to get rid of all Airline cards and just focus on cash back.