I agree with you Stevens397, the "value" is in the opportunities that miles / points create that would otherwise be unavailable. I can't figure out why everyone feels a need to try to quantify them and even try to consider them an asset. As I have said in other threads, to me the miles / points are a coupon system that are worthless from an economic standpoint; they simply allow me to purchase travel at a substantial discount. At the end of the day, their existence will probably cause me to spend more overall on travel than I would have spent if I did not have them, so I hardly see how they have value. On the other hand, if I was not able to purchase premium class international travel at a discount using these coupons, I would simply never be able to obtain the corresponding experiences from the international travel. So to me the benefit is psychological satisfaction that cannot be quantified. So, in my opinion, people should stop trying to quantify the miles and points.

Disagree. You have to have some sort of value to make logical rational decisions. I might need to fly to California and it might be 25K miles or $600. Only way you can possibly decide what to do is if you have some sort of value on your miles.

I suspect that we all have some sort of value in our heads as that is the only way to make any sort of decision. If you are not considering using your miles on a domestic trip than you still have a value for them. Its just a value that is fairly high.

If you have ever had to decide whether to use a paid ticket or miles than you have had to make a decision on the value of a mile.

To me this debate is important because it affects everyday decisions I make. Should I buy the ticket or use miles, should I take 2% cashback or use miles, should I collect SPG points with a credit card or United miles? These are all decisions that cannot be made without having some sort of value of a mile.

I've started to realize that there are quite a few people who simply don't care about the "cost" of a frequent flyer plane ticket. They've decided they're going to earn it and they just do whatever it takes to earn it.

If that means diverting 60k of credit card spend and losing $1200 of cashback, that's fine to them.

To me, the value side of the equation is less important than the cost side. In other contexts, this would be the difference between an "investment decision" and a "financing decision". Clearly the investment is a good idea, since it nets me a dream vacation. But that's independent of the "financing decision" of how to make it happen.

Knowing the cost of my miles is how I stop myself from making poor financing decisions. But there is definitely a large portion of the FT population who simply don't care about cost, in lost $ or lost time. So be it.

hindukid has a valid point about how people need a baseline for comparison when making day to day decisions (purchase vs. redeem), but overall, I tend to view this issue more like Stevens397 and Andy2, because after skimming this thread and others like it, I don't understand the thought process of people who live in a fantasy world and assign arbitrary, artificial values to ticket prices.

The example of choosing between 25K miles or $600 is real, and one that people like us confront all the time. It makes sense to me that someone would want to have a per mile "value" in mind when making that decision. But when folks say that they value a $10,000 (or $26,000!!!) F ticket at $2,000 because that's all they would be willing to pay for it, then that paradigm breaks down, because they aren't talking about real world choices any more -- they will never be able to buy that ticket for $2,000. Under these circumstances, the decision boils down to, do you want to redeem the miles and take the trip or don't you?

I agree you have to have a rudimentary sense of the value of points to figure out which credit card to use, or whether an Amex transfer bonus makes transferring worthwhile. Etc.

I also agree there is a fair amount of irrational behavior out there, like using a southwest card to earn 1 RR point worth 1.7 cents instead of 2 percent cash back (barring working towards a companion pass or something). Then agan, it's easy to get 2.66 cents toward plane tickets for $1 of spend using a citibank thank you card, but stll people use 2 percent cash back cards and spend cash on plane tickets (or, hopefully, use their Amex gold cards which reduces the problem slightly). So go figure.

All that said, I still get confused about valuing a mile when I can't otherwise afford to purchase the ticket or purchase the miles. I want to fly 4 people to Europe in C. Even if I could get unlimited miles for 2.1 cents, I don't have $8400 to spend. How do I value 400k miles? It feels to me like they are worth more than $8400 in terms of allowing me to do things I otherwise couldn't. But maybe that is irrational.

I find it helpful to think of the scenario this way.

Suppose a rich relative gave you a gift of $26,000. It can only be used for plane tickets but it can be used for as many plane tickets as you want until it runs out.

What's the largest portion of that gift you would spend on that F ticket in that scenario?

That will give you a sense of value.

Then make sure you pay less than that (in cash outlay to buy them or lost cashback for earning) for the miles you use to buy that F ticket. That will give you the actual cost for the ticket and ensure it is less than what value you place on the trip.

actually I sat in lobbies after going to the beach to unwind and waiting for people to get ready a lot lol, besides the local hotels which aren't half as nice usually were going for around $50 a night, getting these for $30.90 a night and using free points I get for signing up, and having my family rack up points for me for free is quite nice LOL, my family saves for their hotel stays but they never use it either. maybe once or twice a year? I also churn their cards for them since they don't care about points :)

They just ask for a free trip to Japan every other year or so and they're happy ;)

The price you would pay for that F ticket is a real world decision. I can give you a concrete example. I just redeemed a marriott travel package in which I received 120K miles. I could send those miles to Southwest or United or AA.

If I send them to Southwest I get 120K points which is redeemable for $2000 worth of flights. I also get a companion pass which is valid until Dec 31, 2014. I estimate that the companion pass will save me $2500 over the two years. So in all I estimate that the 120K southwest points will save me $4500. This is cold hard cash that I would have spent on various domestic trips over the next two years.

I could instead redeem for 1 F ticket to Europe had I transferred to UA and AA. I am making a calculated decision that the F ticket is worth less than $4500 to me. Without figuring out how much those miles are worth I would not know whether to redeem my marriott points for United or for southwest. You have to look at things in terms of what they are worth to you, not what they cost on the retail market.

Okay, so here's how I would value the redemption. So take the CX flights: 135,000 AA miles. Cost: 2.2 cents per mile (buying AA miles + SPG miles on Promo). Cost: 2970 Dollars. So if you had a cashback card @ 2% (assuming you can get 2% if not more in the States), you're not missing that much with miles.

so where do you get your miles in the first place? Well, if you're spending with CC to get points, then yes, you're only paying 0.1 cpm more to get the flights. But then that's why CC bonuses make miles so much more attractive.

Again, you can buy UA miles between 2.05-2.5 cpm, and AA between 2.0-2.4 cpm. You can go calculate what the miles are worth. But yes, you do have a good point. If you don't value buying the miles at 2cpm, then that's why you transfer to SW.

I definitely care about the costs so I try to at least get $0.02 of "value" from my points (vs. what I could book hotels and airfare with online) otherwise I would just use my Fidelity card. When it comes to time I really don't mind spending some time on it since I actually enjoy it (like people that shoot things in video games for no reason other than a score that means nothing at least I get something out of this hobby).

You can only buy 60k AA miles per year so you really can't buy business or first class international travel like that.

You can buy 60k AA miles and then an unlimited amount of spg @ 2.4 cpm. Averages out.

This it's an important point, if you don't enjoy the game than there is almost no deals that are worth it.

I understand the rationale behind that decision, and would probably make the same one myself, but it's not an apples to apples comparison. You had a choice between option A (SW miles) and option B (UA/AA miles) and decided that you prefer option A because you subjectively believe that it will provide more value in the long run.

Importantly, your example didn't assign some random, arbitrary number to the F ticket (the price you say you would have been willing to pay for it), and then back into your decision. You simply decided that it wasn't worth it to you to forgo the $4500 of benefits that you expect to receive from the SW miles (presumably, multiple trips and opportunities/experiences over the course of nearly two years) in order to get 1 F ticket to Europe. Indeed, the FMV of the F ticket does not appear to have been a factor in the decision either.

It's really no different than saying you would prefer to allocate 100K miles to 4 domestic coach tickets over 1 international business ticket, even though the cost of the latter may dwarf the cost of the former. The rationale may be that you want to take your family on a nice vacation, and not have anything to do with making the optimal decision from an economic perspective.

To me, that's enough reason to make the decision -- you subjectively value the trip with your family more than a solo trip to Europe. You don't need to concoct an artificial number to justify the decision. It's especially silly when it's done by people who would probably never actually purchase an international F ticket in any event. But if that makes people feel better about their decisions, then they should keep doing what they are doing.

How do you buy an unlimited amount of spg, particularly at that price?