Voltaire once coined the phrase loosely translated that “Perfect is the enemy of the good”. In general this terms means that for want of perfection one may never complete a task. That being said even an imperfect execution may be a preferable outcome to nothing. The pursuit of perfect is particularly a common road block for all things financial we all need to get over. Typically change is better than stasis, even if it’s not perfect.
For example, recently I came across another blogger’s post on travel hacking. I respect this blogger greatly but I was surprised to see he came to the conclusion that credit card churning was not worth the effort. I read this post with great interest as I’ve always found travel hacking to be one of the best bangs per hour worked of any pursuit. So why did we have differing opinions?
Perfect in Travel Hacking
As I read his post I noted he devoted significant words to pursuing the best usage and earning of travel hacking points. From where to go to get the most value per point to what to spend to get the most points per dollar he mentioned spending days on end maximizing his outcomes. He was right, with the hours he spent travel hacking was a waste of time. The thing is, if you read my travel hacking posts I do almost none of this. I will readily admit I could maximize my points and earning better. If I increased my hours spent I wouldn’t be surprised if I could make at least 20% more in cash back/bonuses. But I don’t.
Maximization is a Time Sync
The thing is travel hacking maximization is a colossal time sink. You can spend thousands of hours maximizing every last bonus to the point that you spend. Meanwhile I spend just 10 hours a year on travel hacking. This gives me about 80% of the benefit of maximization with minimal to no impact on my life. How much benefit is that? Well in 2017 it was approximately $5,000, or the equivalent of 500 dollars an hour. I don’t know about you but I don’t have many income sources paying me 500 dollars an hour which makes it a steal and a strong recommendation. But if I spent 1000 hours on it and it earned me $5800 dollars would I still be a huge fan? No. At $5.80 an hour I could find something better to do with my time
Don’t Waste Time Maximizing
So on the one hand I wouldn’t recommend maximizing travel hacking, or frankly even finances in general. You can tweak your finances and analyze spreadsheets 365 days a year and no doubt you will improve. But it would likely be a waste of dollar per time compared to other pursuits.
Perfect and the Pareto Principle
Statistics illustrates this point very well. In general studies have mathematically shown that 80% of effects come from 20% of the causes. Put differently you can address 20% of the concerns or do 20% of the work and typically achieve 80% of the outcome. This is known as the Pareto Principle. The ramification of this point is you can likely cut out 80% of the work towards perfection, the maximization, and still achieve 80% of the outcome. I try to apply this to many parts of my life.
Travel Hacking and the Pareto Principle, My Spend Implementation
My credit card strategy, for instance, is definitely not maximized. I don’t shift spend to cards based on which category returns the most. On spend I simply shift all my funds to a new card until I get a bonus. I then move on. The card statement warns me of impending annual fees, so when I get a warning I call and cancel the card. I might spend 10 minutes online researching which card to switch too, 10 minutes reading the statement, and 20 minutes calling to cancel. That is it. With some cards returning $500 or more in bonuses, that’s quite a return.
My Travel Hacking Point Usage
On the points usage side I do not maximize either. Instead I long ago determined which categories have an extremely low rate of return and avoid them. These are typically purchasing merchandise with card points and usually cash back. If a card is an exception to these rules, rare but possible, I take note. Otherwise I simply use the points for the remaining categories that tend to have higher returns to capture 80% of the value. I might get 1.2 points per dollar for one option and 1 point per dollar for the other, but in both cases avoiding the .3 per dollar credit card store is enough of a return for my purposes. Simple with no fuss.
I do much the same with my finances. I don’t formally budget and I don’t pursue exotic investments to gain a tenth of a percent in return. These would maximize my situation but be a waste of my time. Instead I control my general spending and I actually use index funds. 20% of the work, but again 80% of the outcome.
Start Something, Do Not Wait for Perfect
It’s an important point to not spin your wheels for an extra dollar, or I wouldn’t have spent a whole page on it. But there is another lesson here that is probably even more important. That is don’t forgo doing something because you are afraid you can’t maximize it or how long it will take to do so. The time it takes to do something like daily scrutinizing a budget is not something that should be a barrier to getting your financial life in order. No the single biggest impact is the first few steps where you start to reign in your behavior. Even if you never get to perfect you’ll likely be better off.
Don’t let Perfect stop you from getting your life in order and turning it to the better.
Do you travel hack? Are you susceptible to not starting things because they won’t be perfect?