This doesn’t quite fall into the realm of deceptive deals, but I think it proves as a useful exercise in valuing miles and points. View from the Wing commented yesterday that you can now schedule a test drive with participating Cadillac dealerships and earn 7,500 American AAdvantage miles. You don’t actually have to buy the car. You just have to register for the promotion and show up to try it out.
But even though 7,500 miles sounds like a lot, I don’t think this is a promotion that makes sense for most people. The value of your time is probably equal to or more than the value of the miles. Waiting times to schedule an appointment on the phone are already an hour in some cases. The dealership nearest to me is a 30 minute drive each way. I’m pretty sure once the dealer has his claws in me that I will be stuck there for 30-60 minutes even if the test drive around the block is only 10 minutes.
We’re looking at two or three hours invested to get 7,500 miles. American’s website lists the retail value of the miles at $221. Gary thinks it’s half that. If you value your time at about $50 an hour or more, then you’re wasting that time and should go off to do something more productive instead.
$50 an hour sounds like a lot, but it isn’t. Your employer may pay you $30 an hour (about $60,000 a year) but there could be another $20 of self-employment taxes, Social Security contributions, and health care premiums that you need to set aside if you were making $50 as an independent contractor. Not to mention that you’re spending a beautiful Saturday drinking bad coffee at a dealership and being pressured into a purchase. I’m also sure that some of you value your time much less than $30-50 an hour. I did a lot of stuff in college to save a few bucks because my time was cheap. My point is you should think about it.
The same debate extends to people who do manufactured spend. The fiscal expenditure on transaction fees and breakage is almost irrelevant. I agree with One Mile at a Time that the real issue is that it isn’t worth my time. If you’re really good at it and figure out all the details you can go out and get $25,000 in gift cards in one go and maybe even turn a profit liquidating them. But most of us don’t do that. For most of us it’s a time sink in proportion to the miles earned.
Last year some bloggers started talking about their earn rate in terms of “miles per minute.” That’s exactly how it out to be done. But expand the formula to include the value per mile. Don’t forget to offset that value by the cost in transaction fees, etc. Are you earning enough miles per hour to make up for the time you could spend doing something else? I’m starting to sound like the Devil’s Advocate, and he already had his time to speak earlier today. 😉
It could be a big time sink: test driving a car. It could be a medium time sink: driving around town liquidating gift cards. Or it could be a small time sink: answering online questionnaires for a few dozen miles at a time. But I really doubt you will find it worth your while unless you do it partly for the entertainment value. Some people just like to figure these things out and have a hobby. My blog started that way. And I don’t disagree with that. People do lots of irrational things that are enjoyable and should not necessarily be discouraged. I even invite Amol and Tahsir to write about manufactured spend on this blog because I enjoy reading about it even if I don’t always do what they recommend.
But most people will be better served by working in ways to earn miles in your daily life that don’t take extra effort. Things like using a credit card vs. cash, picking the right rewards card to match the types of stores where you shop, and just remembering to include a frequent flyer number on your reservation. Many people don’t do these simple, obvious things. And a steady trickle of miles that you’re earning every month at almost no added cost or inconvenience is probably better in the long run than a one-off deal like this or the constantly changing maze of manufactured spend.