In order to remain competitive, airlines try to keep fare prices low. When that strategy starts to break down and airlines can’t compensate for the cost of flying in the normal way (increasing bookings, and decreasing flights) and they still resist raising fares, they look for new ways to earn revenue.

So now we’re charged for meals and luggage, both of which were once included in the fare price for most flights. JetBlue Airways is now selling a pillow and blanket set for $7. I’ve noticed the disappearance of the “free” pillows and blankets that once adorned seats while boarding, but now they’ve returned in another fashion.

The $7 will provide you with your own unused pillow and blanket set. As they are charging for the privilege of comfort, at least you don’t have to cuddle with the same bedding used by travelers before you. The set also comes with a $5 coupon for Bed, Bath, and Beyond, making the purchase a little more attractive.

JetBlue Starts Selling Blankets and Pillows, Micheline Maynard, New York Times August 5, 2008.

Last week, I spent several days in San Diego with family and friends, including my mother and her long-time boyfriend, my brother and his girlfriend, and my girlfriend. One benefit of visiting family for vacation every April is the fact that my mother seems quite willing to spend money to ensure everyone’s enjoyment, at least through this year. (If I continue to earn more money than I expect, that may not be the case for much longer.)

I decided to estimate how much my mother might have spent on our trip to San Diego as an exercise in curiosity. To be fair, I did pay some of these expenses, but only a small portion.

Lodging. A room with double queen beds at the Hyatt Regency Mission Bay may have cost $750 over the course of three nights. We had three rooms for an estimated total of $2,250. I believe she was able to receive one night free, but I’ll stick with estimates based on the full retail value. Add internet access at $10 per room per day and valet service of $20 per day. Add tax. Running total: $2,780.

Travel. The trip from my mother’s home in Orange County, California to the hotel in San Diego was 80 miles. At a rate of 50.5 cents per mile, the round trip in our car “cost” $80. My brother and his girlfriend drove separately, so I would consider than an additional $80. Cab rides throughout the four days added about $120 to the transportation total. Running total: $3,060.

Meals. Tuesday: lunch at a restaurant with an ocean view in La Jolla ($200) and dinner at Osetra ($300). Wednesday: breakfast at the hotel ($150) and dinner at a fondue restaurant in San Diego ($250). Thursday: breakfast at the hotel ($150), lunch by the hotel pool ($50), and dinner on a cruise around the bay ($300). Friday: brunch at a restaurant near the hotel ($200). As I didn’t see any of the bills, these prices are just estimates. Running total: $4,660.

Entertainment. My girlfriend and I visited the San Diego Zoo one day, and the tickets cost a total of $60. Food and souvenirs added an additional $40 to that cost. My brother and his girlfriend attended kayaking lessons, which I’ll estimate at $60. My mother treated herself and the other women to manicures and pedicures at the hotel’s spa. My brother and his girlfriend, only a few days from leaving for the next leg of their band’s country-wide tour, received facials and massages, and I had use of the spa’s shower and steam room. Based on the price list on the hotel’s website, this must have cost over $500 total. Running total: $5,320.

This doesn’t include the money my girlfriend and I spent to fly across the country, about $800. Estimated total: $6,120.

While it’s true that we could have saved thousands of dollars by traveling less over the past week, and I would be happy spending time with my family doing anything, having these yearly vacations gives me something to look forward to every spring. I may be wrong, but I believe my mother would consider this to be money well-spent. I hope to be in a position to provide similar vacation opportunities for my family at some point in the future.

Life is short, and I believe it’s important to do and accomplish the things that make us happy while we can enjoy it as much as possible, healthily and with full wits. Is this philosophy at odds with the idea of frugality? A reader recently wrote in with this question for other Consumerism Commentary readers: Are you missing out? Here’s John N.’s email:

I buy into the importance of not living beyond our means. And there’s a great deal of comfort and satisfaction to be had in having money in the bank so that we’re not devastated by the next misfortune.

But, when it comes to living frugally, do you feel you’re missing out by forgoing the sports car, fine dining, and exotic vacation? If so, how do you make a place for those things in a frugal lifestyle?

Robert Kiyosaki’s (author of Rich Dad, Poor Dad) answer is to wait until you’ve saved the cash and then go forth and spend. But some of us, depending on predisposition and earning power, may grow old or die before that happens. Are there compromises? Can you make them and remain financially secure?

I say absolutely. Frugality is not my strong suit, but I believe it’s important to strike a balance. I try to do what I can now to secure a comfortable retirement so I can stop trading my time for money—working to earn a living —and to make relatively smart financial decisions throughout my waking life. At the same time, I strive to enjoy the time I have today that’s not spent typing at a computer in an office or in my living room.

Frugality and making the most of the present are not mutually exclusive. First, not everyone needs to spend on a sorts car, fine dining, and exotic vacations to feel they are making the most of their life. Simple pleasures can often be the most satisfying. That’s not for everyone for a variety of reasons.

So, you want a buy a sports car because that would make you happy. That doesn’t make you a bad person, and it doesn’t mean that you can’t be frugal at the same time. No, a sports car is not the most economical decision, but for people with the means, financial decisions can be weighed against other, somewhat more nebulous aspects, like the thrill of driving (known popularly as fahrvergnügen).

Whether fahrvergnügen exists as a reflection of a true feeling or only as a feeling created by a marketing term is an entirely different discussion.

To the point of John’s question, what if you don’t have the means to afford the thrill today? There are three options. The first option is to go into debt or forgo saving for the future. Obviously that’s not recommended and could lead to problems down the road. However, everyone is different, so if one understands the cost and risk of debt then one should be free to make that decision.

The second option is to wait as long as possible, but what if you never have the money to experience a safari in the Serengeti? What if by the time you could afford it, you won’t have the capacity to enjoy the trip? Life is for those who don’t wait.

The third option is to realign your expectations with the reality of your financial situation. This option is the hardest but the most rewarding. I’m not saying a trip to Six Flags Great Adventure & Wild Safari is a worthy alternative to the Serengeti, but there may be other experiences that induce a comparable level of happiness and satisfaction.

What do you think? Does a frugal philosophy necessitate missing out on life and how can one compromise?

Image credit: Stig Nygaard

As gas prices approach $4.00 nationally this summer, airlines are looking for ways to keep their profit margins without increasing ticket prices. Even though the average today is still “only” $3.20, some airlines have begun to make some changes.

Carriers have been scrambling for ways to “up-sell” fliers, including selling first-class upgrades, fancy alcoholic drinks and day passes to airport clubs. But they’ve also been stripping out previously free services and charging customers for anything more than basic transportation—everything from use of skycaps and telephone reservationists to on-board meals and, at a few carriers, assigned seats and exit-row or bulkhead legroom.

In my experience on airplanes in the last few years, I’ve been charged extra for food and headphones. In my latest foray booking with Virgin America, they wanted more money to reserve slightly better seats like those in the bulkhead or exit rows.

I’d like to get used to traveling with everything I need in carry-on luggage, but that’s not always possible. Charging for more than one or two checked bags is already part of the flying experience. Check out this chart from Yahoo Finance/Wall Street Journal.

The airlines are doing everything they can to avoid raising ticket prices, thanks to consumers’ tendencies to live and die by the fare price.

US Airways spends roughly $250 million a year on baggage service, Mr. Parker says, and passing some of that cost to customers who actually use the service helps the airline offer lower basic fares. Consumers will switch airlines over even a $5 fare difference, airlines say, but are less sensitive to fees paid at the airport.

The psychology of money is interesting, and I am a victim just like most humans. I’ll search online for the lowest fare that makes sense for my schedule requirements, but buy overpriced food in the airport and opt for upgrades elsewhere.

Baggage Becomes a Big-Ticket Item [Wall Street Journal Online]

This weekend, I purchased tickets for the trip my girlfriend I will be taking to California in April. My general method of operation for purchasing airline tickets is to decide which dates will be best for traveling taking into account my schedule and my girlfriend’s schedule. She’s a teacher who doesn’t take vacations or sick days except for calendar vacation days set by the New York City Public Schools, so our vacations coincide with winter break, spring break, and over the summer.

I check SideStep to compare options from a variety of airlines and schedules, usually plus or minus one or two days depending on our available schedule. I take some mental notes and check back about once a week until I’m ready to pull the trigger.

Invariably, I end up waiting until I’m within the “six week window” in which prices are higher. I’m barely within that window now—we will depart on April 21—and the prices haven’t risen.

We don’t choose the cheapest flight, which would usually involve flying from an inconvenient airport or at an inconvenient time. Given the choice to spend a little extra money and not find a way to the airport at 5:00 am, not take a red-eye flight, and not require battling the Los Angeles rush “hour,” we’ll spend the extra money.

This time, Virgin America presented the best non-stop schedule for the best price. Virgin America is a new airline for me. I checked some reviews online before booking and generally found promising opinions. Rather than booking through SideStep, I booked directly at Virgin America’s website to ensure I was getting the best scheduling options.

I noticed that Virgin America charges more for better seats. Their interface allowed me to choose our seats before finalizing the reservation, and the bulk head and exit row seats, which have more leg room, would cost an additional $25 each to reserve. Other airlines don’t generally allow you to reserve these seats in advance, but I don’t like the idea of being charged more for a seat that’s only slightly better than the others in the main cabin. As far as I know, no other airline shares this policy.

Virgin America sports what seems like a neat entertainment center for each traveler, a step up from jetBlue’s television. Movies and food all cost extra on these flights, however. I’ll probably stick with reading a book or listening to my own music and bringing my own food for the flight.

Liz Pulliam Weston asked credit card experts for their recommendations for making the most of the rewards that the issuing companies offer. I’ve done well with my Citi Dividend Platinum Select and now my American Express Blue Cash for Business, but it’s interesting to see what is recommended by those who live and breathe credit cards.

Travel Rewards

For travel programs, the winners were American Express Starwood Card and the Diners Club MasterCard. With the Starwood Card, you earn 10,000 points after the first purchase which can be redeemed for up to 3 nights at a hotel. More rewards come quickly afterward. Read about all the benefits here.

The runners up in the travel category were the American Airlines AAdvantage® MasterCard, United Mileage Plus Visa, Choice Privileges Visa, and Citi PremierPass Elite MasterCard.

Cash Back Rewards

Cash back is my personal favorite type of reward. The top card picked by the experts is the American Express Blue Cash, which offers 5% cash back on “everyday purchases” and 1.5% cash back on everything else. In order to reach this level of reward, the card requires a total yearly charge of at least $6,500. As Liz points out, if you charge less than $2,500 on the card each month, the Chase Freedom Visa (no longer available) will be a better choice with its offer of 3% cash back on each month’s most charged category and 1% on all other purchases. With this card, you’ll also receive an additional $50 cash back after your first purchase. MSN claims 200 points earns you $250 cash back with this card, so the cash back rebate is effectively 1.25%, but I can’t find any evidence of this.

The runners up in the cash back category include the Citi Professional Cash Card and Discover Motiva. I still run across some stores that don’t accept Discover Cards, so that wouldn’t be my choice if you intend on carrying only one card.

Savings Rewards

If you’re saving for a child’s future education, a number of cards offer options that provide savings incentives each time you charge. The Fidelity Investments 529 College Rewards American Express Card is the clear winner, particularly for an investor with a 529 education savings account at Fidelity. 1.5% of your purchases, up to $1,500, are credited to your 529 account annually.

I formerly used a Citi Upromise MasterCard, the runner up in this category. With this card, 1% of all purchases is deposited into a holding account at Upromise which can later be invested in a 529 or returned to you in the form of a check. The latter was my option. In addition to the 1% rebate, the Upromise card is also now offering 2% on ExxonMobil purchases and 10% cash back on certain supermarket and grocery store items.

Cards honorably mentioned by the experts on MSN include the Citi Home Rebate Platinum Select MasterCard, GM Flexible Earnings and NestEggz Platinum Visa Card. This is the first I’ve heard of the NestEggz Card, which offers a 1% rebate and a $25 incentive for using the card, to be deposited into a qualifying retirement account.

Summary: MSN’s 15 Credit Cards With The Best Rewards

1. American Express Starwood Card (Travel)
2. Diners Club MasterCard (Travel)
3. American Airlines AAdvantage® MasterCard (Travel)
5. Choice Privileges Visa (Travel)
6. Citi PremierPass Elite MasterCard (Travel)
7. American Express Blue Cash (Cash Back)
8. Chase Freedom Visa (Cash Back, no longer available)
9. Citi Professional Cash Card (Cash Back)
10. Discover Motiva (Cash Back)
11. Fidelity Investments 529 College Rewards American Express Card (Savings)
12. Citi Upromise MasterCard (Savings)
13. Citi Home Rebate Platinum Select MasterCard (Savings)
14. GM Flexible Earnings (Savings)
15. NestEggz Platinum Visa Card (Savings)

The 15 Most Rewarding Credit Cards [MSN Money]

I received a notice in the mail the other day reminding me to renew my roadside assistance service from AAA. For the last several years, I have been a member of AAA “Plus,” which offers the standard service and extra distance for free towing. I’ve decided to downgrade to the standard AAA plan. Before owning my current car, I could make a case for being a member at the higher level.

Despite the Plus membership’s higher price of somewhere in the neighborhood of $90 a year, every year until owning my current car, the service has paid for itself in car service alone. That’s no longer an issue, so I’ll be renewing my membership at the basic level. I’ll still receive useful roadside assistance and be eligible for the same discounts from a number of companies.

I could cover the basic membership yearly fee of about $50 in discounts alone. Here are some of the deals I can take advantage of:

• 10% off at Circuit City with a number of restictions.
• 6% off at Dell.
• 10% off at Target.com (online only).
• 20% off on movie tickets.

• 15% (up to $50) off of Magellan GPS units when shopping online and 5% off at BarnesAndNoble.com.

  A full list of savings is available at AAA’s savings website.