Disclaimer: This is not to take the place of financial advice of by a financial planner.
Let's look at a trip to Europe.
You can get an economy ticket from the east coast for about $1000. Business class generally for $4000 (Though there are good sales for both right now.
Airlines will hawk their credit cards telling you that 25K miles will get you a domestic economy ticket. True, if you plan in advance. That ticket is generally worth what? 300-400 dollars?
An economy ticket to Europe is 50K miles on AA, if you plan far enough in advance.
A business class ticket is 100K, again if you plan in advance.
Notice the growth in value:
Domestic economy: $300ish or 25K miles.
Europe economy: $1000 or 50K miles.
Europe business: $4000 or 100K miles.
For a point of reference, I got my mom a business class ticket to Germany this fall for 100K miles and $120 in fees/taxes.
Now, how do you get these miles?
(You will need to start about 2 years in advance and get the tickets 330 days in advance, they go fast.) Find an offer for an American Airlines credit card with a 50,000 mile sign up bonus. You need to spend $3000 in 3 months. Then get an AA business card and do the same. (You don't actually need a business.) You now have enough for the ticket. Have a spouse who wants to go? Have them do the same.
Some ways to get the spend:
Buy gas gift cards. I spend $400 a month on gas. Buy Shell or Exxon cards at Staples and in 3 months I have a $1200 spend.
Pay cell phone, Internet, electricity and other utilities. Good for another $1000-1500.
Buy big ticket items during this time.
There are other ways to get miles: When I signed up for DirecTV I got 25K miles. The airlines have online malls linked to a large number of stores. always look for deals. If you buy flowers for anyone they also have deals for that.
The same principles work with hotels as well.
Is all this a pain? Can be. But to me it is a hobby and well worth the work.
The difference is A 8-9 hour flight in this for $1000:
Or this for 100K miles and $120:
At this stage of my life I'll take the latter.