Dilemma #2 - To Hedge or not to Hedge

So this has been a dilemma I have had since the budget for Europe got put together back in July of 2010. How do I contain the risks in currency fluctuations? So far, my approach has been to do nothing.  However, this can be a costly mistake, a big rise in the euro could limit the availability of funds in Europe or worse force us to trim down the itinerary.  Of all the currencies we will be using during our trip the Euro is by far the currency we will be exposed to the most, as illustrated below:

Currency            % of Budget    % of Time
Europe (EUR)      22.58                 25.59
China (CNY)        7.74                   7.06
Australia (AUD)   7.04                   5.29
Japan (YEN)         2.89                   3.24
Vietnam (VND)    2.17                   3.24

I did buy some AUD back in July and so far the bet has paid off, but the fluctuation has been minimal so my gains have not been something to get too excited about.  In regards to the other currencies, they won't make or break the trip if the currencies were to drastically appreciate against the dollar.  Going back to the Euro, the way I see it I have at least three options:

Option 1: Buy Euros
I can buy Euros now and not worry about what happens with the currency when our European segment begins.  By locking in the currency exchange rate now, I will eliminate the risk of the Euro appreciating against the Dollar.

Option 2: Shorting the Euro
There has been a lot of turmoil in the European Union recently, which has caused the Euro to fall to as low as $1.19 back in May of 2010. Things have recovered somewhat and the Euro now trades for about $1.30, but still far below its highs.  Many things can influence the value of a currency, most of which are beyond my comprehension.  What I do know is that if the Euro is expected to go down, then I might as well bet that it will.

Option 3: Do Nothing
By doing this I am only assuring myself of getting the second best result possible.  If the Euro rises, I will pay more for things when we get there, but I won't lose money by shorting the currency. If the Euro falls to the dollar, I will pay less for items in Europe, but I won't benefit from having shorting it.

I am not an expert in this territory, but it has been something I have been thinking about for a while and I think I need to take action. I'm also sure there are more options than just three.  If you have any insight as to what is going to happen to the Euro please give me a helping hand!

Dilemma #1 - To Give or not Give

I figured several dilemmas would start cropping up along the trip, reason why I have decided to label this #1. Here is the situation:  I purchased our tickets to San Francisco separately, Courtney’s was purchased with miles and mine was a free ticket I was awarded by United for my continued loyalty.  I booked the tickets separately and by the time I booked the second ticket, I wasn’t able to get two seats next to each other. At the time I didn’t think it was a big deal.

Last night, I checked-in both of us for the flight and I noticed that I had been upgraded to First Class.  Unfortunately, since Court’s ticket was purchased with miles it cannot be upgraded.  So now, we are not sitting together and I am sitting in First Class while Courtney will be sitting in 22D, pretty far back.  My initial thought was: I have earned this upgrade and I can’t wait to have free Bloody Marys’…Yes! And to make Court feel good about the situation I could send her one of my free drinks.  PERFECT!!! ….well, not too fast. I quickly realized that I had a couple more alternatives:

Alternative #1 – I could give up my seat to whoever is sitting next to Courtney on the plane. This way we would fly together on the first leg of the trip.  It would be the ultimate sacrifice, neither one of us gets the First Class seat but we get to sit together.

Alternative #2 - I could be the loving husband and give up my seat to Courtney.  She could enjoy First Class and maybe she could send a drink to the back of the plane for me.  Additionally, I could also gain some brownie points, which I could exercise at some point in the future.

I kept this information from Courtney, so she was not aware that I had been upgraded. I am curious to hear from all of you what you would do if you were in my shoes and what you think I did. I will let you know what happed in a future post.