Cash Backing, an Alternative to Travel Hacking

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Playing the miles game is such a win-win situation.

On one hand you learn new skills;  Organization, creativity, and attention to detail come to mind.

On the other hand you save thousands of dollars and are able to expand your world with amazing travel experiences to exotic destinations.

As an ordinary working stiff, you can travel like a plutocrat!

But what if travel is not your thing? What if you’re more focused on your own financial puzzle? Perhaps you’re happy living a local organic lifestyle and merely want to get out of the rat race as soon as possible?

Does the miles game offer no value for you?

Quite the opposite is true.

By leveraging the skills of credit card churning, and manufactured spending, you can just as easily hack your way to an earlier retirement.

In order to illustrate this, I thought I would put together a sample six card churn with the goal being to build up money for a retirement account.

Most research is courtesy of Frequent Milers excellent credit card reference page.

1. Chase personal Credit card: Chase Sapphire Preferred.

This is a fantastic card that will earn you 40,000 ultimate reward points. This has a cash value of $400 in the form of a statement credit, or check.

You will also get two points Per dollar awarded on all restaurant purchases, and a 7% bonus on redeemed points at the end of the year.

(The alternative is the Chase freedom card, which is a no annual fee card that will now give you 20,000 ultimate reward points ($200) as a bonus.

In addition you will get 5X cashback on rotating categories for up to $6000 in spend per year. If you hit this mark, that’s an additional $300 in your pocket.


2. Chase Business Credit Card: Chase Ink Bold.

This card gives you a whopping 50,000 ultimate reward points ($500) as a sign-up bonus.

In addition, all of your phone, cable, and cellular bills or earn five times points as well all of your office supply store purchases (gift card paradise.)


3. American Express Personal Credit Card: Blue Cash Preferred Card.

This card has a paltry $100 sign up bonus, and also has a $75 yearly fee, but the beauty here is in the manufactured spending opportunity. This card offers 6% cashback at grocery stores up to $6000 in spend per year.

So if you hit this target with actual, or manufactured spend , that’s $360 (minus the $95 annual fee) or $265 cash in your pocket per year. Not bad.

(Alternative in this category: The American Express Fidelity card which gives you 2% cashback on all purchases.)

4. Barclays Personal Credit Card: Barclays World Arrival Card. 

This card gives you over two cents per dollar spent value on all spending.

In addition, you get 40,000 points as a sign-up bonus ($400.)

This card is meant to be spent on travel, but Rom’s Deals highlighted how it can be used for cashback here with a nifty trick.

5 . Miscellaneous: (Hawaii And California Residents Only) JCB Marukai Credit Card. 

This card is not about the bonus. (It is only $50 when you spend $5000 yearly.)

It is about the 3% cashback you get on all purchases after your initial $2000 in spend.

Unlimited 3% cashback is… Money Baby!

6. Miscellaneous:  Wells Fargo cashback card.

You may be targeted for a $100 cashback sign-up bonus. But this card is really about the 5% cashback on all gas, drugstore, and grocery store purchases for the first six months

All together these 6 cards yield over $1400 in sign up bonuses alone.

But the real money comes when you harness the power of manufactured spending.

With this constellation of cards, you should be able to average at least three cents per dollar cash back on all of your manufactured spending purchases.

If like me, you manufacture about $12,000 in spending a month, then your cost for gift cards will be on the order of $120 a month. But you will make $360 a month in cashback, meaning you will net $240 a month towards your early retirement goal. That’s almost $2900 a year in profits from manufactured spending.

Total it all up, and that’s almost $4300 in your IRA at the end of the first year. Not too shabby.

old-man-sleepingLive the dream…. even sooner.

Even ignoring the sign-up bonuses, The manufactured spending profits alone, when invested in the stock market at 7% Growth per year will net you $41,520 at the end of 10 years.

That is meaningful savings. Your actions will palpably move the goal line of early retirement closer to you.

Of course my preference now is for using the miles game for travel, because I get much more value per point on travel redemptions, and travel is an important part of my family’s life and lifestyle.

But at an earlier time of my life, when I was making less money, and the margins were tighter, I think that this strategy would’ve been extremely valuable for me.  (This would also be a fantastic option for an older individual, nearing retirement with an inadequate nest egg.)

Even now, just knowing that this approach exists, gives me added confidence in my financial reserves going into the future.  Which is a good thing, I think.

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