Leap of Faith (Flowchart)

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Note:  The miles game is constantly changing.  As of now you can no longer buy Vanilla Reloads with credit card at CVS, and vanilla brand Visa cards can no longer be used to reload bluebird at Walmart. (6/21/14)

 

Today I was emailing with a friend who also plays the miles game and is into the early retirement philosophy.

We were comparing notes and he seemed a little surprised by the sheer number of credit card applications that my family completes in a year.

Despite not having any ethical reservations about manufacturing spend, he still had not taken the jump.

From what I can gather his reservations were that the undertaking would be difficult to keep track of, and possibly risky.

In my conversations with friends, I’ve been struck time and again by how complex manufactured spending seems when explained (despite how simple it is to execute in reality.)

I know it is simple, because all of my friends who have tried it, just picked it up very quickly and without much difficulty.

I know the risk is minimal, because I’ve watched my credit score like a hawk throughout the entire process and have seen no loss of credit score.

I  previously tried to explain The process in this post (and others), but questions linger.

What to do?

The answer is obvious. This calls for a flowchart! And one with not many boxes!

I’ve included links to my previous posts and others from around the blogosphere below so you have the best resources possible along the way.

So without further ado I present

Manufactured spending 101, flowchart edition.

securedownload (1)

 

1. Link to Bluebird Application.

2. Vanilla Reloads:  Why they are great.  

3. How to Load Vanilla reloads onto Bluebird.

4. How to load Visa Gift Cards onto Bluebird at Walmart (gag) note if no kiosk or kiosk out of order, just go to customer service or money center and load it there with an employee.

5. How to use Blue Bird Bill Pay.

6.  See 5!

7. (No current tutorial, but its intuitive…trust me.)

8. And for god’s sake don’t forget about Amazon payments. and (tutorial)

9.  And if you are going to get one Bluebird, shouldn’t your spouse get in on the action?

(Using 2 Bluebirds and Amazon Payments you should be able to manufacture $11000 a month spending, in about 3 hours, for about $80 all in, netting you a minimum of $2000 in travel value from credit card bonuses.  Do you really make more than $640/hour***?  I don’t.)

 

***640$/hour is a conservative estimate as to the value of using manufactured spending to get credit card sign up bonuses and this is why:

1. There is almost no six card Churn who’s spending requirements cannot be met with $33,000 in three months.

2. I have never made less than 250,000 miles/points from a six card churn. (and the $2000 Assumption is based on only 200,000 miles gained.)

3. Assuming this level of manufactured spending, you should be able to meet the requirements for a six card churn for you and your spouse every three months.

4. Given that it may actually take a month and a half of manufactured spending to meet requirements, I could lower the hourly wage to $427 an hour but…

5. This ignores the fact that Miles are not taxed! ( see this post)  So at the highest marginal tax rate those miles are actually worth closer to $854/hour!

6. The money you make from the manufactured spending itself  is not included in this calculation. That’s just pure gravy.

7. Most miles are worth well more than one cent per mile, which actually increases the value of your labor conservatively by at least 50%!

Take home: there is big value to be had from manufactured spending in the miles game! It will be more than worth your time if you enjoy it.

 

 

 

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15 Responses to “Leap of Faith (Flowchart)”

  1. Nathan February 12, 2014 at 7:23 am #

    Thanks! I like the post!

    The only thing I’m confused on is the $2,000 travel value you get from $11,000 in monthly manufactured spend. Even if I use my SPG card, which I can usually get at least $.03 per point, I’m still only getting $330 in value. Nothing to sneeze at… but I like $2,000 better. :-)

    I thought it might be an annual number, but you references $640 an hour making me think you really were using it as a monthly figure.

  2. Robert February 12, 2014 at 7:31 am #

    Nathan, I think he’s referring to credit card signup bonuses.

    Doc, can you also add where Office Depot gift cards fit into this? i.e., I understand using some credit cards gets you 5x points at office supply stores, and you can buy Office Depot gift cards, and then use those to buy other gift cards. But I’m fuzzy on how that links in to the processes you outlined above.

    • Miles Dividend M.D. February 12, 2014 at 9:23 am #

      Robert,

      What you are referring to, I believe, is the fact that chase Ink cards yield 5 ultimate rewards points per dollar at office supply stores.

      This was a tremendous value when office supply stores sold 500$ vanilla reloads.

      Now they sell $1-200 visa gift cards which means the dollars spent per point earned increased by a minimum of 150%.

      This is still a great value for no fee amazon gift cards and gas cards.

      But you should get at least 2% rewards per dollar spent on manufactured spend when you are not meeting credit card bonus requirements.

      AZ

  3. Miles Dividend M.D. February 12, 2014 at 8:45 am #

    Nathan,

    Glad you like the post.

    The $2000 assumption does indeed refer to meeting Credit card sign-up bonuses.

    My goal for this post was to show just how simple (and valuable)
    manufactured spending is. But I will include some bullet points to back up this assumption later.

    1. But briefly, there is almost no six card Churn who’s spending requirements cannot be met with $33,000 in three months.

    2. I have never made less than 250,000 miles/points from a six Card churn. (the $2000 Assumption is based on 200,000 miles gained.)

    3. Assuming this level of manufactured spending, it should be able to meet requirements for a six card churn for you and your spouse each three months.

    4. Given that it will actually take a month and a half of manufactured spending to meet requirements, I could lower the hourly wage to $427 an hour but…

    5. This ignores the fact that Miles are not taxed!. So at the highest marginal tax rate those miles are actually worth closer to $854/hour!

    6. The money you make from the manufactured spending itself (i.e. The $330 you mentioned your question.) is not included in this calculation. That’s just pure gravy.

    7. Most miles are worth well more than one cent per mile, which actually increases the value of your labor conservatively by at least 50%!

    Take home: there is big value to be had from manufactured spending in the miles game! More than worth your time if you enjoy it.

    Alexi

    • Nathan February 12, 2014 at 4:12 pm #

      Thanks for the explanation Alexi! That makes sense. My wife and I regularly churn cards, but to date have had no problem meeting minimum spend. We spend a lot on a regular basis I guess… So I’ll need to adjust my strategy to maximize for just normal/bonus category spend. I might also look at this as an option to meet high spending requirements on certain cards for other perks. Elite status, Elite qualifying miles, companion passes, etc. After all, $11k a month is more than enough to get the Southwest companion pass every year.

      Thanks again!

  4. Brad @ RichmondSavers.com February 12, 2014 at 10:44 am #

    This is fantastic Alexi — thank you for posting it! I will link to this post from my site from here on out…

    A few questions:

    1) Can you give us a breakdown of your 3 hours?
    How many cards do you purchase on each trip to CVS?
    Do you go to different CVS locations?
    Do you ever purchase with two different credit cards on one trip to CVS?

    2) $11,000/month = ? Is that $2,000/month on Amazon Payments and $9,000 on Bluebird?

    3) I’m assuming your spouse has to personally visit these CVS stores as well to buy the VR cards on her credit cards?

    4) Of the ~$11k/month, how much do you use to pay bills, use to pay off these same credit cards, or use to deposit directly back to your bank? I don’t need specifics on your life, but I’m looking for a general sense of if you can load ~$4k onto each Bluebird account each month and then just pull it all back to your bank without it flagging something.

    I’ll probably think of additional questions, but that should about cover it…

    Thanks!
    Brad

    • Miles Dividend M.D. February 12, 2014 at 12:34 pm #

      Brad

      Glad you liked it.

      1. The three hours assumes three round trips to Walmart with a stop off at a drugstore to buy gift cards.

      If you have CVS near you it’s really just the time cost of three trips to CVS.

      2. My strategy is something like this.

      Trip one: go to right aid by $4000 worth of gift cards with 2 to 3 credit cards. Go to Walmart at 8:45pm load $1000 on my and my wife’s Bluebird. After 9 o’clock on the West Coast, when the bluebird day ends, load another $1000 on each.

      Trip two: at least two days later. Repeat.

      Trip three: repeat with $2000 worth of gift cards loaded 1000 onto each Bluebird at Walmart. (There’s a $5000 maximum monthly load onto Bluebird from gift cards.)

      3. $11,000 assumes $5000 on each Bluebird and $1000 Amazon payments.

      4. I am an authorized user on my wife’s CC accounts so I do all the manufactured spending.

      5. I keep my manufactured spending total less than my monthly pay, but this is just what I’m comfortable with. No reason one couldn’t do more.

      6. For simplicity sake I usually just pay back my credit card companies with my Bluebird funds. No issues yet.

      Alexi

  5. Brad @ RichmondSavers.com February 12, 2014 at 12:55 pm #

    Thanks!

    I have a CVS 1.5 miles from my house, so this is going to be rather easy…

    Wow, rookie mistake with the authorized user cards; I cannot fathom why I didn’t think about that, so sorry to waste your time.

    Do you pass the $1,000 on Amazon Payments to your wife?

  6. Miles Dividend M.D. February 13, 2014 at 1:09 am #

    Brad,,

    You’re not wasting my time I love this stuff.

    Yes on the amazon payments usually me to wife.

    Alexi

  7. David S. February 13, 2014 at 7:37 pm #

    Alexi:

    Maybe it’s because I am new at this that I wonder if I’m missing something basic…can’t you just buy $500 gift cards (Visa?) at an office supply store using the Inks and then use them everywhere, guaranteeing that you will get 5x UR’s minus the activation fee? It would be better that 2x on gas or groceries or…or…or using another card, wouldn’t it? Am I wrong? Thanks.

  8. Syed February 13, 2014 at 7:41 pm #

    Awesome post. I can’t believe I didn’t think of adding myself as an authorized user to my wife’s accounts. I was wondering how I’d get her in to CVS and walmart while taking care of our 1 year old. What a no brainer. Really loving the site.

    • Miles Dividend M.D. February 13, 2014 at 8:49 pm #

      Syed,

      You are not the first smart guy to miss this! Everything is obvious in retrospect. That’s the power of the blogosphere. We all teach each other. It’s very efficient.

      I’m very glad you like the site.

      Oh and Walmart is unnecessary if you have access to CVS/Vanilla reloads. VR can be loaded onto your bluebird via computer or smart phone. I’m all for avoiding Walmart, if at all possible!

      Alexi

      PS, thebrokeproffessional.com is nice! keep up the great work.

  9. Miles Dividend M.D. February 13, 2014 at 8:21 pm #

    David,

    Thanks for your interest.

    You can use gift cards for ordinary spending too. There are a couple of issues with using the Ink card to buy visa gift cards though.

    1. You will be unlikely to find > $200 visa cards at office supply stores. With a $6 dollar activation fee, this means you are spending almost 3% cash in order to get your 5X everywhere, (so it’s really 2X everywhere at that point, with more cash outlay.)

    2. One of the main advantages to manufacturing spend is the ability to use your credit card for expenses that can not be paid with credit cards (mortgage, student loans etc.) This is where the alchemy of the bluebird card is so important. Using visa gift cards for ordinary spend does not increase your spending (without actually increasing your spending.)

    Alexi

  10. Lisa May 9, 2014 at 5:10 pm #

    I’m new to all of this, and have been reading hours upon hours…I still have a question though. As of now, in May 2014, we can no longer buy vanilla reloads at cvs with a credit card. So we have to buy the gift cards instead, then load them into bluebird…at walmart. I read on another blog that walmart was discontinuing loading bluebird via a gift card.

    Also, am I correct that I would not be able to use an AMEX for this process? Would the citi AA work ok? Wasn’t sure if it would be considered “cash advance or cash equivalent” as referred to in the T&C.

    Thanks!

    • Miles Dividend M.D. May 10, 2014 at 6:02 am #

      Sarah,

      Thank you so much for your interest.

      You are correct that the window of opportunity appears to have closed recently for vanilla reload. With the caveat that the last time I loaded my bluebird card was a couple weeks ago, I have not heard or read anything about Walmart discontinuing swipe reloads of bluebird cards.

      Similarly, there is no stricture on using Cards to buy gift cards drugstores, grocery stores, etc. The only time that I’ve heard of people being charged to cash advance is when they purchase the card directly from a bank(I.e. purchasing a visa gift card from Chase bank with American Express code or an amex card from American Express with a non-American Express credit card.

      It’s always a good idea to set your Credit cards cash advance limit is zero to avoid any such mistakes.

      Hope that helps.

      Alexi

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