The Other Half

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I got a very interesting response in the comments section of my post “philosophy of miles.”

Reader Mark shared his perspective on the miles game as a working-class individual living in a rural area who endeavors to collect miles as well.

He expressed frustration with the lack of a working-class perspective in the blogosphere, and a lack of understanding of the challenges facing this group of miles game players.

His comment is worth reading and I would encourage you to check it out.

What follows is my attempt (as an admittedly privileged individual) to imagine what my miles game strategy would be if my salary were near the poverty line, and I lived in a rural environment.

This is purely a thought exercise, so please correct me on any mistakes I make out of my lack of real-world experience, or 1%er arrogance.

Step one: Evaluate my credit score. 

I would check my free FAKO scores on creditsesame.com and creditkarma.com, as well as pull my free annual credit report.

If my credit score was above 700, there were no major errors on my credit report, and I was not planning a major loan application in the next couple of years I would proceed to step 2.

If my credit score was under 700, I would focus on raising my credit score first. This would benefit me not only in my ability to play the miles game in the future, but also in terms of gaining future access to capital, and cheap loans for housing, and business opportunities.

Step two: Build up some financial reserves.

I would not consider playing the miles game until I had a couple of months (minimum) living expenses saved up.

Travel is a luxury, but a rainy day fund is a necessity.

Furthermore, manufactured spending does come with the risk of a temporary loss of access to your money. You should always be able to get it back, but the money leveraged in manufactured spending must always be something you can afford to be without for a few months. The rainy day fund would give me this crucial cushion.

Now obviously with my yearly salary of $20,000 a year, saving money would be incredibly difficult.

But miles game skills could be useful here, too.

I would probably start by applying for a cashback credit card and putting all the spending I could on it.

If my take home was $20,000, and I wasn’t saving any money, then if I put every cent of my $20,000 on a 5% cashback card, I would be able to harvest $1000 at the end of the year. Not chump change.

Step three: Eliminate all high interest debt.

The miles game only works if you do not carry any credit card debt, otherwise the value’s just not there.

Step four: Research my miles habitat.

I would visit every drugstore, gas station, and grocery store in my area to find out what gift cards were available.

If there are CVS drugstores with Vanilla Reloads, score! I can now manufacture as much spending as needed without ever visiting a Walmart. I would simply order a Bluebird Card by mail, Load it up with vanilla reloads, and pay my bills from my Bluebird account.

If not and there is a store selling the Green Dot MoneyPaks, I would order a GoBank card, or an Account Now card, or a RushCard, and manufacture spend by Buying Green Dot MoneyPacks and loading them electronically onto my chosen card and paying my bills from that card account.

Since my margin is so low, I would always offset the activation fee on the reload cards buy buying a proportion of them with a cashback card.

watch-the-colonies-of-african-penguins-in-their-natural-habitat-at-boulders-beach-in-cape-town-south-africa-theres-also-an-excellent-place-for-swimming-nearby

The Miles Game Player’s habitat is as cruel as it is beautiful…

Step five: I would focus on applying for cards with the most value for economy travel.

The Southwest cards (business and personal) with a companion pass come to mind, as does the British Airways card which has some incredibly cheap short distance fares due to its distance-based award chart.

Step six: Low hanging fruit.

I would set up an Amazon Payments accounts for both me and my wife and manufacture $ 1-2000 every month for free using this method of spending.

Step seven: Take a hard and honest look at my own financial situation. 

Am I high interest debt free?

Am I socking away enough money for my retirement?

Am I saving any money?

Am I taking advantage of the fact that my low tax marginal rate means that any investment income I make will not be taxed at all?

Is the miles game where I want to continue focusing my energy? Or would I be better off switching my priorities temporarily to cutting my spending further, and accumulating some wealth via the cashback game, and investment?

If I wished to proceed, then I would simply rinse, churn, and repeat.  If I wasn’t sure, I’d look into the early retirement game.

So what do you think? Is this realistic? Have I overlooked any challenges?  Am I being a condescending classist?

If you are lower income, does the strategy seem realistic?

What have I missed? What can you add?  Don’t hold back, I can take it.

Your comments, as always, are appreciated.

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6 Responses to “The Other Half”

  1. Bob January 20, 2014 at 11:10 am #

    Do you ever wonder if your obsession with this game is detrimental for you overall? If you put this much time into your craft, you could be the next Bob Jarvik.

    You have the luxury of enjoying what you do and not really having to worry about finances ever, even if you made some mistakes along the way (which you won’t). Even if you paid cash for all your vacations forever, that would have zero effect on your bottom line. Meanwhile, time, your only finite asset, continues to tick away. It’d be different if you didn’t like your job, but you don’t. You are more than likely never going to retire, maybe scale back your active practice. Which you could do now if you really wanted to. Stop worrying about early retirement, you’re basically already there!

    So why not make a real difference instead? You already have the credentials and the background. Your peers are inventing the next medical breakthrough while you’re running to Walmart. You don’t have to completely give it up, but you are probably way, way overdoing it.

    • Miles Dividend M.D. January 20, 2014 at 8:17 pm #

      Bob,

      These are fair questions, but I feel they reveal more about your values than mine.

      The miles game and pursuit of early retirement, have not really affected my work life in any measurable way. I still work the same number of hours per week, if not more as my practice is growing.

      What pursuing the miles game, and early retirement, and blogging, have taken their toll on, is my golf game. I used to pound balls four or five nights a week, now I do this instead.

      You’re right to point out that I’m very fortunate that I love what I do. But you’re wrong to assume that financial decisions that I make are irrelevant to my financial future. There are plenty of people who make more wages than I do who are in debt because they spend too much.(Conversely there are plenty of people who make much less than I do Who have already reached financial independence by my age because they have shown more spending discipline.)

      You are right, I very well may not retire when I reach financial independence. I love my work. I love helping people. And most of all I love my relationships with patients. But this is not really the point of financial independence. For more on this, please see my article “the point.”

      As to my ability to become the next Jarvik, it seems to me that you are projecting your own aspirations onto me. While some people are dogged in their pursuit of success or progress, that’s just not who I am. Pretending that that is what I want would be mere pretense. For more on this please see my post entitled “The fork in the road.”

      One final point. Your underlying message seems to be that my pursuing these interests has made me a worse doctor.

      Here is a surprising and unintended consequence of my pursuit of these endeavors. I feel it is made me a better doctor. I’m more interested in my patients as human beings. And my technical skills are undiminished.

      In any case, thank you for your comments, they have certainly been food for thought!

      Keep em coming!

      AZ

  2. Bob January 21, 2014 at 12:20 pm #

    Ok, I get that you may not aspire to be the next Jarvik. And I agree that your financial decisions do affect your financial future. But on both fronts you may still be skewed.

    The problem with the illusory “financial independence” as most people aspire to is it’s defined as you don’t have to work if you don’t want to. But you don’t have that problem, you WANT to work. So by aiming for a world where you don’t have to work, you are probably OVERsaving. Yes, there is such a thing as oversaving. Remember, if you get hit by a bus tomorrow, or develop terminal cancer, you can’t take that nest egg with you to the grave. Obviously, we’re ignoring family expenses in the event of catastrophe as those should already be insured against. Essentially, you are already financially independent. Not that you can sit on a beach forever, but that all your expenses are covered and you’re spending your time how you want to spend it.

    You were probably better off practicing golf 4-5 nights a week. After all, isn’t that what you would be doing if you were “financially independent”? In fact, it’s good exercise. It might even save you medical expenses down the road or increase your earning capacity.

    Yes obviously higher earners than you file for bankruptcy, and younger savers than you retire on $5000 on a year living minimally. But going golfing or planning vacations I can assure you will never affect your bottom line. Unless you downward spiral into living above your means, you won’t have any issues.

    You seem to downplay something like being the next Jarvik. But a lot of times medical discoveries are complete serendipity. You say you love your work and you love helping people. What if you could develop your work and help 1 billion people?

  3. Miles Dividend M.D. January 21, 2014 at 10:23 pm #

    Bob,

    I have no idea what you do for a living. I don’t know what your philosophy is. I don’t know what your talents are.

    But if there’s one thing I’m 100% confident about, it is that I know more about my own happiness than you do. Happiness is after all a subjective judgment. And, let’s face it I am the subject.

    I’ve written before about The risk of early mortality and how it affects The philosophy of early retirement.

    Please see my post “carpe diem”

    But this is where you’re just going to have to take my word on faith: since kicking up my savings percentage and pursuing these hobbies, I’ve never been happier.

    If I die tomorrow, I will die a happier man than I would have had I died before I started all this.

    So in this specific example, I find the argument that I am over saving to be entirely unconvincing.

    If my choices do not make sense for you, so be it.

    I think it would be more informative for to you share the details of your own life, experiences you have had, the regrets that you have, And wisdom you have gained, than than for you to speculate about my life.

    (though if you want to keep going down this path, no problem, I’l continue to publish your comments.)

    Honestly. And without anger.

    The floor is yours.

    Alexi

  4. Bob January 22, 2014 at 2:15 pm #

    But there is such a thing as oversaving. And therefore, there is a chance you may be oversaving. If not now, then maybe at some point in the future.
    The question is, how do you know if you are oversaving?

    The fact that you link saving to happiness is similar to linking spending to happiness. When people undergo ‘retail therapy’, they have a tendency to overspend. You may have a tendency to oversave!

    The interesting thing about happiness.. we (humans) are not very good at predicting what we want or knowing what makes us happy. Just because you feel happier trading the driving range for Walmart now doesn’t mean you wouldn’t feel even happier later after realizing that after you’ve already mastered the main lesson (save more spend less) other things might matter more. In personal finance terms, think diminishing returns. Maybe that’s just the natural progression of the personal finance journey.

  5. Miles Dividend M.D. January 22, 2014 at 10:19 pm #

    Bob,

    Just wrote a new post in your honor.

    Enjoy!

    AZ

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