S1E2: The easy shift than can 10x your points

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<v Speaker 1>One of the biggest mistakes that I see people making when it comes to travel points is putting all of their same spending onto the same credit card year after year, and that's what we're going to be talking about today that mistake and what to do about it.

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<v Speaker 1>Welcome to Points for Normal People.

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<v Speaker 1>I'm Katie and I'm here because I know that travel costs add up, especially for a family, but I believe that travel isn't just for the rich.

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<v Speaker 1>That's why, on Points for Normal People, I help you do what our family does Use everyday expenses and credit card welcome offers to supercharge your travel points so that you can pay for entire vacations every year.

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<v Speaker 1>Today we're talking about the easiest way to start earning 10 times the amount of points in a year.

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<v Speaker 1>The reason that most people aren't reaching their points earning potential is because they're not doing this.

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<v Speaker 1>Most people that I know who aren't super into points have one to two credit cards.

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<v Speaker 1>Typically, for the people that I talk to, they might have a credit card from their bank or their credit union and then they might have a credit card for their favorite airline.

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<v Speaker 1>So you have your card and you are faithfully putting all of your spending onto that card to save up your points.

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<v Speaker 1>That feels like the most responsible thing to do to stick with one to two credit cards, but it is really hard to earn enough points to cover full vacations every year if you stick with the same credit card year in and year out.

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<v Speaker 1>It just is.

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<v Speaker 1>It's a very slow way to earn points.

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<v Speaker 1>The one mindset shift that makes the biggest difference to earning enough points to cover multiple vacations each year is that, instead of putting all of your spending onto the same credit cards, you'll open multiple credit cards per year in order to earn multiple welcome offers per year.

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<v Speaker 1>This is the absolute easiest way to supercharge your points earning.

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<v Speaker 1>I know, as soon as I said multiple credit cards per year, some of you have alarm bells going off, like what about my credit score?

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<v Speaker 1>We are going to cover that in depth in the next episode.

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<v Speaker 1>I want to assure you that I absolutely take credit scores seriously.

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<v Speaker 1>We have been doing this for over a decade.

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<v Speaker 1>Our scores are still in the excellent range and since we've been doing this, we've gotten multiple mortgages and even a car loan.

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<v Speaker 1>Once you understand more about FICO scores and how they're calculated, you'll understand, like, how this can all work.

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<v Speaker 1>But again, I'll cover that in the next episode in depth.

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<v Speaker 1>Today I want to focus on why it is such a big mistake to keep putting all your spending on the same card year in and year out, and spoiler alert, one of the biggest reasons is that you can save a heck of a lot of time invested.

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<v Speaker 1>So here's an example that I came up with some numbers to illustrate this point.

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<v Speaker 1>For our example, let's use a family who spends $2,000 per month on a credit card.

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<v Speaker 1>Now, to be super clear, in order to be successful in this travel points hobby, you absolutely have to pay off your credit card bills on time and in full every month, but I will talk about that more in the next episode with credit scores.

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<v Speaker 1>So this family is spending $2,000 per month on their credit card and they're paying it off in full every month.

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<v Speaker 1>So that's going to add up to $24,000 per year.

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<v Speaker 1>Let's say this family has a Chase Sapphire Preferred card, which is a card I'm going to be talking about a lot this season.

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<v Speaker 1>The Sapphire Preferred earns one point per dollar on most categories of spending.

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<v Speaker 1>On some categories you'll earn more, like for dining, you can earn three points per dollar.

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<v Speaker 1>Let's say, in an average year, this family has earned 30,000 points from a total of $24,000 spent Now.

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<v Speaker 1>As my son often says, that's better than nothing.

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<v Speaker 1>But if, instead, this same person followed the first year of my easy points earning plan, they would have earned 10 times as many points.

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<v Speaker 1>Here's how this family would strategically open four new credit cards in the course of the year.

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<v Speaker 1>Each of these cards would include a generous welcome offer.

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<v Speaker 1>Like maybe they'd need to spend $4,000 over three months in order to earn a 75,000 point bonus.

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<v Speaker 1>These new cards would be spaced out, so basically every three months they'd be opening a new card.

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<v Speaker 1>If you're wondering, but which cards?

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<v Speaker 1>Don't worry, I've got you covered.

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<v Speaker 1>In the show notes I have a link to a super easy to follow plan.

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<v Speaker 1>It's actually a whole three-year plan to make it easy for three years.

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<v Speaker 1>But even in the first year of that plan, you would earn 310,000 points with the same spending.

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<v Speaker 1>Just by changing one factor, just by opening the additional cards, they are earning 10 times as many points.

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<v Speaker 1>That's a lot more.

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<v Speaker 1>This is the biggest bang for your buck when it comes to time invested.

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<v Speaker 1>Opening a credit card takes about five minutes to fill out the application online, and then you have to get it in the mail and then you have to set up your online account and set up autopay.

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<v Speaker 1>If you're really, really slow, all of that other stuff might take about an hour.

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<v Speaker 1>I'm going to add in an extra hour just for whatever else might happen, right?

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<v Speaker 1>So let's say it takes you two hours per card that you're opening to do all the things that you need to do, and you're doing this four times in the year, so it's going to take you eight hours.

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<v Speaker 1>Now, again, I actually think it takes less time than that, but I'm just giving the biggest, most generous numbers here.

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<v Speaker 1>Now let's say you take those points that you've earned and you use them for straight cashback.

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<v Speaker 1>This is, generally speaking, the lowest value you can get, but I'm using it as a point of comparison and, like I said in the previous episode, this is all about what you value.

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<v Speaker 1>So if you value cash back, I support you.

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<v Speaker 1>With the 30,000 points that you earned in scenario A, you would have earned $300 cash back.

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<v Speaker 1>That's what 30,000 points is generally worth.

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<v Speaker 1>If, instead, you chose scenario B and you opened four new cards and you earned 310,000 points, you now have $3,100 of cash back.

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<v Speaker 1>You've earned $2,800 more of cash back.

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<v Speaker 1>If that took you eight hours, which, remember, was our generous estimate of time.

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<v Speaker 1>If that took you eight hours to do, you're earning $350 per hour.

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<v Speaker 1>I don't know about you, but I don't earn $350 an hour doing anything else.

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<v Speaker 1>And again, that's the low end of value, because you can also transfer your points to airline and hotel partners to get even more options out of your points, which we will be discussing in future episodes.

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<v Speaker 1>And if those numbers aren't compelling to you, I don't know what will Running.

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<v Speaker 1>Those numbers are what convinced me to dive into this.

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<v Speaker 1>Now, some people might be able to open more than four credit cards per year and earn even more points, or you might be comfortable starting with fewer than four credit cards per year.

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<v Speaker 1>Anything can work.

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<v Speaker 1>But let's talk about a few times when you should think about opening a new credit card to earn a new welcome offer.

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<v Speaker 1>The most common would be for everyday spending, and then the next would be for big expected expenses.

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<v Speaker 1>So we'll talk about each of these in a little bit more detail.

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<v Speaker 1>For us, the most important time to open up a new credit card has always been for everyday spending.

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<v Speaker 1>This, in turn, has simplified our points earning decisions.

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<v Speaker 1>Remember how I mentioned that family in our example, that was spending on a Chase Sapphire Preferred card.

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<v Speaker 1>For most of their spending, they're earning one point per dollar, but in certain categories, like dining, they're earning three points per dollar.

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<v Speaker 1>If you only have one or two credit cards, these spending categories can feel very important and you want to make sure that you're getting the most out of each dollar that you're spending on your credit cards.

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<v Speaker 1>But here's one of my secrets I don't care about credit card earning categories.

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<v Speaker 1>If you really want to dive deep into this and nerd out, I have some really good resources that I can give you, but I personally don't do it.

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<v Speaker 1>I'm going to tell you that we have been all the places that we have been without caring a single bit about credit card earning categories, because in my mind, if I'm always opening a new credit card and I'm always putting my everyday spend onto that new credit card, I'm always earning way more than those bonus categories.

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<v Speaker 1>If I spend $4,000 to earn a 60,000 point bonus, I'm effectively earning 15 points per dollar spent.

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<v Speaker 1>Not only am I earning 15 points per dollar, I also save myself the trouble of having to care about how many points I'm earning on this credit card at a grocery store versus a restaurant versus on gas, I just always use my new credit card.

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<v Speaker 1>Instead of caring about bonus earning categories, we chose to establish a habit of opening a new credit card every three months for our everyday spending.

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<v Speaker 1>Beyond everyday spending, the next habit you can establish to really up your earnings is to get in the habit of thinking of opening a card when a bigger expense pops up.

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<v Speaker 1>So this could be for charitable giving.

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<v Speaker 1>If you save up your charitable giving and you do it at one time in the year, that's a great time to open a credit card.

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<v Speaker 1>This could be for taxes.

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<v Speaker 1>There's a small fee to pay taxes to the IRS with a credit card, but if you're earning a big welcome bonus, it can be worth it.

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<v Speaker 1>If you're doing a remodel or your kid needs braces, this is a great time to open a credit card.

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<v Speaker 1>Your mindset can then switch to okay, I have this big expense, which card can I open?

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<v Speaker 1>What I love about it is it really turns lemons into lemonade.

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<v Speaker 1>Now there are cards with welcome offers that require all different levels of spending.

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<v Speaker 1>You may look at some cards and think my everyday expenses are never going to help me meet this card spend, and that's fine.

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<v Speaker 1>At different points in our life, we had to ignore certain cards because we just couldn't meet the spend on them.

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<v Speaker 1>Unfortunately, or fortunately, now that I'm self-employed, we have to pay all of our taxes directly to the government, with quarterly estimated taxes.

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<v Speaker 1>My husband is also self-employed, so we find minimum spends a lot easier to meet than we used to.

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<v Speaker 1>We also have to pay our health insurance out of pocket, and we can pay that with a credit card, so for us, meeting minimum spends happens to be easier now than it used to be.

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<v Speaker 1>But regardless of our monthly budget overall, it was a simple mindset shift that we made back in 2011 that has allowed us to amass millions of points.

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<v Speaker 1>We simply open credit cards with good welcome offers as often as we can meet a minimum spend requirement Again.

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<v Speaker 1>Next episode, we will dive into how you can do this while also keeping a strong credit score, but it's that mindset shift of regularly opening new credit cards with good welcome offers that I want to soak into your brain for this episode.

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<v Speaker 1>So what are your action steps today?

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<v Speaker 1>First, I want you to get a sense of what the typical monthly expenses are that you're putting onto a credit card, so you have a good sense of your baseline for what minimum spend you can meet.

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<v Speaker 1>We don't ever want to spend more just to meet a minimum spend, like spend unnecessarily.

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<v Speaker 1>We don't want to do that.

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<v Speaker 1>We want to work within our regular budget.

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<v Speaker 1>Next, I encourage you to take a minute and just jot down the bigger expected expenses that you have during the course of a year and when they are due.

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<v Speaker 1>These are different for everyone.

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<v Speaker 1>Some counties you can pay your property taxes with a credit card.

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<v Speaker 1>It might be income taxes, it might be charitable donations, it might be daycare.

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<v Speaker 1>I don't know what your expenses are.

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<v Speaker 1>You're going to have to brainstorm that.

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<v Speaker 1>But start a list or a note on your phone.

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<v Speaker 1>About a month before these expenses are due is a good time to be opening a new credit card so you can start thinking about that.

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<v Speaker 1>It really helps if you can anticipate it.

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<v Speaker 1>This also means that sometimes a card with a big minimum spend requirement might become within reach if you can combine your everyday expenses with a bigger one-time expense.

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<v Speaker 1>Planning this out will help you avoid the justification of overspending just to meet a bonus.

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<v Speaker 1>Next action step I'm going to tell you again to keep listening, because these first six episodes are really what's going to help you set the stage and help you have a good foundation with points knowledge.

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<v Speaker 1>Last, I have two resources linked down in the show notes for you.

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<v Speaker 1>I encourage you to take a look at them both.

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<v Speaker 1>The first one, if you didn't grab it already, is my brand new beginner's guide to travel points.

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<v Speaker 1>Along with that, I also have a link to my three-year plan.

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<v Speaker 1>Some of you are not ready to think about three years, I know, and that's fine.

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<v Speaker 1>But some of you are trying to understand what does this look like or where can I go, how can I go from here?

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<v Speaker 1>So I made a super simple plan that you can follow.

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<v Speaker 1>It's a three-year plan that earns you a million and a half points over the first three years.

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<v Speaker 1>Thanks so much for being here with me today and I can't wait to see you next time, where we'll continue to keep unlocking more secrets of travel points.

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<v Speaker 1>Thank you.