Blasting out Min Spends in Min Time

[Matt]

Due to a rare medical condition, I am unable to MS more than 1hr per week. Any longer and my left eyelid starts to twitch uncontrollably. This makes post App-O-Rama times interesting in the Saverocity household, where I recently took on a requirement of 25K+10K+10K+5K+6K+6K min spends by year end..

Money = Time


I always talk about how time is money, and should be priced in. To prove any equation, including this, you invert the equation and see if it remains valid. If my time really is limited to 1hr, can Money leverage that?

$5K spend on Crapital One Spark


This is a great bonus, often ignored by the blogging experts. $500 for $5000 min spend, and 2% on everything. So you’d earn $600. My bonus cash triggered mid first cycle, and I applied it to the balance before paying the rest down mid month. $5000 spend came from $1200ish to our quarterly charity (we donate credit card income to charity – get involved!) and $3800 to Kiva. In two transactions, the min spend is met.

In this example, its really only a $3800 spend. I intentionally timed the App to know I would have the charity expense. The $3800 transaction took probably 4-5mins to complete, and I didn’t have to leave the mancave. If you compare that to the standard alternative: buy a gift card, buy a money order, I would say that I probably saved about 40 minutes in exchange for money… I swapped float for convenience. Note that Kiva has a default risk, but risk isn’t the same as a fee.. so the fee saved works towards mitigating principal loss risk.

How to look at this


Instead of you going out to run around town like a demented hamster, you are paying a price for someone else to take the spend into the system, and return it to the float. The price you are paying here (because there is no fixed fee) is the time it takes to return to float, plus a variable fee attached to potential loss. As an equation:

• Time (walk/drive) +GC Fee+ Time (walk/drive) + MO fee = Goal
• Time (few minutes to load, few clicks to unload) + Giving up float + Possible Loss = Goal

Then let’s wipe out the possible loss in exchange in one method for the fee paid in another.

• Time (walk/drive)+Time (walk/drive)=Time (clicks to load, clicks to unload)+Float lock up

Therefore… Money=Time

Card 2 – Paying a contractor a surcharge to use credit


I’m getting some HVAC work done, sadly the cost is about $5700 including parts and labor. I really like the team who I selected to work with, so don’t want to screw them over (remember, you don’t need to screw over everyone in your quest for points and value…) I asked if they take credit cards.

They do… ! But they get charged a 2% fee.

Because the fee was 2% I figured they might not be talking Amex (my last card to hit spend on.. $10K by some date, I guess 90 days) so I checked, and offered all in one: If you take Amex, add on a surcharge to cover your loss, and we all win. 2% of $5700 is $114. Could I have been a dick and demanded this, for free, of course! But if I’m benefitting, I’m happy if they do too. I thought about this, and had considered going as high as 3%.. I wondered if I could go higher.

Of course, people with ape like avatars on Twitter called me insane… but I get that a lot.

@Saverocity don't see where time/spend is factor. it's simple math- makes sense or it doesn't: what card gives btr GUARANTEED $ reg spend.

— HK Trader (@1hktrader) October 28, 2015
​

Let’s do Maths again


$5700 is would be 11 GCs at $500 and a bit. Let’s say they are $5 each,+ 0.70 to liquidate, that’s $62.70.

Most stores won’t sell you 11 GCs in a single transaction, so that means visiting two stores, maybe on the same trip, so your 20min drive becomes 30-40 to acquire. You could liquidate in one visit, but it requires ‘the book’ which slows things down another 5 mins. All in, maybe an hour, hour 15?

• $62.70+1hr15 = $114 + 0 hrs
  • $51.30 = 1hrs15

Now.. here you might say “but Matt, I work in MCDs for $5 an hour, and if I didn’t have a $300K credit line for hardcore MS I wouldn’t be able to fly Emirates F!” which is a fair point… but you should also remember that the hour would be spent earning at 1x (in the attempt to trigger the 75K bonus) vs earning at 2x, 3x or 5x. Therefore the spread there comes into play, and that word that I may, or may not be misusing, opportunity cost.

In addition to my medical condition, I have another problem… I’ve taken on large travel ‘obligations’ in that we have may partial trips booked, and I need to get up to 420K UA pts (from 10K… a month ago) in the next month or two. So anything that takes away from earning those also hurts.

With time being limited there is a constant pull between earning a 5% (or more with the EDP card) at groceries, earning UA and meeting min spend. Sometimes, you’ve got to pay the piper, 2%, or even 3% to make it all come together…. Don’t forget though, if you are earning at a 5x rate, you can pay a 3x fee on a cross over gig (the surcharge) and still win.

That – or you have to drop everything that is really important to you, such as time with your family, or building your career or business, and keep a couple of bucks.. that’s smart.


The post Blasting out Min Spends in Min Time appeared first on Saverocity Travel.

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[HariOm]

I wholly agree on the huge value of paying the piper, e.g. that extra 1.5% or 2.5% for Plastiq or to pay property tax with credit card. To me it also seems important to fully acknowledge the Kiva default risk. While Kiva's default rate of 1.3% is admirably low, we need to recognize that in dollar terms, that equates to $7.7 million of defaults, as per the Kiva website. That's real risk.

 

[Matt]

I wholly agree on the huge value of paying the piper, e.g. that extra 1.5% or 2.5% for Plastiq or to pay property tax with credit card. To me it also seems important to fully acknowledge the Kiva default risk. While Kiva's default rate of 1.3% is admirably low, we need to recognize that in dollar terms, that equates to $7.7 million of defaults, as per the Kiva website. That's real risk.

Agreed. But kiva is also a risk that can be diversified- you aren't giving them 1 loan of $3800.

Now, the company itself could default... That's certainly a possibility.

 

[Abbazappaplant]

I, as well, am a big believer in the "They're giving me a ridiculous amount of crap and I'm going to complain about $50???" Give me a low cost butt in chair liquidation any day. I'm not rich, but I know what my time is worth.

 

[R.R.]

$5K spend on Crapital One Spark

Heh, Crapital... yet, as you say, not a totally crappy bonus on this particular card, IMO...

 

[RWC75]

Question - when you're talking float, are you talking about keeping a balance on the card for a few months, or just paying it off and floating the cash? Running a balance would add interest costs in most cases, which could quickly tilt the balance.

IMO, this is probably most viable when you're able to float the cash for that period of time.

 

[Matt]

Question - when you're talking float, are you talking about keeping a balance on the card for a few months, or just paying it off and floating the cash? Running a balance would add interest costs in most cases, which could quickly tilt the balance.

IMO, this is probably most viable when you're able to float the cash for that period of time.

Float is cash.

You shouldn't have credit in play that you can't pay off 100% in the event that your product gets stolen or locked up.

 

[ElainePDX]

Would sure like to give the "demented hamster" the boot.

@Matt do you have a sense of how long you'll be floating the $3800? Obviously it will vary, but is there an average amt of time it takes for Kiva loans to repay?

And how many micro-loans do you do per thousand?

 

[smittytabb]

Would sure like to give the "demented hamster" the boot.

Ha ha! Demented hamsters unite!

 

[Matt]

Would sure like to give the "demented hamster" the boot.

@Matt do you have a sense of how long you'll be floating the $3800? Obviously it will vary, but is there an average amt of time it takes for Kiva loans to repay?

And how many micro-loans do you do per thousand?

The repayment terms can be as short as 6 months, but I tend to just sort by duration then cherry pick (quickly...) by not having to many of the same type: eg you might find that all Ecuadorian loans are 6 months, I don't trust that... so I pick a couple, then bounce. This (doesn't completely solve, but addresses) both overexposure to a particular currency risk, industry risk, or just a nationwide 'let's go short on duration to win all the loans and then default!'.

You get paid monthly.. so you get the money back over time, it returns to the float each month. Here's my data, I have $5800 or so outstanding:

As you can see this is a good 'DURATION' of a loan in that I get the majority back up front, and then it generally peters out... this is smarter than having it level repayments, or the skew the other way around, where I'm waiting (and allowing more time for default etc) for repayments to come back in.

Duration is important.. I hope to discuss it in Vegas if I get to writing the presentation there!

Loan amount: $25 is safest, $25 is slowest to 'click'... I used to do a ton of $25s for diversification, but now with loaning higher amounts I just do $100s. I would advise starting safe.

 

[ldylwr]

How much would you suggest as a starting investment?

$500 invested $25 at a time....
$1000 invested $100 at a time or some other combination. I would like to test the waters so to speak, but want to have enough diversification to minimize loss.

 

[GettingReady]

I may look into this next year, but am currently maxed out (mentally) and already have a To Do "learning" list. It seems like it would be time consuming to pick out loans until you develop a methodology.

Having said that, I don't like loaning money let alone trying to make a return on it. We give monthly to charity and people in need. (Don't worry about tax deductions since we don't itemize and thus our giving doesn't qualify).

Whatever I might give to Kiva would be viewed as a gift, and if it was returned, could then go to help others. Doing it that way would minimize trying to pick the right loan as it wouldn't really matter.

 

[Matt]

Start with $25 loans, as many as you can afford to lose. You'll likely get the majority back, but mindset wise for the first year, think that they all are gone.

Remember that they all can default.

 

[Haley]

Or just start with one instead of everything you can afford to lose.
Matt just got home from Vegas.

$25 is a really low cost for learning and odds are you will get it back and if you don't think of it as good karma. Look for good Field Partners.

Diversity w/in a country includes diversity of Field Partners.

 

[Matt]

Or just start with one instead of everything you can afford to lose.
Matt just got home from Vegas.

$25 is a really low cost for learning and odds are you will get it back and if you don't think of it as good karma. Look for good Field Partners.

Diversity w/in a country includes diversity of Field Partners.

Isn't that the same?

Damn Vegas

 

[Jonathan.]

Hey Matt, just curious, what kind of HVAC unit you had put in for $5800? I'm getting a 16 SEER heat pump and got qoutes from 7 different companies. Cheapest I found was $6800 after power company and HVAC company rebates.

One nice bonus is that part of the rebate I'm getting is $300 discount for paying by credit card. *happy dance* And how timely as my wife just got approved for (what is probably) her final chase ink. They offered me a $100 more off for paying cash. No gracias.

 

[Jonathan.]

nm just saw your status said two mini splits. dont know much about those except they are for individual rooms? happy with how it went? There was one guy that qouted me cheaper but he was doing it 'on the side' when he worked for an hvac company. Seemed like some shady (if not illegal) activity, so im choosing to pay a few hundred more and go with a reputable company.

 

[Matt]

IIRC SEER relates to cooling, and HSPF for heating. My units were very high efficiency.. SEER was 29, HSPF 14 in one room, and a bit lower in the other.

There are several ways to implement the system, we elected to pair units, IE, one interior unit plumbed into one exterior unit for two rooms in the house. It is possible to plumb in several interior units to one exterior unit, but that loses efficiency.

Our heating bill for the year dropped considerably, and we have reclaimed more than half of the cost already, probably something in the 60% range in the first season alone. Though some of that must be attributed to the much milder winter.