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The Perplexing Case of an extra $137
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<p>[QUOTE="Matt, post: 809028, member: 1"]</p><p>Totally agree that we should spend cash last. But it gets complicated.... </p><p></p><p>After all, what happens when points are cash? Statement credits etc? What about when you can use a point to transfer to an airline OR cash it out at a penny a point?</p><p></p><p>This is where I hear the phrase, spend cash last, but often people associate that only with Travel budget. I wonder:</p><p></p><ol> <li data-xf-list-type="ol">How many people have 2.5M points who value them at 2cents each, so wouldn't cash them out at 1cent each?</li> <li data-xf-list-type="ol">How many of these people have some form of debt (mortgage, student loan etc) or obligation (not maxing out the IRA/401(k) or 529)?</li> </ol><p>These people in group 2 of the above are spending cash first, not last. They are paying bills/expenses etc from their payroll/assets and hoarding points.</p><p></p><p>The argument that you could later use them for 2 cents doesn't work for me. Because I think that if today, you don't need the points, you can cash them out at almost any rate, use the money to boost net worth, and then get more points in time for the next need. The exception being any travel you know you need to book but haven't got around to yet (IE in the next 12- 14 months or so). Beyond that, cash 'em out, and get new ones before your next trip if it is expected to be Xmonths from today, perhaps 18-20 months being a good level.</p><p>[/QUOTE]</p>
[QUOTE="Matt, post: 809028, member: 1"] Totally agree that we should spend cash last. But it gets complicated.... After all, what happens when points are cash? Statement credits etc? What about when you can use a point to transfer to an airline OR cash it out at a penny a point? This is where I hear the phrase, spend cash last, but often people associate that only with Travel budget. I wonder: [LIST=1] [*]How many people have 2.5M points who value them at 2cents each, so wouldn't cash them out at 1cent each? [*]How many of these people have some form of debt (mortgage, student loan etc) or obligation (not maxing out the IRA/401(k) or 529)? [/LIST] These people in group 2 of the above are spending cash first, not last. They are paying bills/expenses etc from their payroll/assets and hoarding points. The argument that you could later use them for 2 cents doesn't work for me. Because I think that if today, you don't need the points, you can cash them out at almost any rate, use the money to boost net worth, and then get more points in time for the next need. The exception being any travel you know you need to book but haven't got around to yet (IE in the next 12- 14 months or so). Beyond that, cash 'em out, and get new ones before your next trip if it is expected to be Xmonths from today, perhaps 18-20 months being a good level. [/QUOTE]
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