Tuesday, November 22, 2016

Turnover Tuesdays - Update on My Miles vs. Cashback Opportunity Costs

For those who are not familiar, I started a series a while back called Turnover Tuesdays. Every Tuesday I like to highlight one item that I have resold. This will include profitable and non profitable sales. I hope that there is always something to learn.

The previous posts in the series can be found at the bottom of this post.

Miles vs. Cashback

Back in Week 47 I discussed the opportunity costs of earning miles rather than cashback.  I highly recommend reading that post as I don't want to rehash my arguments back and forth in favor of against miles or cashback.

In that post I showed that I estimated a possible increase in my account by $17,500 for 2016 based on what I had already earned and possible projections.  This is a picture of one of my accounts in Fidelity at that time.

I normally don't like to show actual numbers in my account but my roots are in the manufactured spend/miles world so I do feel the obligation to help everyone stay grounded in what they are giving up when they earn points.  I've probably earned about half a million points (and used a bit more than that) between sign up bonuses and spending bonuses but cashback has always been my preference.

As Shawn of Miles to Memories has said before, reselling isn't manufactured spending, it's a business that requires a lot of spending and you can earn a lot of points.  

For retirement savings purposes I now had to start depositing into two separate accounts within Fidelity.  Both are still in Fidelity.

Remember, that all of the money being deposited into these accounts is from credit card points (including sign up bonuses of which I don't think I had any cash ones this year) and shopping portal cashback.  You can see that the money in Fidelity has been increasing at a breakneck speed.

The $17,500 I estimated included $2,500 from Chase Ink.  These accounts do not include that money since I in fact used those points for travel (I do travel everyone once in a while, I might as well get more than $0.01 per point out of them).  I also have another $1,000 from Bank of America on the way in, over $650 still in Discover, over $350 from American Express simply cashback.  That's another $4,000 to be added to this total.

So besides those $4,000, there is an increase of $8,000 in one account and almost $10,000 in the other account (you can see that the second one only starts in April in anticipation of taxes).  It also happens to correspond to when my Discover doubling came through.

So $18,000 increase in Fidelity in one year along with another $2,000 on the way and another $2,500 of points that I could have cashed out but I didn't.  Let's call it $20,000.

$20,000 and the year isn't even over yet!  That makes a significant impact on my retirement fund.  That's just an extra $20,000 of income besides reselling profit.

How Did I Do It?

The major answer is Discover.  The Discover card double cashback match for the first year is the most lucrative promotion a reseller can take part of as far as I know. A very significant percentage of my cashback comes from the Discover promotion.  That's because I use Discover Deals liberally which is a minimum of 5% cashback at places like Walmart, Macy's (sometimes other portals can be better at Macy's), Kohl's (same thing as Macy's) and many others.  That 5% cashback turns into 10%.  10% is nothing to sneeze at.

If you don't have a Discover card (or if you are finished with your first year and want a second one), you can sign up with my link and we will both get $50 which will get doubled for both of us.  You see what I did there ;)

Next Year and Going Forward

I don't think I will be able to earn close to this going forward for a number of reasons.  There is a limit to how many Discover cards you can get, I think.  Even if there is no limit, at some point Discover is likely to take away the double promotion.

Even if they never take it away, I still won't earn as much.  I earned over $4,000 from the insane Discover Apple Pay promotion (from 2 cards) when Apple Pay launched and that won't be replicated.  That's a lot of money

Also, Best Buy was offering 5% cashback through Discover Deals last year during Q4 and it included iPads and Apple Watches for a while.  They have dropped Best Buy for a long time.  Staples is also gone from Discover.

Also, shopping portals have gotten a bit worse for me.  It used to be that Shop at Home would pay out 110% relative to any other shopping portal if they were lower.  I used this liberally to earn about $500 monthly for about half a year.  They stopped this promotion so my portal earnings have been more varied and lower.

In addition, I've earned over 110,000 from the Citi ATT card which would have been another $600 but I'll take the 3x TYPs.  That's a trend I hope to continue.

The bottom line is that I earned enough cashback to make a difference in my life.  I don't know what the future holds but I would love to continue earning these numbers though I don't see it continuing.

Week 64 - The Buy Box
Week 65 - Amazon Restrictions and the Future of Selling on Amazon
Week 66 - Fun with Inventory Reimbursements
Week 67 - Q4 Storage Fees
Week 68 - Start Your Own Listings
Week 69 - A Long Tail Sale and Calculating Storage Fees
Week 70  - Prices Always Come Back Except When They Don't
Week 71 - Past Performance is No Guarantee of Future Results
Week 72 - Automation Beyond Amazon
Week 73 - Some Quick Holiday Tips