Andy Hough

Maxing My Credit Card Cash Back

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If you have been reading the blog for a while you have probably noticed that I have a cash back category in my income statements each month. The amount varies but it isn’t unusual for me to make $50 or more in cash back. This amount comes from both cash back credit cards and online cash back shopping portals. Some may think that cash back isn’t worth the hassle. With interest rates for savings being in the 1% range getting 1% to 15% cash back on purchases you’re going to make anyway is a great deal. Plus, it isn’t really that much of a hassle to get cash back.

Although, I am doing pretty good at earning cash back I think I can do even better. Obviously, I don’t want to just increase my spending to earn more cash back as that would eliminate any benefit from the extra cash back. There are some strategies I can implement to increase my cash back earnings that don’t require me to increase my overall spending. First, I’m going to detail how I currently earn cash back.

Discover Card – This card earns 5% cashback on a rotating set of categories each quarter. They also have occasional promotions where they will offer 2% cash back on certain days. Black Friday was a 2% bonus day and allowed me to earn over $60 in cash back. If you make a purchase outside of the bonus categories you receive 0.25% cash back on your first $3000 in purchases and 1% on purchases after that. Purchases that get 5% cashback do not count towards your $3000 in purchases.

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When There’s More Month than Money – $100 Cash Giveaway

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Running out of money before the end of the month is a situation many people find themselves in. There are several things you can when there isn’t enough money at the end of the month.

Prioritize Your Bills

If you don’t have enough money to pay all of your bills then you should pay the most important ones first. The two most important things are food and shelter. It should be obvious that you pay your rent or buy groceries before you pay your credit card bill.

Sell Your Stuff

If you have anything of value worth selling then you should do so. This can provide you with the money needed to get through a short term financial squeeze.

Borrow Money

If you have family or friends that are willing to lend you a hand then you should consider this option. Do not take out a payday loan as that will most likely ultimately lead to you being in even worse financial straits. You could also consider checking out Activehours.com to get a loan. They are the sponsor of this giveaway. Their aim is to compete against payday loan companies by providing loans with no fees or interest. Instead they ask for voluntary donations. It is an interesting idea, but I haven’t been able to check out the site myself since it is blocked on the library’s internet.

Assess Your Finances

You need to determine what caused you to run out of money before the end of the month. Was it a one-time thing due to numerous unexpected expenses or is it likely to be a repeating thing. The above steps won’t be much help if you repeatedly run out of money. If you are repeatedly running out of money you need to either increase your income or reduce your expenses or do some combination of both.

Of course, it is easier to say that you should increase your income or reduce your expenses than it is to actually do it. Reading a book like, The Total Money Makeover, can get you started on improving your expenses. You can also get lots of ideas on how to reduce your expenses and find alternative sources of income here at Tight Fisted Miser. Plus, there are lots of other personal finance blogs with helpful advice.

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November 2012 Safe Withdrawal Rate – 86.22%

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If you have been reading the blog for a while you may remember that I used to track my monthly investment income. The idea was that once I got my monthly investment income to $1000 a month I would have enough money to be financially independent. This was hypothetical investment income and I decided the numbers didn’t accurately reflect how close I was to being financially independent so I discontinued tracking my monthly investment income. If I had continued tracking I would have seen my income go way down due to various factors that resulted in me withdrawing money from my investments.

I’m now at a point where I am able to contribute to my investments. For now, my investments consist of the dividend stocks in my broker account and my Roth IRA which is currently invested in a TIPS fund. I have decided on a new way to track my progress towards financial independence. I will be tracking my safe withdrawal rate. The way I will be doing this is by tracking my trailing 12 months expenses divided by the amount of my investments.* For this first calculation I am going to take last months expenses time 12 to determine my trailing 12 months expenses. This is because I don’t think my expenses in the previous months accurately reflect my current spending since my living situation has changed dramatically this year. Eventually, the 12 months trailing expenses will be based on my actual expenses.

The generally accepted rule is that you need to get your safe withdrawal rate down to 4% in order to be able to safely retire. I am setting that as my goal. In order to reduce my safe withdrawal rate I can increase the amount I put in my investments and/or reduce my living expenses. The return on my investments will also be a factor, but if I am contributing 50% or more of my income each month it should not be that much of a factor.

My November 2012 safe withdrawal rate is 86.22%. That is obviously not a safe withdrawal rate at all. On the plus side, starting with such a big number should allow me to see measurable progress quickly.

*I’m not 100% sure this is the correct way to determine my safe withdrawal rate. If the calculation should be different, please let me know.

November Income – $2871.09

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Here is a breakdown of my income for November.

Online Income

 $467.96

Interest

$0.81

Dividends

$20.31

Cash Back

$64.36

Mystery Shopping

$61

Jobs

$2106.65

Credit Card Bonus

$150

Total

$2871.09

My income was up slightly in November. My job income went up quite a bit due to it being a three paycheck month at my attorney job and my online income went down quite a bit resulting in a very small increase in overall income.

The amount of money I’m making from my jobs doesn’t seem like enough compared to how much I’m working.  When the online income was going good, I was making a lot more money from a lot less work.  I guess that couldn’t last forever.  Since I’m mostly sleeping at the part-time job, I can’t really complain about how little it pays.  I have taken some action that will increase my overall income and am looking for ways to increase it even more.

My sources of passive and alternative income didn’t add up to much, but every little bit helps. I got a nice bonus of $150 for signing up for a new cash back credit card. I got $34.04 from Mr. Rebates which was almost all from my referrals’ purchases. It is nice to have the residual income coming in without any more effort needed on my part.

I will likely have a significant decrease in income this month.  This is because I quit my attorney job so I could move to Kansas City.  I’ve already got a new job with higher pay at a local CPA firm.  It doesn’t start until January though, and it is only for the tax season.  For now, I am picking up extra shifts at my part-time job and might have a possible 1-2 week temporary job starting next week. Once I start working at the new job my income should be even higher than it has been the last couple of months.

 

November Expenses – $1113.82

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Here is a breakdown of my expenses for November.

Household

$179.36
Entertainment

$88.71

Transportation

 $595.33

Food

$101.36
Debt $5.00
Phone

$26.81
Health

$117.25

Total

 $1113.82

My expense total for November was very good.  It looks like I will soon be able to get my expenses under $1000 a month. I did not include my vehicle purchase in the expenses.  The money I receive from selling my van should cover my car purchase and associated expenses, any money leftover will be income for December.  If the van sale doesn’t cover the car purchase and associated expenses than I will count the deficit as an expense for December.  Assuming I am able to sell the van this month.

My big expense was once again transportation. I spent well over $500 on gas in November. I’m moving to Kansas City so this expense will go way down this month.  It will be offset by having rent, but my rent will still be less than what I’ve been spending on gas.  My car insurance is due at the end of the month so the transportation category will still be my biggest expense in December.  The category should be way down in January though.

It will be difficult to meet my expense goal of $1000 this month due to moving expenses and my semi-annual car insurance bill.  I should still come close and I think I will be well set up to get my expenses under $1000 in January.