Cheap Living: Show Me the Money
I just got my Credit Card Rewards rebate check in the mail for the year… It was a whopping $53.71! I feel like I put so many purchases on the credit card throughout the year, and every year I anticipate a nice rebate check and every year I’m disappointed when I get it.
My wife and I have two credit cards. I have my own that I started before we were married. It’s a CitiBank MasterCard that earns rewards on one percent of all purchases. As this was my first credit card, I wanted something that allowed me to earn rewards on everything and didn’t limit me to certain categories like travel or gas. I thought this was ideal as I never had a credit card before and I wasn’t sure exactly how I would use it.
Our other credit card is a joint Costco and American Express “True Earnings” card. We share this account. I love the Costco card because there is no annual fee as your $50 annual Costco membership doubles as the card fee. This card has sweet rewards, too: three percent cash back on gas and restaurants, two percent cash back on travel, and one percent on everything else.
The problem is that we don’t utilize the credit cards to take full advantage of the benefits they offer. When I first got my CitiBank card, I didn’t know how I was going to use it. We pay our bills and mortgage with cash right after payday, and typically there wasn’t a whole lot of liquidity after that. Then we would use the credit card to pay for things like groceries, gas, and leisure activities like going out to dinner or seeing a concert. Now we both make more money and there is more room for maneuvering.
But I would still always use my CitiBank card to keep track of how I was spending. I would only use it when I had to – if I had cash I would always pay with cash. This caused my end of year rewards to be very low. My wife would primarily use the American Express card, but her alone using the card doesn’t take full advantage of the rewards.
I, being an extreme cheapskate, have always thought that I will spend the money I have first before I start using credit so we can live within our means. How do you stay out of debt? Don’t spend money you don’t have, that’s how. My wife and I have only used the credit cards when we had to. I would try to keep that credit card balance as low as possible so when payday came and I had to pay the balance off, it didn’t cut too much into our cash for the next cycle. Now I’m throwing that whole idea out the window…
I have devised a plan for us to fully utilize the American Express card’s excellent rewards. I call this plan “Show me the Money.” I came up with this title completely on my own – I have never heard this phrase before. Thanks to improvements in income over time we now have more liquidity and room to maneuver with our cash than we did first starting out. Although we will still pay the mortgage and bills with cash, we will use the American Express card for almost everything else. This includes gas, groceries, going out to eat, and all other leisure activities. When we take a trip, we’ll buy the plane tickets with the credit card instead of using cash. I’ve been itching for a new laptop; when I buy it I’ll use the credit card instead of cash. And then at the end of each month, we’ll pay the balance of the credit card with all of the cash we would have used.
For larger purchases, such as plane tickets or a new laptop, we will still follow the same rules: don’t spend money you don’t have. I won’t buy the laptop until I have enough cash. Once I have saved up enough cash, I’ll buy the laptop with the credit card and pay it off immediately with the cash we saved.
Under our new regime, all of our gas and going out to eat will earn the three percent rewards the card provides. When we buy plane tickets to visit my parents in Florida, we’ll put the tickets on the card to earn the two percent travel rewards. And those items added to the one percent rewards on everything else should give us a nice fat rebate check next year.
That means that for now I’ll be retiring use of the CitiBank MasterCard on items like gas and restaurants to fully utilize the American Express card’s rewards. We (and by “we” I mean “I”) will keep close tabs on the online statement for the card, and when we start to get close to our reserve of actual cash, we will curb our spending so we don’t get ourselves into a hole. Then at each payday, we’ll pay off the balance with cash. Not only will we maximize our rewards, we will also bolster our credit much faster.
There are even more avenues to explore if this experiment is a success. If we can control our spending as effectively as I envision, we can try putting everything on the credit card. And by everything, I mean the mortgage, the bills, all of our regular spending – everything. Now that’s some serious rewards.
I will need to fight off the urge to jump off a nearby bridge when I look at the credit card statement and see such a huge balance, but I can take comfort in the fact that I can open up our online banking site and see the cash right there to pay the credit card balance off. We’ll see if this actually works.
Wish me luck!
