Updated: 4/29/2021
Credit Cards
Disclaimer
WARNING
GETTING CREDIT CARDS IS ONLY WORTH IT IF YOU PAY OFF THE FULL BALANCE EACH MONTH. CARRYING ANY SORT OF BALANCE WHATSOEVER MAKES THE CREDIT CARD COST YOU MONEY INSTEAD OF SAVING YOU SOME.
I use autopay for all my credit cards and I highly recommend you do the same. I also only spend money I currently have. I check my checking account often to make sure I don’t spend what I don’t have. Getting multiple cards to optimize your spending isn’t worth it if you have a difficult time managing and keeping track of all your cards.
On the Subject of Too Many Cards
- Having too many cards with annual fees can kill any returns you might gain. Be sure to analyze your spending and potential credit card usage carefully when considering cards with annual fees. For example, certain Capital One cards and Amex Cards have really good returns for travel purchases but large annual fees. When you travel, you only use one credit card at a time. You either accrue points with the Capital One or Amex card. Not both at the same time. Therefore having both of them would be a waste. That example is obvious. A better example would be a card (Capital One Savor) with an annual fee of 95 dollars that pays back 4% at restaurants and a card (Capital One Savor One) that pays back 3% at restaurants with no fee. In order for the Savor card (the one with the annual fee) to be better than the Savor One (no fee), you would have to spend more than $9,500 a year on restaurants! .03 x 9,500 = 285
(.04 x 9,500) – 95 = 285
The math checks out! Now, how much is 9,500 a year on restaurants? Well, if you eat out twice a week, that’s $91.35 per meal! If you eat out every day of the year, that’s $26.03 per meal! Twice a day every day of the year?? Yup, $13.01 per meal. So, if you’re constantly buying food for others, wining and dining clients, or high-class eating is your life, I understand why the Savor card might be for you. But for most people, the cards with annual fees are simply not worth it, especially if you will be following along with this guide. If you are able to find 3-4 no annual fee cards to help you earn 3-5% back in your largest spending categories, it makes no sense to get a card with an annual fee! - Closing cards can hurt your credit. A large part of your credit score is based on your credit utilization which is, what percentage of your credit is being used? If you have a credit card balance of 200 and a max limit of 1,000, then your utilization is 20%. So, having some cards open with unused credit can help pad your utilization rate. In addition, closing cards with long lines of established credit can hurt your credit score. Source Source 2 Source 3 Source 4 Source 5 Source 6
- Does having too many credit cards open hurt your credit? Short answer: no. Long answer, maybe a little? Most of the sources above say no, one source says “common sense says yeahhhh”. So if you want to take that one piece of anecdotal evidence and use that as a reason to not open 50 credit cards, by all means, seems rational. I do know that some credit card agencies will prevent you from opening too many cards too quickly. There is a 5/24 rule where they won’t give you a card if you opened 5 new cards within the last 24 months.
- Opening a credit card will ding your credit temporarily. Exactly as the point says. When you open a new card, your credit will take a small hit but will recover quickly. If you plan on buying a new car, a house, or have iffy credit with a credit check coming up, don’t open a new card. Wait until after the check to open a new card. Also, this is a reason to not open a lot of cards at the same time. Having all of them hit your credit at the same time might make you unqualified for a card you would have otherwise have been qualified for.
How to Personalize Your Min Max
- Categorize spending (i.e. eating out, groceries, shopping, etc.)
- Look at the categories above $3,500 spent annually
- Find the best cards for each category
Example: Restaurants
In 2019, I spent over $5,000 eating out. I googled: “best credit cards restaurants” and found a few websites with lists of good cards for eating out. I looked at those cards and compared the benefits of each. One card offered 4% back on restaurants but had a $95 annual fee. Another card offered 3% back on restaurants but had no annual fee. If I expect to spend $5,500 on restaurants next year, then I can do out the math and figure out which card is best for me.
(5,500 x .04) – 95 = 125
5,500 x .03 = 165
Therefore, the card which pays 3% back looks like it is the best for me, however, there is another very key consideration.
How does the card pay you back?
Currently on the market, there are many cards which return 3% or even more for restaurants, all without annual fees. However, many of these cards do not give cash back, but rather give points. Amex cards give you Amex points, the Uber card gives cashback only for Uber purchases, etc. etc. If you would use Amex points because you travel a lot and know how to use those Amex points effectively, then an Amex card would probably be best.
I do not travel much, so accruing points and miles wouldn’t be worth it for me. For me, I prefer cashback. If you also prefer cashback, make sure you check to see that the card gives cashback and not some weird point system which you can only use on select items you don’t purchase anyways.
The reason I said to only try to find cards for expense categories over $3,500 annually is because it’s not really worth it to do for anything under that. At 3% back and $3,000 of expenses, you only save $90. You shouldn’t spend a lot of time and hassle to open a credit card to only save a little bit of money per year. In addition, you don’t want to have too many credit cards.
Last note: signing bonuses are very powerful. Can be a source of “free money” every once in a while. Again, you can’t open more than 5 cards in 24 months. But, opening a card every year or two to collect 100-200 dollars from multibillion-dollar companies that specialize in profiting off of the poor won’t hurt anyone, would it?
Article on categorizing spending: https://www.nerdwallet.com/blog/finance/tracking-your-monthly-expenses/
I use http://mint.com for tracking my spending and categorizing all my expenses. I check it every week or two, go through all my expenses, and then categorize them using the labels available.
Restaurant Card: Capital One Savor One. $200 sign-up bonus, 3% back on dining, entertainment, phone/cable, internet subscriptions, 2% back for groceries, no annual fee, and no foreign transactions. Also, the phone/cable and internet subscription stuff is weird. It isn’t advertised as receiving 3% back, but it does. And also, only some of them count, not others. My Patreon subscription and podcast hosting service are covered sometimes, sometimes not. Some other random internet subscriptions seem to be covered but I’m having a hard time finding a pattern. Regardless, it’s a pleasant surprise and something you can test out when figuring out what card to use for what subscription. If you do choose to get this card, please use my referral link: https://capital.one/3aPFT30
UPDATE: The Savor One card is one of my favorite cards now. I’ve used it for 14 months. Counting the sign up bonus (mine was only 150 back then), my average returns are 2.84%. Not counting the signup bonus, it is 1.51%.
Restaurant Card 2: (4/29/2021 Update) Hi. Decided to look at the current state of credit cards and found this pretty crazy card so I figured I’d add it. I actually plan on getting it soon for the signing and return bonuses. Chase Freedom Flex. $200 signing bonus if you spend $500 in 3 months, 5% on rotating categories, 5% on travel booked through their platform (which is Expedia), 3% on dining, 3% on drugstores, 3 months of free doordash, and 5% back on Lyft until March 2022.
Restaurant Card 3: Costco Card. If you have a Costco Membership already, or you plan to get one, then this is the card to get. 4% on gas, 3% on restaurants and travel, 2% back on Costco, no foreign transaction fee. The membership for Costco costs $60, so this card is only worth if you plan to have a membership.
Restaurant Card 4: Amex Gold Card. Okay, so this one is only worth it if
1. you spend a lot of money
and
2. you would get a lot of value out of the Amex points you accrue.
The card has an annual fee of $250, but you earn 4% on restaurants and supermarkets, 3% on flights, $10 dollars a month for specific eating establishments, $100 per year for flight fees like airplane meals and checked bags.
One thing to note is that a lot of shops and restaurants do not take Amex card, so take that into consideration.
Cash Card: debit card linked to cash app. free and easy to get, no credit history required. Has rotating bonuses: $1 off coffee shops (this includes buying only food from a coffee shop too. this bonus works no matter the charge i.e. $2 coffee will only cost $1. while a lot of other bonuses have rotated in and out, this one has remained ever since I got the card many months ago), 15% doordash (this one is pretty new, not sure how long it will last), $1 off in n out, 5% off whole foods, 10% off chipotle, and $1 off Panera
Update: as of now, it seems the benefits for the Cash card are rotating. The coffee benefit is set to expire in 4 days and I do not know what I will get in it’s place. As of 12/29/2019, the benefits are: $1 off coffee, 15% off doordash, $5 off one Wish purchase, 10% off Nike, $5 off one Grocery Store purchase, 10% off blaze pizza, 5% off CVS, 10% off wingstop, 10% off chipotle, 10% off subway, and $3 off Cinemark. As of now, these still seem like incredible benefits and it makes the card very worth it to get. All you have to do is check the app every week or so and use the bonuses when they come up.
Update: As of 4/29/2021 the bonuses are: 15% off DoorDash and Shake Shack, 5% off Burger King, Sam’s Club online purchases, GOAT, McDonald’s, Chick-fil-a, Domino’s, Playstation Network, and Twitch, and earn 10% returns from any restaurant in Bitcoin.
Amazon Prime Credit Card: only possible if you have Prime. 5% back on all Amazon and whole foods purchases. If you buy a lot of things with Prime, this card is a no brainer. Also get 5% back on Amazon Fresh, the grocery store delivery service, which is pretty great too. No annual fee, no foreign transaction fee.
The regular Amazon (non-prime) credit card gives 3% back on Amazon and whole foods, still pretty worth if you shop there a lot.
REI Credit Card: 5% back at REI (on top of your REI rebate), $100 if you use your REI card within 60 days. No brainer if you shop REI even a little. Also, if you shop REI, become a member to receive 10% back. Definitely worth it.
Other Department Store Cards: There are many department store cards like Target, Macy’s, and Microcenter. If you shop at those places a lot, then yeah, consider getting a card there.
So those are some of the cards I use currently. There are probably better cards for stuff like groceries at places other than whole foods or amazon fresh, gasoline, travel, and maybe some other stuff, but for me and how I live my life, these are optimal. Feel free to tell me what cards you use and why.
If you say fuck it and are lazy: Get the Citi double cash back card. If you only want to get one card and only use one card and don’t give a fuck about free money, get this card. It’s a 2% back on EVERYTHING, no signing bonus.
Investing
Stocks: don’t invest in stocks individually, unless you do it for a living (and even then, probably still don’t do it because you’re probably not maximizing your returns lol). Invest in ETFs and Index Funds. Those have historically received the highest returns. The golden standards are the S&P500 and the Nasdaq 100, tickers SPY and QQQ. You can also invest in other nations, developing nations, and so on. There are also ETFs and index funds which focus on growth in other nations. Those can be pretty good to diversify. Lastly, if you think you are wicked smart or are cool waiting for a longer play, you can try to invest a little more narrowly in a sector. Think cybersecurity will be the future? There is an ETF for that lol. But again, whenever you invest narrowly, you are pretty much saying that you think you know better than the smartest people in the world with the best tools, best educations, and insider knowledge. So yeah, hate to break it, but you aren’t shit compared to the institutions in place. Diversify, invest in the overall market, and you’ll receive the best returns you probably can.
Oh and if I get a message or comment saying “but my dad, friend, uncle, I got 50% returns on this one stock because big brainz”, I’ll say congratz, even an idiot can pull a slot machine lever and get lucky.
Update: (4/29/2021) I have been full-time trading in the market for almost a year now. Spending over 50 hours a week doing so. Reading voraciously, spending all my free time and weekends to learn as much as I possibly can. Creating models, running test, and spending a lot of money on expensive datasets, tools, and information. I would have made more money this whole time if I bought the S&P Index. I would have earned a 17.4% return (and that’s using numbers from Sept 2nd, the literal day before a 2 month correction). In contrast, given all my hard work, effort, education, and brilliance, I somehow am DOWN 5%, not counting the $905 dollars I spent on data, information, and tools.
Real Estate: (Update 4/29/2021) okay, so I don’t have enough money to directly participate in the real estate arena, so this isn’t that. However, I have found a way to invest in real estate indirectly through a third party. They promise 8-12% annual returns, which is pretty solid, and have very low fees. So far I’ve used them for 23.5 months and my compounded annual growth rate thus far is 8.97%. This is on the lower side of what they are promising, but I do have a growth preference which might mean I need to wait for the investments to scale. Last not, the last 10 months have been absolutely insane for real estate. I’m a little disappointed this isn’t making more money given how insanely hot the market is, but this is probably because they are making apartments, which have been struggling recently. Once COVID is over, we might see a return to cities which could help this portfolio. Investing with them is a good way to diversify your investments outside of just the stock market while still earning solid returns. The service I use is called Fundrise, but feel free to look around for others you like or prefer. If you do want to use them, please use my referral code http://fundrise.com/r/rpp832
Bonds: lol I’m pretty sure this is a dead way to invest for most people
Crypto: I do not recommend it. This isn’t something you can sit on and forget. You need to have high-level knowledge about the overall market, economy, technology, and politics to get this one right. I do trade crypto, but again, 50 hours a week of work, paid information, years of experience, and help from others. If you don’t do that and you still are fiending to invest in crypto, buy very small amounts, 1-2% of your portfolio total, or a crypto etf. By, 1-2%, I mean, if you have $10,000 the most you should but would be $100 of ethereum and $100 of bitcoin. I know it might not seem like a lot and you’ll fomo hard, but trust someone who knows more than you and probably every single person you know unless you are friends with literal portfolio managers at top hedge funds.