FIRE’d, frugal greetings to all my millionaire readers. (Hi Mom, Josh, and Miguel!) Okay, as most of you already know, I’m bat-guano crazy. Once my mind gets going on something, there’s no stopping it. In January my mind began to percolate on how to fund $2,000 to our son’s Coverdell educational savings account. Since we’re “retired” for now and living on a fixed income of $43,500, we don’t have lots of extra money just waiting to be invested. How could we get our hands on $2,000 without working, stealing, or dancing for tips?
Suddenly in a moment of clarity, it came to me. Instead of earning money in a traditional manner, I decided to reach out and grab some of the low-hanging, monetary fruit that’s all around us. No, I’m not talking about a magic money tree. I’m talking about the various bonuses offered by banks, credit unions, and credit card companies. Instead of walking past their free money offers, I decided to grab every piece of face-level, monetary fruit that I could get my hands on.
It started last spring when I received an offer in the mail from a credit union (see doctored photo above). It offered a $25 credit if I spent $500 on my seldom-used credit card. Usually, I’d throw such junk mail in the trash and forget about the offer. However, this time my reptilian, travel-hacking mind sensed an opportunity:
- I could buy a $500 gift card for $4.95 to complete the spending requirement.
- Then, I could convert the $500 gift card to a $500 money order for 69¢.
- From there, I’d deposit the money order to my checking account, and use its bill-pay service to pay the credit card bill.
- The bottom line: $25 cash-back bonus – $5.64 of fees ($4.95 + 69¢) = $19.36 for low-hanging fruit (aka, free money).
Naturally, this was an offer that I couldn’t refuse; it might have been the easiest $19 I ever made. Even better, there was more low-hanging fruit to be had. When I was in the process of canceling a credit card, the service rep offered me a $100 credit if I spent $1,000 on the card. A thousand bucks? No problem! I took the offer, bought two $500 gift cards, flipped them to money orders, deposited them to my checking account, and promptly paid my fictitious $1,000 credit card bill. The math: $100 credit – $11.28 (fee above * 2) = $88.72 of free money. (Do you see what I’m doing here?)
Our goal for 2017 was to generate at least $2,000 of monetary rewards so that we could fund our son’s Coverdell educational savings account at Vanguard. We accomplished our goals through the use of: six cash-back credit cards with sign-up bonuses, three credit union sign-up bonuses, and one credit card spending bonus. Here’s how we did it:
Six Cash-back Credit Cards = $1,776
In January we each applied for three credit cards offering various bonuses. Unsurprisingly, we were approved for all six cards. (I’d prefer not to name the cards, but I usually sign up for my cards here.) Here are the details on the three cards we opened:
- Card #1 offered a $500 bonus (with 2% cash back) after spending $4,500. After fees, we each generated $545 of free money from this card. Total = $1,090.
- Card #2 offered a $250 bonus (with 1% cash back) after spending $5,000. There is another $250 bonus after spending $10,000 within 12 months of opening the card. (We’ll start chipping away at that bonus in a few months.) This resulted in $243 of free money after fees. Total = $486
- Card #3 yielded a $100 bonus (with 1% cash back) after spending a whopping $500. Total = $200
All three of these cards had cash-back bonuses (of at least 1%) that covered the cost of purchasing gift cards. ($500 gift cards bought at $4.95 result in a fee of .99% ($4.95 / $500). That means that the 1% cash back covers the cost of buying the gift card. Did you get that?) The only other fee involved was the 69¢ cost of buying money orders.
Three Sign-up Bonuses at Credit Union = $135
Last spring we went to a Jacksonville Suns (now the Jumbo Shrimp) baseball game with our Cub Scout pack. We had a great time , and, better yet, we got to camp out on the field after the game. During a trip to the concession stand, there was a promotional table for a well-known military credit union. I spoke with a friendly representative and learned that I could join the credit union even though I had never served in the military. She took my contact information and called me a few weeks later. She intentionally delayed signing us up so that we could qualify for four $50 sign-up bonuses. One bonus went to a custodial account for Eduardito, and Edwina and I scooped up the other three bonuses. Since $5 had to remain in each account, we were able to get $45 from our three accounts (2 individual and 1 joint). The math: $45 * 3 = $135
One Spending Bonus on Credit Card = $94
Last December I received the following offer from my credit union: “Spend $500 on your credit card before December 31st and receive a $100 statement credit.” If you’ve read the post this far, you already know exactly what I did, right? Yes, that’s correct: credit card → gift card → money order → checking account → bill pay back to credit card. Once again my total fees on this maneuver were $5.64 ($4.95 + 69¢). The bottom line math: $100 – $6 = $94.
Here’s a table with the grand total for my visual learners:
There you go, that’s how we saved $2,000 to fund our son’s Coverdell educational savings account for 2017. Sure, it was a little unorthodox, but it wasn’t hard to do. Now that we’re aware of the abundance of low-hanging monetary fruit out there, we look at our “junk” mail in a different light. Many times there’s gold in your junk mail. Are you throwing gold away by not looking over your junk mail? I look forward to your comments and questions.
Yours in FIRE’d Frugality,
|Health Savings Account: We use Elements Financial to access commission-free, low-cost Vanguard ETFs at TD Ameritrade.