Experiments in Life Optimization (ELO)

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Travel Hack Post 2: Sapphire Preferred

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Note – Travel Hacking Update:

We are now a few months into travel hacking and have learned some more tricks along the way. Before we get into this post; however, we need to do some cleanup:

  • The Chase Sapphire Preferred 100k bonus has already gone away (luckily, we both got it before that happened). It is currently sitting at 60k which still seems pretty decent but is about $500 per card less in rewards. That is $1,000 less if you consider couples that can get two cards! Hopefully they will bring it back again soon.
  • I was able to refer my wife for the 20k referral bonus and she still got the full 100k for her card which is pretty cool.
  • The math that we used behind the value of the points was slightly incorrect because the southwest rapid reward points do not go into your chase portal. They actually get credited directly to your Southwest rapid rewards account. For this reason, it does not appear that they get the 1.25 factor that you can achieve with your chase points. That said, the redemption value is still very good because Southwest fluctuates the points required for a trip with the price of the plane tickets. If you find a trip where the price of tickets has dropped, the amount of points required for the tickets should also reflect the drop.

I am sure there are more nuances that I have left out, but that is the purpose of this series. We want to be able to share the steps as we figure them out so that you can learn with us.

Post #2: The Chase Sapphire Prefered

This post will include the very basics so that even the inexperienced travel hacker (like me) can understand the process. If you already have a good amount of experience with signing up for cards and getting the bonuses, this is probably not for you.

Our first step was taking advantage of the Chase Sapphire Preferred signup bonus.  While planning, we realized that we did not have a high enough spending rate in a normal month to allow for us both to open a card at the same time, so we started with only one card.

Note: Don’t take this for granted. You need to make sure that you have a plan on how you are going to hit the minimum spending threshold. If you don’t, then you might end up overspending your budget just to get the bonus or underspending and missing the deadline.

The easiest way to apply is to go to the chase website directly and select the card. It was a pretty simple process and I got approved instantly.  They also sent the following email:

Chase Credit Card Approval

After getting approved, we had immediate access to the Chase Online Portal and could see the card in our dashboard. It took 7 days (5 business days) for the physical card to arrive in the mail.

Setting Up Spending:

Once it arrived, we transitioned our bills and started using the Sapphire card in place of our debit cards. We were not able to pay the mortgage or power bill on the credit card without additional fees so they continue to be paid out of our checking account.

Note: If I were going to do this over again, I would try and time it so that the card arrived at the beginning of the month. That way all spending for the month would be logged in one place and not split between the Chase account and the bank account. If you use a spreadsheet or a budgeting software this should not be a big deal but it is annoying when having to make sure everything got logged into the budget.

Our statements with Chase close at the end of the month and are due the 26th of the following month. We have decided to pay it off on the 15th because that matches nicely with when our paychecks come in. The $95 fee for the card was also added to the first statement so be prepared for that in your budget.

For this card, we had some special expenses for school books, sports/ballet gear, and a new phone due to my wife jumping into a pool to save a kid while it was in her pocket. This resulted in us hitting the spend at the end of August. These were mostly pre-budgeted (except the phone) so statements were paid off in full as planned. This does remind me that I need to do a post on how we save for annual expenses.

Refer Your Spouse:

I also referred my wife in August when it looked like we were on track to hit the spend on my card. Both the bonus for my card and the referral bonus were applied to the chase account at the beginning of September when the statement had closed. This put us at over 120k in points in my account alone:

(100k bonus + 20k referral + the normal points from spending)

My wife’s card took 8 days (6 business days) to arrive after applying. She was also approved instantly. The only difference was that she used my referral link when applying. We transferred the bills over to her card and used it for September and October and received her 100k bonus at the beginning of November.

Next Steps:

At this point, we put a hold on applying for new cards because we had achieved step 1 (Sapphire bonuses). Our next step is completing the southwest companion pass for 2022 but we did not want to get the southwest travel cards early and risk cutting it too close on timing. We will cover that more in the next post because we have now applied and been approved for both the personal and business cards!!!

Oh almost forgot, we are currently ~240k in points.

Other Highlights:

Chase allows you to transfer points within the same household; however, it does not appear that the website allows you to set this up online. I had to call Chase and request ability to transfer points to my wife. It was not that big of a deal  and they were more than happy to set it up. Now, I can go online and transfer points to her any time I would like.

One surprise that we found was that I could send her points but she could not send me any. I even sent 10k in points to her account to see if that would open it up so that she could send them back. It did not. It looks like we will have to call back and set it up going the other direction too so that in the future we can send points both ways. This is just a small nuisance but is easy enough to resolve. I am just glad they can be transferred!

How to Combined Credit Card Points

Once you have it setup correctly, you should be able to click the “Combine Points” Option and that will take you to a page where you can transfer points to the other card.

Points Transfer Page

I hope this helped any newby’s like me out there!

Until Next time, continue to Choose Beta

 – Chris

Travel Hacking Photo

Travel Hacking Post 1 – The Game Plan

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We have spent the last month and a half diving into our Experiments in Life Optimization projects that were announced in July. We have made more progress in some areas than others, but nonetheless, we are still working towards the goal of figuring out the nuances.

For today’s post, I am going to focus on travel hacking including what we knew ahead of time, what we have learned so far, and what our goals are going forward. We will also utilize the framework from this post to provide progress updates over the coming months.

What Is Travel Hacking?

Travel hacking is a process where people take advantage of credit card sign-up bonuses and rewards points to minimize or even eliminate the cost of travel. The strategies range from simple (having a couple credit cards with high rewards points) to advanced (taking steeply discounted airplane trips around the world just to rack up miles). Let me be honest, if you are looking for the ultra-advanced course in travel hacking where you are optimizing down to the penny, you are in the wrong place. Our goal through this project is to identify the 80/20 rule (how to achieve 80% of the benefits with 20% of the effort).

 Our Background with Credit Cards:

This post may come off as hypocritical to many that have known us in person. We have been vocally anti-credit card in the past and to many extents still are. Early in marriage, we never signed up for credit cards because we did not want to keep track of them. Also, over time, we have known people that would transfer balances from one credit card to another in order to delay payments and play games until they could find a way to pay them off (hopefully). This kind of financial chaos and disorganization has never appealed to us. Early on, we wanted to keep it simple because our budget was extremely tight and we wanted to make sure that we had all of our expenses going to one place so that we knew exactly where we were. Now we are in a much different financial situation.

With that said, we are entering into this process with no open credit cards which, as it turns out, is a huge benefit (so long as you have a good credit score). More to come.

So, What Changed?

I would argue that on a fundamental level, nothing has changed. I still cannot imagine having 20 different credit cards to manage balances on every month and trying to figure out how much was spent.

We still enjoy keeping our finances simple. In fact, to a large degree our finances are more simple than ever due paying off all of our debt. Our utilities/Insurance/phones/etc are all setup on autopay and remain very consistent from month to month. This leaves only normal household expenses such as food/gas/clothes/etc to manage on a monthly basis. We enjoy simplicity and therefore are entering the process with a few defined rules.

Our Rules:

  • 80/20 rule – I don’t want this to be an all-consuming process. Time has value and the more time spent on this the less total value. For this reason, we are looking to get 80% of the results with 20% percent of the effort.
  • This process cannot change how we operate our life: How much we spend, where we spend, and no pre-buying for the sake of hitting a minimum spend threshold.
  • We are looking at the long-term plan so that we are not rushing. We do not have any official trips booked and are looking at 7+ months out before we do our first travel hack. This way we do not get into the position that we feel pressured into violating either of the above rules.
  • Don’t lose site of the big picture – Travel hacking is cute and it is fun think you will be able to tell your friends that you only spent $”X” to get a trip to Destination “Y”. With that said, if you become consumed in the travel hacking space and lose focus on your investments/wealth building, then you will come out behind. The amount of money saved in travel will not make up for it.

Chase 5/24:

Before you jump in and start applying for any credit cards, it is important that you develop a plan ahead of time. The reason for this is the Chase 5/24 rule. This is an unpublished but well understood rule in the travel hacking space. If someone opens 5 or more credit cards in the last 24 months, Chase will not approve new credit card applications. For more details on the information about this rule check out The Points Guy.

Do you remember where I said not having any credit cards gave us an advantage? This is the reason why. We were able to start with a clean slate on the Chase 5/24 rule. The caveat is that you need to have a decent credit score to get approved for the high value cards. Having our mortgage and paying it off consistently over the last few years is what kept our credit score up.

For transparency, here is my credit score when I started in July: 737. I will provide updates on this over time.

Why should you care about the chase 5/24?

While not all of the high value sign-up bonus cards belong to Chase, they do have many of the best ones. These should be taken into consideration when mapping out your plan. 

Where to Start:

There is a lot of literature out there and I will include the two that I referenced the most:

The Points Guy

ChooseFI Travel 101

Understand where you are currently and what your travel goals are. I can’t emphasize enough, if you struggle keeping up with your expenses or staying organized, THIS IS NOT FOR YOU.

We decided that we wanted to max out the most points possible with as little annual fees as possible (which I will break down as we go). We want to maximize our travel potential for next year and we want to focus on chase cards first so that we can get them out of the way before the 5/24 rule is exceeded.

Most of all, we want to achieve the coveted Southwest Companion Pass.

Our 3 Goals:

  1. Achieve Southwest Companion Pass as early in 2022 as possible to maximize travel potential
  2. Focus on Chase cards first so avoid 5/24 violation
  3. Max out as many points as possible but being conscious of annual fees

What is the Southwest Companion Pass?

The Southwest Companion Pass is one of the most generous travel rewards currently in existence. Once achieved, it allows the holder to take a friend for basically free (just pay a $5.60 fee) every time they fly. This benefit lasts throughout the year that the pass was received and the following year as well. If you receive the companion pass in January of 2022, then you could take a friend for free on all flights you take through the end of 2022 plus all of 2023.  This is an amazing travel perk! If you time it correctly, you can have almost 2 full years of the companion pass for as many flights as you can cram in.

The ways to earn the companion pass are as follows:

  • Fly 100 qualifying one-way flights in a calendar year
  • Earn 125,000 Rapid Rewards points in a calendar year. Qualifying points include those that you earn through revenue flights booked via Southwest; those that you earn on Southwest credit cards; and base points you earn from Rapid Rewards partners.
Southwest Companion Pass

Southwest Rapid Rewards Credit Cards

100 flights in a year requires a lot ot time and money. So, let’s focus on the second bullet point. How can we fast track the rapid rewards points? Well, there are 4 Southwest Rewards credit cards offered through Chase.

  • 3 Personal Cards
  • 1 Business Card

The catch is that you can only have one personal card. So, the best way is to pair it with the business card. Here are the current comparisons for the personal cards:

Southwest Rewards Cards

Assuming that you get one of these personal cards and the 40,000 bonus points, there is opportunity to get another 80,000 points with the Business card. This is a hang-up for most people because they think that they have to have a fancy LLC or corporation to qualify. Luckily, the business card can be applied for with much less stringent criteria. You can apply for this card even with something as simple as an Etsy Shop operating as a sole proprietorship. I will not go into all of the benefits of the Southwest Business card, but currently it comes with 80,000 points after spending $5,000 in the first 3 months.

With this, you can hit 120,000 of the 125,000 points required by earning the signing bonus for just 2 cards. If timing is done correctly, these can be achieved very early in the year. The remaining points can then be achieved through normal spending.

Obviously, the catch to this travel hack is that it is for southwest flights only. Southwest flies predominately inside of the United States, so if you are more interested in international travel, it may not be the best use of your time. For us, this is a prefect plan because we are wanting to knock out as many states and national parks as possible over the next couple of years.

Other High Value Opportunities:

Besides the companion pass, our other goal is to obtain as many points as possible while minimizing annual expenses.

I don’t want to recreate any tables for comparing credit cards when the link to The Points Guy above does a great job, but here is a quick screenshot of some top cards at the moment:

Credit Card Comparison

As can be seen above, there are several cards that return significant sign-up bonuses but there are a huge range in annual fees. For our purposes, the Chase Sapphire Preferred was the best card for the value.  

Understanding Your Monthly Spending:

While planning out cards, it is important to realize that the bonus points come after hitting a minimum spend limit within a given time frame. This is critical to understand so that you do not find yourself spending extra money just to hit the threshold. If you end up overspending, then you have lost the game. We also decided that we only wanted to focus on one card at a time so that we could keep our simplicity mindset.

Another important thing to note is that not all expenses can be paid on a credit card. For example, our mortgage and power bill cannot be paid directly by a credit card. There are third party services that will allow you to sign up  and use a credit card to pay these types of expenses, but they come with fees attached. For the purity of our requirement to not increase spending, we will not use these services and our power/mortgage will continue to be paid through our checking accounts. Everything else; however, will be transition to the card that is being used at the time.

For us this is roughly $2000/month.

This means that if a card has a $4k spend over three months we should hit after 2 months…. Math….

Timing:

Once we had this plan put together, it was obvious that we are too far away from 2022 to be starting the southwest credit cards and we would risk accidentally hitting the spend in 2021 which would be a huge penalty to the duration of the companion pass. With that said, we started this process at the end of June meaning that we needed a plan that would take us 7 months. That would get us into January for the maximum time on the pass.

Here is what we came up with, Travel Hacking Phase 1:

Card Timeline

Note: You will notice I snuck a referral bonus in there. Chase Sapphire Preferred has a referral program where you can refer a new member and get 20,000 points when they sign up. They allow this up to 100,000 points in a year! Because my wife never had the card either, I can refer her for some free points.   

Phase 1

We are calling this Phase 1 because we do not have the rest planned out yet. This allows us to learn the process and we have a 7-month plan mapped out. Hopefully, as we work out the details, we will have Phase 2 planned before we get to January of 2022.

Through Phase 1, we will have spent $458 in credit card fees and coordinated our normal monthly expenses adding up to $14,000 to receive $4,250 in Chase travel + just under 2 years of a southwest companion pass which has the potential to be worth thousands in itself depending on how much we use it.

Notes:

We will not use authorized user cards because they can actually count against the 5/24 rule for that person. For example, if I signed up for the Sapphire Preferred and set my wife up with an authorized user card, then we would both take a hit against chase 5/24 rule. On the other hand, if I sign up for the Chase Sapphire Preferred and do not get her an authorized user card then I am the only one that gets penalized against 5/24. This causes a little bit of an inconvenience but we do most of our grocery shopping together anyways and the bills will be all setup to autopay so we decided to stick with this plan.

Next Steps:

This was a review of our logic/plan as we get started in travel hacking. In the future posts we will cover:

  • The mechanics of applying for cards
  • Timing from when we signed up to when the cards arrived
  • Timing from when we hit spend limits to when the bonus points arrived
  • How the companion pass arrives and how to use
  • Any mistakes/learnings that come up
  • Linking family members in Chase Ultimate Rewards
  • Phase 2 plans once we have it sorted out

There are a lot websites and material out there. Our goal as part of the ELO project is to show you step by step how things actually work as we go through the process ourselves.  We will share the things that we felt went well but also the mistakes. All in hopes of helping you figure out how to implement this in your own life and Choose the Beta that works for you.

Until Next time, continue to Choose Beta

 – Chris

Disclaimer: At the time of this posting, we are not receiving any financial payments from any credit card companies. The views expressed on this blog are for informational and entertainment purposes only and are not intended to be a substitute for obtaining professional financial advice. We make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, or omissions in this information. All content reflects our opinion at a given time and can change as time progresses. All information should be taken as opinion and should not be misconstrued for professional or legal advice. Please do your own research.

Experiments in Life Optimization

Intro to Experiments in Life Optimization

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Fancy title, but what on earth does “Experiments in Life Optimization” Mean? Read on…

One thing that drives my wife crazy is when I make spontaneous decisions on trips or family activities. She likes to plan days or weeks in advance if we are going to do a major activity or go out of town.  I am more likely to play things by ear but she is more likely to come completely prepared.

When it comes to our financial future, however; I am actually quite opposite. Having a plan for the next steps in our journey is a requirement. My goal is to keep our path organized with milestones that phase in as our other milestones are reached so that we have a clear structure and timeline to know if we are on track and always have the next target ready so we know what goals we are aiming at.

Our Vision & Life Optimization

As part of this plan, we have various factors of financial independence built in.

Here is a glimpse at some of the items in our 5yr & 10yr goals:

    • Pay off the house
    • Achieve 4% Rule with 5 years of expenses (minimum) in the MBDR
    • Create passive income streams capable of sustaining our current lifestyle
    • There are a few more but let’s not get ahead of ourselves quite yet…

The first two items have been covered in the blog through various posts. We are targeting paying off the house this year and we have an aggressive savings strategy in place to help us achieve our FI number… To this point though, we have not yet put any attention on our passive income streams. With the house about to roll off, it is time to start kicking off some of those other projects.

What Value do We Want to Provide Here?

As we have been doing research, there are a lot of examples of people who have successfully launched side hustles. There are much fewer individuals publishing failures in side hustles (for obvious reasons). This is a significant gap. While it is good to learn from others successes, it is also beneficial to see failures. This full transparency would give you a well-rounded picture of the “Do’s and Don’ts”. For this reason, we are going to launch new page on our site that will cover the story of our side hustles as we start them up and how they perform.

This should be an interesting exercise in itself. I have no idea if any of the projects will have success and what all they will entail. We will keep everything as open and honest as possible so that you can benefit from any successes and failures that we may have. We will include any resources that we use as well as any systems that we setup to manage the processes.

Currently, all of the projects that we will be posting on the website will be our own; however, there is at least one project that we will be collaborating on with friends.

With all of that said:

Welcome to Experiments in Life Optimization (ELO)

We will stagger the launches of each project within the ELO series due to the fact that we want to give each one the right amount of time to really get launched off the ground. We will provide updates in varying detail on their status depending on where they are in the project lifecycle.

    • Developing the concept
    • Research and development
    • Drafting the strategy
    • Aligning resources
    • Launching the project
    • Tracking the results

Current Life Optimization Projects:

While we currently have dozens of projects in the cue, we are intending to announce 3 in 2021. As these projects stabilize and require less time to manage we will begin to launch others:

    1. Drop Shipping
    2. Travel Hacking
    3. Online Courses

Notice that these are not all about passive income or money generation. The intent is “Life Optimization” so we will include anything that allows you to better live a happy and fulfilled life.

Experiments in Life Optimization

Until Next time, continue to Choose Beta

 – Chris 

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DISCLAIMER

The views expressed on this blog are for informational and entertainment purposes only and are not intended to be a substitute for obtaining professional financial advice. ChooseBeta.com makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, or omissions in this information. All content reflects our opinion at a given time and can change as time progresses. All information should be taken as opinion and should not be misconstrued for professional or legal advice.