Author Topic: Estimated costs  (Read 6304 times)

Paul der Krake

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Estimated costs
« on: February 10, 2013, 09:34:10 AM »
This came in the mail yesterday. Targeted at a single male, mid-twenties.


Jamesqf

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Re: Estimated costs
« Reply #1 on: February 10, 2013, 11:18:14 AM »
Looks like the cash-back amounts from the BofA card.  They did give me the $100 for signing up, but in 3 months I've gotten about $25 back.  Part of that is because my other card is giving 5% on gas this quarter, but that's only going to add about another $5.  How the heck am I ever going to make all this free money if I don't buy stuff?

cats

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Re: Estimated costs
« Reply #2 on: February 10, 2013, 04:32:52 PM »
Reminds me of some folks I knew who were into credit card churning (signing up for a bunch of cards to get airline miles or other bonuses...catch is that each card comes with a mimimum spend requirement).  They felt this was totally reasonable because they would have spent as much as was required for the minimum spend "anyway".  I discovered that over the course of a year they had about $36k in "required" CC spending and my (private) reaction was "Who the @#$#^###$^ has $36k of expenses that can be CHARGED in a normal year?".   Unless you are doing a ton of reimbursable business travel, or you can put your mortgage payments on the credit card, I think this is a distinct sign that you are spending Too Much Money.

Paul der Krake

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Re: Estimated costs
« Reply #3 on: February 10, 2013, 05:05:54 PM »
Yes a lot of credit cards have minimum spending requirements, but I don't think think I've ever seen something really extravagant. The highest was around... $1500 in the first 3 months maybe? If you coordinate it around a big purchase it's pretty easy.

@Jamesqf, it's from BofA indeed.

Nords

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Re: Estimated costs
« Reply #4 on: February 10, 2013, 06:06:54 PM »
Reminds me of some folks I knew who were into credit card churning (signing up for a bunch of cards to get airline miles or other bonuses...catch is that each card comes with a mimimum spend requirement). 
Credit-card stoozing used to be quite profitable (although quite a bit of work) and a few members of this forum have profited nicely from it.  Many of them used to have very low spend minimums, based more on #uses/month than $$/month.

It's what the card companies want you to do-- boost your spending.  But I think we have enough spending self-awareness not to get sucked into that trick.

cats

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Re: Estimated costs
« Reply #5 on: February 10, 2013, 06:21:13 PM »
Reminds me of some folks I knew who were into credit card churning (signing up for a bunch of cards to get airline miles or other bonuses...catch is that each card comes with a mimimum spend requirement). 
Credit-card stoozing used to be quite profitable (although quite a bit of work) and a few members of this forum have profited nicely from it.  Many of them used to have very low spend minimums, based more on #uses/month than $$/month.

It's what the card companies want you to do-- boost your spending.  But I think we have enough spending self-awareness not to get sucked into that trick.

Oh, for sure, I don't disagree that they can be used quite advantageously, esp. if you're doing something like coordinating a single new card with a single big purchase, or signing up for single card with a moderate spend requirement.  I've done it myself and will probably do it again, if I come across an offer that works for me.  The specific case I was thinking of involved a couple who had signed up for enough cards over the course of the year that their total minimum spend for the year was around $36k (so, not a  single card, but multiple cards with minimum spends of $1-$5k), which struck me as being on the high side.  But they seemed to think it was a totally normal/average level of spending and were planning to do the same or more in the next year, which is what made me think of it when I saw the OP...the idea that you really have to be spending a lot for many of these deals/offers/bonuses to be as "good" as some folks (or institutions) would lead you to believe.

Khao

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Re: Estimated costs
« Reply #6 on: February 11, 2013, 07:40:58 AM »
It depends on how much they can get in cashback or rewards for spending that 36k. If they can get 5-10k of rewards, that would be well worth it in my opinion. If it's closer to 1k~2k, then I'm not sure it's worth all the trouble. I don't have a clear number, but I'm sure my girlfriend and I use close to 15k~20k on our credit cards (combined) each year by paying groceries + gas + bills (not all of them can be put on the CC) + clothes + travel + whatever else.

Angelfishtitan

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Re: Estimated costs
« Reply #7 on: February 11, 2013, 02:25:22 PM »
Plus if you know what you are doing with credit card churning, you don't actually need to spend $36K. There are plenty of methods to hit your credit card while in reality just transferring money around and things like that. That or you stick with "Get $XXX after your first purchase!", then you only got to charge a buck for a few hundred dollars.

Phoebe

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Re: Estimated costs
« Reply #8 on: February 11, 2013, 02:43:32 PM »
$175 for dining out and another $175 for entertainment?  There's $350/month down the drain.

Khao

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Re: Estimated costs
« Reply #9 on: February 11, 2013, 02:55:20 PM »
$175 for dining out and another $175 for entertainment?  There's $350/month down the drain.

That's about our budget for dining out and entertainment as well, and even after budgeting a ton and cutting in a lot of places, I would never consider this wasted and wouldn't accept changing our budget to remove dining out and entertainment. These are things in life that we enjoy too much to let go completely.

AccidentalMiser

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Re: Estimated costs
« Reply #10 on: February 11, 2013, 03:47:46 PM »
I use the Costco American Express for everything under the sun.  We get 3% back on gas, 2% on groceries and 1% on other stuff.  Covers my Costco membership and puts a few hundred bucks back in my pocket at the end of the year (since my biggest expenses are gas and groceries.)  Works for us but we never, NEVER carry a balance.  It may not be the absolute best card in the world but I don't want to ding my credit by opening another CC account.

mpbaker22

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Re: Estimated costs
« Reply #11 on: February 12, 2013, 09:16:10 AM »
$175 for dining out and another $175 for entertainment?  There's $350/month down the drain.

I spend $175 dining out and $175 for entertainment and $300 for groceries.  Except my dining out and entertainment budgets are the same, and dining out rolls into my food budget ;)

I used to spend $300 on food and $200 on gasoline.  Now, I'm down to about $250 and $70, but again that $250 includes dining out which is usually my 'entertainment' with friends.  I'm not sure what drug store purchases are, and I don't know what single 20s male is gardening?  What's in those recurring payments? - Cable ($100), Phone ($100), Internet ($50), utilities ($100).  I'm taking the most extreme I can think of, and I'm no where near the $525.

Jamesqf

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Re: Estimated costs
« Reply #12 on: February 12, 2013, 12:17:40 PM »
[ What's in those recurring payments? - Cable ($100), Phone ($100), Internet ($50), utilities ($100).

  Cable (TV - I have cable internet) - $0.00
  Phone - $7.00  (Actually $20.33 for 90 days)
  Internet - $29.99
  Utilities $40.23 for electric last month, plus about $10/month trash

So $77.22 for me vs $350 for typical single male?  Not gonna make big bucks on the cash back, I'm afraid :-(

mpbaker22

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Re: Estimated costs
« Reply #13 on: February 12, 2013, 01:14:17 PM »
[ What's in those recurring payments? - Cable ($100), Phone ($100), Internet ($50), utilities ($100).

  Cable (TV - I have cable internet) - $0.00
  Phone - $7.00  (Actually $20.33 for 90 days)
  Internet - $29.99
  Utilities $40.23 for electric last month, plus about $10/month trash

So $77.22 for me vs $350 for typical single male?  Not gonna make big bucks on the cash back, I'm afraid :-(
That's what I was trying to get at.  I don't know where their numbers are even coming from.  I couldn't find $525 in that category, try as I might.  My expenses are
Phone - $37 (I have a smartphone)
Utilities (including internet) ~ $50 (I pay 7 months rent per year, and my roommate pays utilities, and it works out about even.)

I was trying to imagine the most expensive way to buy those things in order to reach $525, and I couldn't do it.

Paul der Krake

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Re: Estimated costs
« Reply #14 on: February 12, 2013, 01:20:56 PM »
Large bundle with Internet + Cable TV (with HBO & showtime) + home landline = $200
Cellphone = $100 (Unlimited from major carrier + data plan)
Gym membership = $75
Car insurance = $100
Mass transit pass = $50

This is probably more common than most of us think.


Midwest

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Re: Estimated costs
« Reply #15 on: February 12, 2013, 02:09:58 PM »
I put a roof and siding (paid for by insurance) on a BOA rewards card.  We also pay the majority of our bills with the card which is then paid off every month.

If you're going to spend the money regardless, I think picking a good rewards card is an excellent way to make some extra cash.

Obviously not spending saves you even more :).

Midwest
« Last Edit: February 14, 2013, 06:15:00 AM by Midwest »

the fixer

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Re: Estimated costs
« Reply #16 on: February 13, 2013, 04:52:02 PM »
I was curious and wanted to see if this was even a reasonable anti-mustachian budget for someone in their 20s, or if BofA is subtly encouraging people to get into credit card debt.

Add up all those expenses and you get $1800/month. But because we're being anti-mustachian this person has a car payment and probably some other debt like student loans, say $800/month total? (to be honest I have no idea how much a student loan payment typically is) Now for an ounce of sanity, assume basic mainstream financial advice: housing costs 30% of after-tax income and 10% is saved. This means you'd have to have $4333/month take-home pay to afford those expenses, roughly $70-80k annual income before taxes. That's kind of high when compared with the whole country, but BofA might consider this their target market for their rewards cards. I was making that much in the DC area starting in my late twenties; MMM was doing much better.

...and we've profiled the typical anti-mustachian complainypants who's solidly middle to upper-middle class but still feels like they can't get ahead.