I haven’t published a post in a while, so I thought I’d close out 2016 with a few things that are on my mind at the end of the year. Expect my high level thoughts on our spending, credit cards, financial independence, and more.
Our Spending in 2016
This year has been a bit crazy with a lot of big one-time expenses, but we still managed to stay disciplined and save a good chunk of our income. The biggest new line item of the year was definitely the wedding in the summer, but I think we came out alright at hosting over 100 people at an awesome venue in downtown Seattle for under $20k. We are extremely grateful to all of the family and friends who spent their own money to join us in Seattle to celebrate!
Fortunately, we were able to have an awesome 3 week honeymoon on the other side of the world in Fiji and New Zealand for much less, thanks to a large amount of miles and points obtained from credit cards. While the business class airfare and luxury hotels only cost us a few hundred dollars out of pocket, we still managed to spend a few grand while we were there (mostly food and entertainment).
The other big one-off expense this year was my Lasik surgery which took place in November. For a little under 4 grand, I no longer have to wear contacts which is a huge quality of life improvement. They even managed to improve my vision all the way to 20/15! Certainly not the most “frugal” of expenses, but one that I would highly recommend for anyone that can reasonably afford it. I thought about writing up my experience, but Vinh of Miles Per Day already did a great write-up for the exact same place I went and our experiences were more or less the same.
Other than the big one-off expenses, we stayed pretty much in line with our 2015 spending. We refinanced our house at the beginning of the year to remove PMI and lower the interest rate, and while we’ve broken even on the costs to refinance versus the savings already, it won’t be until 2017 that we really see the mortgage category of our expenses drop. Overall travel spending was down compared to 2015, but we made a few home improvements this year in addition to regular maintenance that will offset the savings. Ignoring the wedding and Lasik, I expect our spending to be almost exactly the same as 2015 which could be a good or bad thing depending on how to look at it. I plan to do another full year expense recap in it’s own post where I can go into more detail.
Credit Card Churning Slowed Down in 2016
This year Becky and I were approved for 13 new credit cards, which may seem like a lot to the casual observer, but looks pretty low compared to the 24 new cards we got in 2015. Several of the cards were big hitters, as we both got the new Chase Sapphire Reserve and Becky got approved for the Amex Platinum 100k offer through a leaked link, but of course this also means we paid over $2,000 in annual fees this year!
All of those fees and more were offset with cash benefits given by the cards, not to mention the generous signup bonuses on top, so don’t have sticker shock just looking at the annual fee number by itself.
Overall, the signup bonuses this year totaled ~750k between various miles, points, and cash back for just over $27k required in minimum spends. As we spend well more than that each year between all of our different expenses, it was easy to meet the required spend without going out of our way to MS or anything else.
Our main goal when we started ramping up the churning was to always be meeting a minimum spend. This allows for the highest return on our regular spending as signup bonuses can often create an effective return of 15-35% on ALL spending that you put on the credit cards! Optimally, every single dollar we spend in the year would go towards a signup bonus, but with a limited number of worthwhile cards to open, this becomes extremely difficult after the first year or so of getting into the game.
The main reason for our slow-down was a combination of limited high-value opportunities and the fact that we’ve settled for 5x back being sufficient. As we’ve built up a large credit card portfolio, it’s not uncommon to be able to get 5% back on a large majority of our purchases over the course of a year. Groceries go on the Blue Cash Preferred, restaurants and fast food go on the Freedom and Discover depending on the quarter, the Ink Plus pays for our phone and internet bills, and there always seems to be a way to get 5-10% back on Amazon. Add in the smaller spending categories like department stores and gas stations that also rotate on 5x throughout the year, and there’s not a whole lot of un-bonused spend to go around.
The 750k number above only included the signup bonuses and not any of this 5x bonused spend, we actually earned closer to 1 million points this year all things considered. In that same timeframe, we’ve redeemed ~785k miles and points towards travel so I think our current pace meets our lifestyle quite well.
We’ll continue to jump on the big, high-value offers that come around, but at least for the time being, I’m not scrambling around trying to find more ways to earn miles.
The other thing that never ceases to amaze me are the various auxiliary benefits that come with having a bunch of credit cards. Hotel status and airport lounges are ones that we use often away from home, but just today Amex sent us a random complimentary gift in the mail. Not a huge deal (especially considering some people got Echo devices…), but something we definitely wouldn’t have gotten if we never got into churning.
Financial Independence is Now on Autopilot
After discovering financial independence in 2014, I dove in and read a ton of material on the subject and we were able to start investing efficiently with the goal of retiring extra early. It was a ton of fun for a while determining what asset allocation would work best for us, whether to go Traditional or Roth, whether or pay of the mortgage early or invest instead, but at the end of 2016 all of those questions have now been answered for a while.
We max out our tax-advantaged accounts each year directly from our paychecks in addition to a once per year push into our IRAs. Studies seem to show that re-balancing our asset classes too often can actually have a negative impact, so I tend to only do that once or twice a year. Our spending is under control and while there is certainly room for improvement, I think we’re pretty close to our ideal lifestyle in the present. Our opinion on that will certainly change over time, but as long as we keep lifestyle inflation in check, I don’t see any problem meeting our goal of FI by 40 or even getting there a bit early.
I’ll still continue to track our spending and look for improvements (it’s actually quite fun!), but for the most part I think we’ll be pretty hands off going forward. Paying too close attention to every dollar or every day that ticks away in this many-year journey sounds like a good way to drive ourselves insane, so I think this is a positive step.
Now we get to focus on improving ourselves, finding new hobbies to enjoy, and generally just living life to the fullest while the money stuff just ticks away in the background.
The Latest Adventure – Fitness
Up until this year, I think almost every single other year of my life I was at my prime physical condition. By that, I mean I never seemed to regress athletically and was always improving something. At some point this year I decided I wasn’t actually sure if I was stronger or faster than the Noah of years prior and that didn’t sit very well with me mentally. I’ve always been competitive in sports and many other facets of life, and I really didn’t feel comfortable going into the next few decades saying that I peaked in my mid-twenties. Regardless of whether or not I can compete athletically at an elite level, I wasn’t going to be satisfied if I didn’t at least try creating the best version of myself.
All that to say I plan to start working out and running more regularly. I’ve always found the best motivation for myself is to just sign up for an event that will challenge me and go from there. That event this time is a Spartan Race in Florida this coming June. If you’re not familiar with obstacle races like Tough Mudder, Spartan Race, or Warrior Dash, they are kind of like a running race, but with a bunch of obstacles thrown in along the way. Barb wire, cliff jumps, water, electric shocks, tall walls, monkey bars, etc.
I’ve done several Tough Mudder events in the past, but this will be my first Spartan Race. Last year, we used one of these kind of events to meet up with family somewhere away from home, run a race together, and make a fun trip out of the whole thing. Hopefully this turns into a tradition, because it’s an awesome time.
And because June is so far away, we also signed up for a huge stair climbing event in March! “The Big Climb” is a race up 69 flights of stairs in Seattle’s tallest building in the name of charity, specifically The Leukemia & Lymphoma Society. It’s happening this coming March and Becky and I both signed up as a team to run the event together. The fastest time last year was just under 8 minutes and while I don’t think I’ll be at that level in time for the race, my current goal is to get under 10.
An interesting thing with these tower climbing races is that they all have minimum fund raising goals in addition to the registration fee. After stumbling into the world of competitive tower running for a moment (they have world-wide rankings, nationals, and more! I had no idea this was a thing), I learned that these minimums are pretty common.
Anyway, if you want to donate to a good cause (The Leukemia & Lymphoma Society) and help us meet our fundraising goal, you can find our team page and more details about the event HERE.
Don’t forget that you can deduct charitable contributions on your taxes (those are coming up soon!) and this particular contribution can even be made with the credit card of your choosing. Meet your minimum spend while donating to charity, brilliant!
I’m already over 1,800 words and I haven’t even gotten to my exploits in the world of gift card arbitrage this past year. The short version is I sold less than 2015, still made some money, and the big gift card reselling “clubs” that opened this year have re-invigorated my desire to get back into the game a bit. We’ll see how much time I decide to dedicate to it going forward, but kind of like churning, I’ll probably focus on the big wins and ignore the small stuff.
I also didn’t talk about all the awesome people I met this year from the FI community at Camp Mustache and Fincon! Hopefully I get to see many of you again in the coming years.
Anyway, I hope you had an amazing 2016 like we did, thanks for reading as always, and don’t mind me plugging our stair-running team one more time:
Click Here to Help Us Meet Our Fundrasing Goals for The Leukemia & Lymphoma Society Big Climb! We’ll climb the 69 flights of stairs, you just have to click a few buttons to help out!
Cheers to 2017!