As I continue to prepare financially for an extended road trip, I’m learning that I’m becoming a lot more comfortable with the idea that it is perfectly acceptable to not optimize your finances to squeeze the most dollars out of your opportunities. I’ve mentioned before that I don’t think my life purpose is to maximize my money, but this is the first time I’ve really considered leaving some real cash on the table when it is clearly offered in front of me for the taking.
Rewards Checking Account Opportunity
If I were to open a Lake Michigan Credit Union Max Checking account, I could receive over $450 per year just for having $15,000 continually deposited. My cash cushion for the road trip is probably going to be be greater than $15,000. A free $450 is certainly a meaningful amount of money to receive just for having your cash on deposit. Internet research suggests that the four online banking log in’s can be fulfilled by an aggregation tool such as Mint or Personal Capital. Internet research also suggests that the “direct deposit” requirement can be fulfilled with an automated recurring ACH.
All I’d have to do is remember to use my debit card ten times per month (Buying Lunch out? Buying Groceries? Using Laundromats??). But as of this moment, I’m not planning on doing any of that. The main reason is that I don’t know how I feel about frequently using a debit card (which has less consumer protections than a credit card) for purchases at random merchants attached to a checking account with $15,000 in it. Particularly during a nomadic period of life. This might be some paranoia.
At this juncture, I plan to keep > $15,000 cash in a 1% savings account (thus leaving $300 on the table vs. the rewards checking account option.)
I’m also drastically simplifying my credit card usage for the road trip:
Pentagon Federal Credit Union Cash Rewards. 5% Cash Back on Gas. Automatic Statement Credit.
Consumers Credit Union Cash Rebate. 3% Cash Back on Groceries (On up to $6,000 in spending per year). Automatic Statement Credit.
Navy Federal Credit Union Cash Rewards. 1.5% Cash back on Everything. Not automatic, but there is zero minimum $ amount to redeem the cash for statement credit.
Utilizing these credit cards will be a huge time saver and allow me to not have to research what card is the best card in a given moment. Plus, those temporary cash back boosters can fairly easily encourage increased spending, even if I tell myself they don’t. Anyone else guilty of this train of thought: DISCOVER has 5% cashback on Amazon this quarter. Perhaps I should look at upgrading my computer… I didn’t think I was the only one…
It admittedly doesn’t take THAT much time to research the 5% categories, and perhaps I might also throw the Discover and Chase Freedom cards in my wallet. The rotating 5% cashback categories are particularly useful the six months of the year that the “dining out” category happens to comes up. But maybe I won’t. Because it’s another thing that I don’t need to think about. And, really, as you see below, the potential cash back from the purchasing habits of a moderately frugal dude, the cash you receive for signing up for a new credit card is going to dwarf the ongoing cash back from regular spending by a rather substantial margin.
Completely Guesstimated and Probably Wildly Inaccurate Budget
I’m still lacking of any clue what an actual road trip budget might look like. I’ve very much considered NOT budgeting and just seeing how the first month goes and making adjustments as appropriate. But here is a theoretical road trip budget with the associated cash back options:
|Category||Monthly Spend||Lazy Cashback - Monthly||Optimal Cashback - Monthly||Annualized $ Left on the Table|
|Food - Restaurants||$300||$4.50||$10.50||$126|
Note: Optimal Cash back assumes using the aforementioned high-cashback gas and grocery specialty cards and a 2% cashback card for everything else, except for dining out, which is 5% for half the year and 2% for the other half of the year. An example of a readily available 2% card might be the Fidelity Visa or Citi Double Cash cards. Everyone has a different philosophy on credit card rewards, but I generally don’t bother with cards that don’t give me actual cash. I don’t want to give the impression that an extra $500 per year isn’t a meaningful amount of money to have around in your back pocket, especially when you are shutting off your main income stream. But there’s also an opportunity cost to your time. It is entirely possible that I could find myself having plenty of free time to optimize my credit card usage and what not while on the road, but at this point, I’m planning for the option that I just might have better things to do with my time.
Readers – have you willingly left some $$$ on the table in the past? Do you think I am crazy for not squeezing every dollar with the benefit of generally putting my credit card usage on auto-pilot?