How to develop a rewards program strategy….

I have spent countless hours pondering this exact question and getting asked this question by many of my friends.  Many co-workers and friends alike are intrigued at the amount of time and “number” running that I have done to find the best cards and programs that will help me with my goals.  It is only when I start bringing up terms like “spend profile” do I get a really hard time. I hope with this post that I will be able to provide  insight on how to develop a rewards program strategy.

Understand your goals…

The first thing you have to do before you even start applying for credit cards is determining what your goals for the rewards you are trying to earn. Do you want to get cashback as your rewards? Do you want to bank frequent flyer miles or hotel points? Do you want to save points for a specific product like a big screen tv or computer? Most people choose cashback or some frequent traveller program. Most don’t try to earn points to redeem products because the redemption rates are very unfavorable and it usually easier to buy the product you want.  Be aware that each type of card has their own individual pitfalls so its best to look at the terms of the programs very closely.

Understand what you spend your money on…

After you know what you want to do with your rewards, you need to understand where you spend your money. Some credit cards give bonuses for gas or grocery purchases. It is important you understand this. I have coined the term spend profile. If you know that you spend the majority of your money towards gas and groceries, this will help you focus on cards that give more points or cashback for gas and grocery purchases.

Understand your current rewards programs…

Maybe you already focused in on a certain rewards program or you can project that you will be flying a certain airline a lot this year or you will be staying at a certain hotel chain many nights this year or maybe you already have miles or points built up with a certain rewards program. If this is the case, you may be interested in continuing to earn points in that program or taking advantage of a signup bonus to get your points to a certain balance. This will also be a factor in your decision process to determine which cards to apply for.

Have a primary and a secondary card…

Determine what your primary credit card will be. This is the card where most of your purchases will be charged to.  This will be the rewards program that you want to earn the most points in. Since there are always draw backs to rewards cards, your secondary card will be there to help reduce most of the drawbacks and can be used when certain situations are met. For example, say your primary card earns hotel points and your secondary card earns cashback, but has a feature that does not charge foreign transaction fees when you are overseas. You would use this secondary card when you travel overseas or when your primary card might not be accepted.

Next steps…

Once you understand your goals, develop your spend profile, factor in your current rewards program earnings, and determine your secondary needs, this will help focus your search on the “right” credit cards for you. These factors may not be weighted equally. It may be the case that you have 200,000 points in a certain program and you want to continue earning points with that program even though you may spend the majority of your purchases on gas and groceries. There will be compromises that you will have to make. You will have to decide which is more important to you. In my next post, I am going to discuss my specific credit card strategy and why I like the Starwoods Preferred Guest American Express card and the Schwab Invest First Visa Signature card.

The blessing and curse of student loans

I read this article on USA Today about the pressures of paying off students loans. I can certainly relate to this pressure as I have spent the majority of my extra income from the last 4 years paying off  over $50,000 in student loans years earlier than I am required. I may have made a choice to pay down those loans early, but I’d rather get rid of debt as quickly as possible.

I found a few things interesting about in this article.  First, how hard student loans are to discharge through bankruptcy. The article seemed to indicate it was easier to discharge gambling debt through bankruptcy than student loans. This doesn’t seem right to me.

The second thing I found interesting was regarding the cost of private loans. Private lenders claimed that once the law disallowed the discharge of private student loans that these loans would become cheaper. According to the article, the interest rates on private student loans have not become cheaper. I don’t know enough about the current private student loan environment, but from my own experience, as the interest rates have dropped, so to have the rates on my remaining private loans. This is probably because the interest rate on my loans are variable and tied to the market rate.

I certainly think that the government needs to take some action to give students relief from their loans especially in the current tough economic times. The banks that gave these loans out have certainly been granted billions of dollars in relief. I see no reason why students can not be granted some relief as well. The article makes an excellent point that many students can not afford to search for a job in a career related to their major because they are taking lower paying jobs to keep up with student loan payments.

The final point I’d like to make is that student loans can be both a blessing and a curse. They can help students pursue their dreams but sometimes at a fairly steep price. Looking back, I wish I had paid out of pocket for more of my college costs. Starting out with a negative net worth and mountain of debt is no fun as recent graduates are quickly coming to realize.

College graduates struggle to repay student loans –

Link of the Day: What Can Travel Teach You About The American Dream?

I saw this article on I think the concept of the “American Dream” is slowly changing for some younger people here in the States. However, for the majority of people (even I would argue the majority of young people age 22-35) the concept of owning a house, having 2.5 kids, and marrying a lawyer/doctor is still the basic idea of the “American Dream”.

My challenge to you is to think outside this concept. Think about the things you keep saying I’ll wait to do when I am retired or think about those things that you keep thinking would be “nice” to do but for some reason always get reprioritized.

Once you do this, maybe you will see your idea of the “American Dream” is not the same as what others have in mind.

What Can Travel Teach You About The American Dream?.

Game Changing News for those who collect miles and points – American Airlines One-Way Mileage Awards!!!

According to (a site I frequent for deals and news), American Airlines has just launched one-way awards. I’ve been waiting for US-airlines to allow their frequent flyer members to redeem one-way awards. Previously and on all other US airlines, if you wanted a one-way award, you would have to book the roundtrip award ticket, plan on losing half the ticket, and half the miles paid for that award. Now with American, you can get a one-way award for half the cost of the round trip. This opens up new possibilities and flexibility for me as I plan my around the world trip. Basically if I wanted to fly somewhere to Asia and Europe and do a bunch of overland travel, I could book a one-way award with American and do it without being locked into a schedule whereas with other airlines, I would have to set a return date and keep paying fees to change the return date or lose the return portion of the trip. I’m also glad to see American participates in the Starwoods Preferred Guest (SPG) program. This further validates my plan to continue to earn SPG points in an effort to maintain flexibility as far as airline partners are concerned. I might even apply for American Airlines credit cards now. » Blog Archive » AA Launches One-Way Mileage Awards!!!.

The first week of bike ownership…

To continue on with the theme of May being National Bike Month, I wanted to share some impressions and thoughts about biking after a week of enjoying my latest purchase and toy.

After a week of owning a bike and 65 miles of riding it, I’ve already learned a few things about why biking is probably going to become my primary means of staying fit. Besides the obvious reason of the fact that biking wear down my knees like running does, it has also opened up the possibility of being able to explore the twin cities from a different perspective.

I had heard that the twin cities had a large number of bike trails and when I was running around the lakes I always saw a ton of bikers out on parts of the trails. I never really thought about where those trails lead to until I round one of them last Sunday. On that Sunday ride, I made it to Hopkins, MN right along highway 169. I was able to log 30 miles and make it parts of the twin cities that I hadn’t explored when I was running around the lakes.

I’ve already started to think about what biking is going to do for me. It will let me stay outside longer and enjoy the 4-5 months out of the year where the weather is really great. It will let me explore areas of the cities from a different perspective and reach new areas that I was not aware existed. It will let have an excuse to go to my fitness club and lift weights and finally on a practical note, it will help save me money on gas because I am spending less time in my car and more time getting around by bike.

Next weekend, I plan on doing a longer bike ride to Stillwater,MN. This should be somewhere in the range of 40-50 miles round trip. I’m really looking forward to getting some exercise, enjoying the weather, and exploring where I live from a different perspective. If you get an opportunity to ride a bike, do be sure to take of advantage of it.

A link from Nomadic Matt’s travel blog – Back in Bangkok

Back in Bangkok | Nomadic Matt’s Travel Site.

Nomadic Matt is one of the blogs I subscribe to on my google reader. I’ve never been to Bangkok before and hadn’t really done any research into the city prior to reading this article. I was aware that it is considered a “haven” for backpackers, but hadn’t put much more thought into it. Needless to say, after reading this article, I defintely want to check out Bangkok at some point in time.

Seize the day and Pursue your Goals

Today, I received the unfortunate news that a friend and former colleague of mine at PwC died suddenly this past weekend.  I admit that this friend was not one of my closer friends, but when I worked at the firm, I would talk to this person nearly every day and even after I left the firm in January 2009, I still occassionally kept in contact.  My friend was only 5 years older than me. The news of this tragic event of someone 33 years old unexpectedly passing away gave me a moment to pause and reflect about things that matter.

To put it in perspective, this person never had the chance to “enjoy” their retirment savings or even most of their frequent flyer and hotel points. This person never had the opportunity not to experience what it was like to not have to work 5 days a week for 40+ hours at a time. Most importantly, this person never had the chance to pursue their goals and dreams to the fullest extent possible.

Putting this event in perspective, I had a few thoughts. Our culture is one that encourages people to work for 40-45 years and then retire and live out the rest of their lives. I have already decided that I don’t want to wait until retirement to do certain things. I have come to the realization that the activities that I am willing and want to do now as a 28 year old could be very different than what I am willing to do at 65. This is why I am doing my best to pursue my goals today instead of waiting until after I am retired to see, explore, and experience difference parts of the world….and I’m willing to do what it takes now to pursue those goals.

If you have certain goals, aspirations, and dreams, I encourage you to seize the day and  immediately pursue them. Even if it is one small step at a time. At least you will be trying to get there. You never know when your time on this earth will be up.

Good luck in the pursuit of your goals.

Another interesting Link –> Begin With a Single Step: Escape from Cubicle Hell

Begin With a Single Step: Escape from Cubicle Hell.

I just had to share and post this link. I saw this article on one of the travel blogs I subscribe to in my google reader. This guy is pretty much spot on – why should people spend the best part of their lives saving for retirement and working in an office cube? I myself want to make a change and retire from the office cube. Before making a huge transition, I do realize that there are certain things I need to take care  like  paying off loans. One of my next posts is going to be discussing how I am re-thinking retirement and life in the corporate world.
In the mean time, check out that link. Maybe you’re feeling the same way.