February 18, 2020

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Maximizing credit card rewards on a tight budget is my JAM! Honestly, it’s the only way to really be able to travel and splurge when you’re just getting by on one income.

Cashing in on credit card rewards can be super lucrative!

Check out this screenshot I just took of my rewards earned! This was all gas and groceries - I wasn’t buying Louboutins or anything.

Total earned in 2019
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Rewards Gas and Grocery
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I easily earn almost $400/year with this one credit card. (There's a $95/year fee.)

It's frigging amazing!

(Sorry for the chat screenshot. They refreshed my earning chart at the end of the year, so I had to get it through customer service to show you.)

Being a stay at home mom is hard. One of the hardest things is feeling like you have to sacrifice so much just to be with your baby.

You want to be able to give your child experiences and... well... the world. But that sure is hard to do on one income.

I know that the thought of going on vacation seems a bit distant to you right now... it’s tucked back there behind keeping up with the bills and buying groceries!

You can’t afford to go on vacation! Right?

I get it.

When I was pregnant with my second little girl, we were just getting by every month too.

Then, I hit a landslide of bonuses by stacking two credit cards. When a deal on airfare cropped up, I booked a 7 day trip to Maui, HI for three for under $1,500 all in!

No joke!

We were only making about $4,200/month at the time and would NEVER have been able to afford that trip otherwise! (From Texas, that trip should have cost $5,784!!)

I know that I can help you maximize your credit card rewards too! That could mean a few hundred dollars extra in your pocket or a crazy cheap vacation to a tropical paradise.

Either way, it’s totally possible to take incredible vacations and get a ton of benefits from your credit cards even if you are on a really tight budget.

Here’s a quick overview of what you’ll learn in this guide:

Are you ready to stop scrimping and start living?

Let’s make some memories!


Should you even get a credit card?

To answer this, I’m going to tell you a brief story.

Growing up, my folks never used credit cards. I’m not sure if they were scared of them or if it was because they knew that they had bad money habits.

Either way, my parents insisted on paying cash for everything.

You can read my full story here if you’d like, but to sum it up quickly: we were always on the verge of losing everything.

We lived paycheck to paycheck and hand to mouth. By not playing the game as it’s meant to be played, my family could never seem to outrun all of the obstacles life seemed to throw at us.

Because they only ever used cash, they had no credit. Without credit, my parents were forced to pay deposits for everything (water, gas, phone...). 

When our car broke down, they couldn’t buy another one. They just didn’t have enough cash on hand, and no one would loan them the money without credit!

They didn’t want to play the game, and so... they lost.

You see, as much as everyone is scared of credit - because of the risk of debt - it’s actually an incredibly valuable tool that you can use to get ahead.

It’s even more valuable when you’re on a tight budget. 

Let me explain:

Your credit score shows the world how trustworthy and responsible you are. Keep being trustworthy and responsible, and so many doors will start to open for you.

For example, one day my old Hyundai broke down. The engine literally vomited oil all over the road and it died. 

I was making about $300-400 a week at the time and had zero money for another car. (Yep... I was extra broke.)

But - I had amazing credit.

So, I walked into a car dealership with no money at all and out an hour or so later with keys to my new ride in hand. All I had to do was promise to come back with financing in place sometime later that week.

They literally handed me keys, asked for no money at all, and trusted me to come back and pay them at some point!

Can I tell you how awesome that felt? I literally couldn’t believe it. I half felt like I stole the thing as I drove it off the lot! Ha!

THAT is the power of credit.

So, before we get started, I need you to repeat after me.

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“I am going to pay off my credit cards regularly.
I will NEVER have a revolving balance.”

Do you hear me?

NEVER.

If you cannot commit to this, then stop reading right now.

My goal is to help you to be able to afford being a stay at home mom. I definitely don’t want you to get over your head in credit card debt.

If you’re already over your head in debt, you should be reading 5 Simple Steps to Pay Off Debt on One Income.

Once you are debt free and your savings account is at a comfortable level (learn how to grow your savings here), then, and only then, are you ready to start playing the credit card game.

Oh yes... it’s a game, and the winners reap big rewards.


Can you really vacation for free using credit card rewards?

I can totally see you sitting there wondering if this is too good to be true. It sounds too good to be true anyways.

So, let’s put it all in perspective here.

Yes, those rewards point and airline miles DO and CAN earn you free stays and free flights. Is it totally 100% free? Maybe not.

mom on vacation
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Here’s how it works in a nutshell.

Let’s say you sign up for Marriott’s Bonvoy Brilliant credit card. This is a premium card with premium benefits, mind you, but it’s just an example to show you what’s possible. (Million Mile Secrets has a great write up on this specific card here.)

If you signed up today, and met the spend threshold of $3,000 in 3 months, you’d earn 75,000 bonus points (as of this writing). Plus, you’d have a minimum of 6,000 points from your spending (2x points per dollar).

That’s 81,000 points right off the bat.

81,000 points (valued at $648 according to TPG valuation) at face value can get you:

  • 16 nights off-peak at a tier 1 hotel (Fairfield Inn, Towneplace Suites at certain locations)
  • 6 nights at a nice tier 3 hotel (Courtyard, Residence Inn in Desirable locations)
  • 2 nights at a full service hotel (Marriott, Westin)
  • 1 free night at most resorts in their portfolio

Sounds nice? Hang on... there’s more.

You see this card offers loads of benefits: one of which is a $300 annual credit towards any Marriott portfolio purchases.

Meaning you might be able to tack an extra night or three onto any of those stays. Or, you can use those credits to cover ancillary costs charged by the hotel such as resort fees, parking, and even meals.

Marriott also offers an “every fifth night free” award for Bonvoy members. So, you could book 4 nights with points, and get a fifth night free. That means your 81,000 points could very easily equal 20 free tier 1 stays if you’re careful.

Oh... one last thing, you also get automatic Gold Preferred status with the hotel chain. This comes with a slew of benefits, primarily automatic room upgrades (on availability).

That means you can get a sweet (or suite??

🤪
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resort
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Now that’s pretty neat eh? And I didn’t even discuss all the goodies you could earn by transferring those points to partner programs, airline miles, or special events.

Don’t go and leave your wallet at home just yet though. While your room might be covered, your vacation isn’t totally free.

Things like resort fees, taxes, food, parking, and transportation might still cost you money out of pocket.

Still, this is only the tip of the iceberg. This was just a simple example using just one credit card. Just imagine what some creativity could do with several cards using both points and miles!

To answer the question: Yes, rewards points can really help to make vacations a whole lot more affordable, but it’s rarely if ever totally free.


Types of Rewards Credit Cards

The first thing you’re going to need to know are what types of credit cards there are out there. There’s actually a bunch of options - most of which are targeting folks that are moving debt around or building up even more debt.

These types of credit cards include 0% interest cards, balance transfer cards, and retail cards (the type you’d pick up at Victoria’s Secret or Banana Republic)

These aren’t for you!

Do not get suckered into applying for a card that is designed to get you into debt! Tempting as they may be, it’s best to stay away.

Buying with Credit Card
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You are looking for rewards cards that offer miles, points, or cash back for your purchases.

Now, the quality of your card is going to be highly dependent on how much money you make, how much debt you have, and your credit score. Higher quality cards tend to have greater rewards and benefits, but they might also have higher annual fees.

You need to be real with yourself here, because you won’t qualify for high end cards with mediocre credit and lots of debt. There’s no point risking an inquiry on your credit for a card you know you’ll get declined for.

With some work, you CAN get there though!


Understanding Points and Miles

When I first started using credit cards, I literally thought that the “miles” I earned were actual real MILES. Like I could buy a plane ticket for the literal number of miles between point A and point B.

Just an FYI: that’s not how it works.

Whoops.

In reality, miles earned are typically redeemable for travel whereas points are usually redeemable for hotel stays or other rewards (like experiences, etc). BUT - the credit card industry is so competitive that the lines between the two is really blurry, if not totally indistinguishable.

For the sake of this post, I’m going to use the two interchangeably. 

Now, there is no set standard for how much a point or mile is worth. The Points Guy has developed a really sophisticated valuation system you can check out.

It is pretty handy to compare rewards programs apples to apples, but keep in mind that what is valuable to you might not be as valuable to the next person.

Try to think of every points system as its own separate currency. Chase Ultimate Rewards is a separate currency from American Express Points, and those are all totally different from Marriott Bonvoy points.

Like currency, many of these points systems will allow the transfer of points to either hotel points or airline miles. In return, you can even sometimes transfer airline miles to your credit card or hotel points

It’s bananas!

Excited monkey
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I made a valiant attempt to draw it all out on paper once in a vain effort to make sense of how every points system worked, how they interact with each other, and the current exchange rates. 

Then, I had a migraine and drank some wine instead.

The thing is: credit card companies WANT it to be complicated. You see, they have to offer rewards and incentives to attract customers.

The more people that open credit cards, the more money the banks make off of the insane interest rates and fees.

But! If their incentives and rewards are too easy to understand, earn, and redeem, then they risk losing money to folks that are trying to win the game.

People like you and me.

So, the learning curve is steep and the terrain is ever changing in an attempt to discourage would-be players from even trying.

Don’t worry though. There’s really only a few things we are really interested in.


What you need to know about sign up bonuses

One of the best ways to build rewards fast is by taking advantage of sign up bonuses. They look something like this:

credit card bonus promo
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Basically, if you get approved for a card with a sign up bonus and spend X amount within a certain time period, you’ll earn a nice chunk of bonus points.

Usually you’ll see spend thresholds of $2,000-$5,000 for premium cards, but you can find bonus with lower thresholds occasionally as well.

The bonuses you can earn are huge! I’ve seen bonuses worth as much as $1,000!! Usually, they are valued between $300-800, which is still a pretty nice chunk of free money if you ask me!

If you are like me though, then you’re on a strict budget. How are you going to hit that four digit spend threshold?

Here’s what you are not going to do:
  • You will not buy things that are outside of your budget.
  • You will not pull out a cash advance from your card.
  • You will not “make it work”. 

Remember: if you have to do something crazy to hit that spend threshold, don’t do it. It’s never worth getting into debt for rewards points.

Don’t force it.

That being said, even a $5,000 spend threshold over 3 months is totally doable on a modest budget. That’s less than &1,700 per month, and you probably spend more than that just trying to get by.

6 Pro Tips For Hitting Your Credit Card Bonus Threshold


1.

Pay all of your recurring bills (utilities, subscriptions, memberships, etc) with this card during the bonus time period.

2.

Buy all of your gas, groceries, and other expenses with this card. Make sure to pay the card off completely every few days so you don’t blow your budget or get behind.

3.

Ask yourself if there’s anything you’ll be needing soon from your rainy day fund. If you’ve got birthday presents to buy or contact lenses you need to order, you might as well buy them now. Pay off the balance immediately.

4.

Buy gift cards. This is a play that works well if you’re close to getting that bonus, but are also about to run out of time. You can pick up Visa gift cards with fees as low as 1% at Walmart. Then, use the cards as necessary for the following month’s budgeted spend. If you do it right, you’ll stay within budget, and still spend enough to earn your bonus.

5.

If you are renting and your landlord allows it, try to pay your rent with this credit card. Note: you may be charged a fee to do this, so make sure that the benefits outweigh the costs before swiping.

6.

In a pinch, you can sign up for Plastiq. This nifty little card allows you to pay for things like your mortgage, taxes, or car payment with your credit card. The drawback is that Plastiq will charge you 2.5% for using your credit card, so make sure to only use this method as needed to earn those big bonuses. Do the math to make sure it’s worth it. 

Keep in mind that it is extremely important to keep paying off the balance on this card as quickly as possible. You don’t need to wait for your monthly statement to make a payment!

The reason for this is that you don’t want your credit utilization going through the roof all of a sudden. That kind of sporadic activity can lower your credit score (temporarily).

It’s also important to pay things off very regularly in order to keep yourself on budget.

When all of your expenses are getting charged to one card, it’s very easy to get overwhelmed and lose track of things. Don’t be afraid to submit payments weekly or even every few days! 

 

Trouble keeping track of your rewards?

Budget better toolkit
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Grab your free Budget Better Toolkit! It has all the tools you need to get organized and stay on top of things. Designed with the busy mom in mind!


Top Strategies for Using Travel Rewards on a Budget

Travel rewards tend to fall into two categories: air miles and hotel points.

Your strategy is going to change depending on which one you choose. If you’re on a budget, you likely won’t be able to rack up points in both categories very efficiently.

Leslie over at Trips With Tykes has a great write up on some of the best rewards cards for families that could help you decide which route you want to take.

Here are 10 key strategies for maximizing your travel rewards:

1.

Opt for the biggest sign up bonus, but make sure that the value is there

Meaning don’t just jump at the biggest number of points. Some points are worth 1.25 cents each and others are worth a measly .5 cents each. Go for the biggest VALUE.

2.

Consider per dollar rewards, but only after the bonus

If you’re on a tight budget, you aren’t going to ever spend enough money on your cards to make that measly 1-2 points per dollar add up to anything. The cheapest hotel stay would still require $15,000 total spend! So, while you SHOULD look at how much is earned per dollar, you need to stay focused on that bonus.

3.

Look for ways to stack benefits

For example, Marriott Bonvoy members get every 5th night free when they book 4 consecutive nights. A favorite trick of mine is to use a card that gives me a cash credit towards stays to book 4 nights. I’ll use points for the nights that aren’t covered by the cash credit, and then get the 5th night free. Boom baby! Free 5 night stay!

4.

Stay at mid tier hotels that offer free breakfast

I almost never book rooms at full service hotels - Marriott, Hilton, W, etc. What’s the point of staying for free if you have to pay parking fees, resort fees, plus tips for the bellboys? Staying at mid tier hotels ensures that you’ll still get great service and stay in clean spacious rooms. You’ll also spend fewer points AND get free breakfast. Now, who can complain about that?

5.

Use flexible date calendars

Whether booking a flight or a room, try to be flexible with your travel dates. You can literally shave hundred of dollars off of your trip just by picking one date over another. 

6.

Cancel cards after a year ONLY if they charge a fee

Opening and closing cards too quickly can be a red flag to creditors. Also, keeping lines of credit open helps your credit utilization rate (it looks good to the credit bureaus!). So, just because you only opened a card for its bonus doesn’t mean you should close it as soon as you cash in. Leave that card open. If there’s an annual fee attached, then wait until just before the card anniversary to cancel it.

7.

Don’t transfer points unless you have to

Typically, points transfers will lose value. This isn’t always true (remember how damn complicated this can be?), but generally speaking it’s usually best to use your points within your program.

8.

Know and use ALL of your card’s benefits

Did you know there’s more to rewards cards than just the points? Everything from free concierge service, free Global Entry, and free Shoprunner accounts can be had with your card. Use these perks! They are there for you!

9.

Pick One Brand And OWN It

When it comes to rewards, it’s best to put all your eggs in one basket. Tons of points in one loyalty program helps earn you higher membership tiers and more exclusive perks. Things like free high speed internet, free room upgrades, and free breakfast are commonplace for hotel loyalty programs. Airlines offer priority boarding, discounts, and waived fees. Also, if you stick to one brand, you’ll have a deeper understanding of their program and be able to maximize your benefits.

10.

Always keep your eyes peeled for new offers

Flash limited time bonuses do happen once in a while, and you can earn sign up bonuses worth $1,000 or more! I snagged two of these babies last year, and they paid for my family's 7 day Hawaiian vacation!

 

Trouble keeping track of your rewards?

Budget better toolkit
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Grab your free Budget Better Toolkit! It has all the tools you need to get organized and stay on top of things. Designed with the busy mom in mind!

Remember, the key to success with travel rewards is all in the bonus. Cycle your cards every year or two and you’ll be traveling happily on the cheap!


Top Strategies for Using Cash Back Rewards

Cash back reward cards are a little different from their travel counterparts. They are really a lot simpler - no transfers, no valuation changes, no web of mysteries.

You just earn straight up cash back for your purchases.

My 7 top tips for maximizing your cash back rewards.
1.

Look for high sign up bonuses!

No question of value here. Some cards offer $100 sign up bonus and some offer $500. Keep your eyes peeled for the best offers, and then grab them. Cash is cash after all!

2.

Pay attention to earnings rates

Cash back cards tend to offer rewards in a wider variety of categories than travel rewards cards. This trick is to get cards with high rewards for things you already buy. For example, the American Express Blue Cash Preferred card will give you 6% back on groceries and 4% back in gas! It’s my personal favorite, and I literally earn hundreds of dollars a year from this one card alone!

3.

Never settle for less

It’s a waste of effort spending money on a cash back card with a measly 1% return per dollar. Once you’ve earned your bonus, put your spend only on cards that give you 2% cash back or more. For example, the Discover It Cash Back card gives you 5% back in rotating categories, and 1% back on everything else. BUT - at the end of your first year, they will MATCH your earnings automatically with no limit. So that’s actually 10% back in rotating categories and 2% back on everything else for your first year. Huge win!

4.

Watch out for fees

Some cash back cards will come with annual fees, and they are generally not worth paying in my opinion. (Except for the Blue Cash Preferred card! That thing is a GOLDMINE!) If you do pick up a card with an annual fee, see when the fee hits the account and figure out if you’ll be able to earn more than that per year.

5.

Have more than one card

If you’re going to earn maximum points, you’re going to need more than one cash back card. For example, if you shop on Amazon, make sure you have an Amazon Prime Rewards card so you can get 5% back online plus discounts and rewards at Whole Foods. Use the Blue Cash Preferred card for Gas and Groceries, and your Discover It cash back card for everything else. By utilizing multiple cards, you can maximize your cash back - whether you spend $5,000/month or $1,500.

6.

Pay off your cards weekly

When you use lots of credit cards, it can get pretty confusing. Make sure to pay off your cards weekly to prevent things from getting over your head. It helps to set strict rules for when each card will be used, and stick to them. That way, your spending on each card stays fairly consistent.

7.

Don't change your spending habits

Just because you get 5% back at department stores this month doesn’t mean you should go on a shopping spree at Macy’s. Remember, this is a game, and it’s designed to get you into debt. To win, you need to stay true to yourself and your budget. Choose the right card for each purchase you make, but don’t make a purchase just to fit your card.

 

Trouble keeping track of your rewards?

Budget better toolkit
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Grab your free Budget Better Toolkit! It has all the tools you need to get organized and stay on top of things. Designed with the busy mom in mind!

About Redeeming rewards for other things

Almost every rewards card will offer you alternative redemption options. You can use points to purchase experiences, dining events, clothes, or gifts. Even cash back cards will try to entice you to buy gift cards with your rewards.

Some of these things can be pretty cool, but I would caution you against alternative redemptions.

Remember: you are using credit cards to increase your credit score, travel on the cheap, and maximize the value of your dollars.

Alternative redemptions tend to not give you the most bang for your buck, tempting as they may seem.


Conclusion

Using rewards credit cards can be a lot of fun once you understand how they work. The trick to it all is to aim for the big sign on bonuses and to ALWAYS pay off your cards in full.

By building your credit with regular on time payments, you will be able to qualify for even better cards with even better perks!

Ok! It’s time for you to get stop reading and get started!

Get your FREE Budget Better Toolkit below and start living better on less. Getting organized means getting more time with your family and less time stressing and worrying! I know you can do it! I can help.

Happy travels!

Maximizing Credit Cards When You're Broke
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Stop Missing momentS.

Start Making memories!

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You deserve to BE THERE for every moment with your baby... and you CAN. Grab your free Budget Better Toolkit and take charge of your finances, so you can finally afford to stay home! 

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