Dow 20,000

Today the Dow Jones Industrial average pushed passed 20,000 points, a new milestone.  What does this mean and should you care? 

The Dow is a stock market index collection of 30 large American companies.  The Dow was founded in 1896 by the Wall Street Journal editor Charles Dow.  The Dow’s market value is created by adding up the share price of those 30 companies and dividing them by a random number called the Dow Divisor.  These are 30 random companies that the Dow has put together, and these companies aren’t necessarily the largest companies either.  Google, for instance, isn’t a part of the Dow.

Interestingly, the 30 companies that make up the Dow are not always the same and regularly get replaced.  As this article by the Conservative Income Investor explains, the stocks the Dow Jones committee chooses to make up the index can have a huge effect on the returns calculated by the index.  In March 1939, the Dow committee decided to remove IBM from the index and replace it with AT&T.  Later in 1979, IBM re-entered the Dow Jones Index, replacing Chrysler.  From 1939 to 1979, IBM ended up being the best performing stock in the US stock exchange.  Amazingly, $1000 of IBM stock in 1939 would end up becoming $41 million in 1979!  If the Dow had kept IBM in the index, it would have pushed pas 20,000 in 1975, and not 2017!

While the Dow IS an economic indicator, it’s a pretty crappy one.  It only tracks 30 companies, and these 30 companies don’t represent the entire US stock market properly.  If you really want to get an idea of how the stock market is doing, a better metric to follow would be the S&P 500, which is made up of 500 American companies.  The Wilshire 5000 index tracks 5,000 of the largest American companies and is another good metric to follow.  This being said, financial pundits still can’t stop hyping the Dow as a market index.   

The only thing going for the Dow as an index is that it has a very long 120-year history.  I personally think that pundits refer to it because it is attached to a nice BIG number.  When you hear that the S&P 500 closed at 2,298 today, it just doesn’t sound as exciting as hearing that the Dow closed at 20,068 today.  Bigger numbers make bigger financial headlines.  Financial news makes a 100-point drop in the Dow sound scary, but it is really just a 0.5% change. 

Planet Money podcast did a great episode on why the Dow is a terrible measure of the US economy.  You can hear the short and entertaining 17-minute podcast here. 

While the Dow hit new highs today, so did the S&P 500.  And this suggests that investors see the economy improving.  New jobs are being added, unemployment is low, and consumers are confident.  Many investors believe that this could be a start of even greater stock market returns.  Other investors believe that these market highs won’t last long and that a crash is coming. 

What should you do?  Ignore the hype and stay the course.  Keep saving, keep investing, and keep pushing closer towards your own financial freedom. 

Redeeming Barclaycard Arrival+ miles towards an Airbnb stay

Earlier this month, I signed up for my second Barclaycard Arrival Plus credit card.  I explained how the sign up bonus for the same card could be churned as long as you don’t have an existing Arrival Plus or regular Arrival card.  Two weeks later, I’ve already received my sign up bonus and redeemed my miles towards $550 worth of travel!

The best thing going for the Arrival+ credit card is the big 50,000 mile sign up bonus after spending $3,000 within the first 3 months.  This card earns 2x miles on every single purchase.  The way these miles can be redeemed is only towards travel expenses of $100 or more made within the last 120 days.  Once a mileage redemption is made, you get a 5% rebate on miles redeemed.  This essentially makes the Arrival+ a 2.1% cash back travel card.  Barclaycard makes it quite a hassle to use this card long term, since minimum redemption of miles is 10,000 miles.  Doctor of Credit does a great write up here on using math to optimize redemption of these miles.  He basically concludes by saying that a normal 2% cash back credit card (such as the Citibank Double Cash card) is better to use long term than the Arrival+ card.

While the Arrival+ card’s annual fee of $89 (charged the second year) makes this a poor card to keep long term, the 50,000 mile sign up bonus is definitely worth a look.  To quickly reach minimum spending, we put a lot of big charges like car insurance ($597 for 6 months of car insurance coverage for 2 vehicles) on the credit card.  For our upcoming Japan trip, we booked an Airbnb stay in Tokyo for 4 nights for $901.  For our big group of 5 adults and 2 children, Airbnb options include excellent location, free portable wifi, clothing washer and other amenities that hotels don’t offer.  Since Airbnb stays count as travel expenses, we used our big 50,000 mile sign up bonus to save money on our Airbnb stay.  If you’ve never stayed at an Airbnb, consider signing up through my referral link here (thank you for your support!).

One of the best things about the Arrival+ card is that points earned show up immediately in your account.  Most credit card rewards points only post when the statement closes.  For the Arrival+, as soon as your credit card charge clears, points show up.  The same happens with the 50,000 sign up miles bonus.  As soon as I received it, I logged into my Arrival+ account and clicked on the “Rewards & Benefits Center.”

Then I went to “Start using my miles”

It was extremely easy to redeem my miles and I used 55,000 miles towards a $550 statement credit.  

Since Barclaycard rebates 5% of miles redeemed, I received a credit of 2,750 miles to add to my balance. 

Barclaycard makes it very easy to redeem miles towards any travel related expense, like our Airbnb booking!  Would I keep this card and pay the $89 annual fee?  Definitely not.  

Another year, another AMEX airline fee credit

One great benefit of having an American Express Platinum card or Premier Rewards Gold card is that you get an airline fee credit every calendar year.  With the Platinum card, you get $200 airline fee credit and with the Premier Rewards Gold card, you get $100 airline fee credit.

According to AMEX, eligible incidental fees include:

·                Checked baggage fees

·                Itinerary change fees

·                Phone reservation fees

·                Pet flight fees

·                Seat assignment fees

·                In-flight amenity fees (beverages, food, pillows/blankets, headphones)

·                In-flight entertainment fees (excluding wifi fees)

·                Airport lounge day passes & annual memberships 

Different airlines you can choose include: Alaska, American, US Airways, Delta, Frontier, Hawaiian, Jet Blue, Spirit, United, Southwest and AirTran.  You select an airline here; you can select a different airline every calendar year.  

In the past, I’ve used this airline credit to get a $200 Amazon gift card from my previous Platinum card ($200 Amazon gift card loophole has now been closed) and multiple Southwest Airlines gift cards from my Premier Rewards Gold card.  Since you can no longer get an Amazon gift card with the airline fee credit, I decided to get another $100 Southwest Airlines gift card with my Premier Rewards Gold card.  I closed my Platinum card last year; if I still had it, I would have used it to buy $200 worth of Southwest Airlines gift cards.

I first made sure that I had Southwest Airlines gift card purchases were still being credited by American Express.  I went to this Flyertalk thread to confirm that Southwest gift card purchases were still being credited.  Then I made sure that Southwest Airlines was selected as my airline of choice here.  Finally, I went to purchase a Southwest Airlines gift card here.

2 days after my $100 Southwest Airlines gift card purchase was charged, I received a $100 statement credit.  Woohoo! 

100,000 Ultimate Reward points with the Chase Sapphire Reserve credit card - this time for my wife!

In case you haven’t read the news on all of the credit card blogs and forums, the 100,000 point Chase Sapphire Reserve bonus offer is set to expire on January 12^th online and March 12^th in bank branch! 

When this card first came out, I was super excited and applied for it right away.  My wife wasn’t in a hurry to apply for the Sapphire Reserve because we have a nice stash of Chase points already.  However since the 100,000 sign up bonus offer is about to expire, it was time for my wife to apply ASAP!  If you want to sign up for this offer online, you need to apply by January 11^th. 

The Chase Sapphire Reserve card is hands down the best premium travel card on the market currently.  This card earns 3x points at restaurants and on travel purchases.  The card offers a lot of unique benefits including lounge access with unlimited guest access, $300 yearly travel credit, free Global Entry or TSA Precheck (up to $100 value), roadside assistance up to 4 times a year with $50 credit per incident, and much more.  See this Chase Sapphire Reserve review from Doctor of Credit for a complete rundown of benefits and features of the CSR.  The best part of this card is definitely the hot 100,000 point sign up bonus after spending $4,000 within 3 months.  This is the easiest and fastest way to earn this many Chase Ultimate Rewards points.  I would value this sign up bonus at over $1,500 value. 

The annual fee of the Chase Sapphire Reserve credit card is $450, which is quite a bit if you look only at the fee itself.  Looking deeper into the benefits, I would give this card more value than the American Express Platinum card, which also has an annual fee of $450.  Owning this card for the first year is definitely worth it.  You effectively get $600 worth of travel credit ($300 per calendar year – 2017 and 2018).  You get Global Entry, a $100 value.  You get an unbeatable 100,000 point sign up bonus.  Lounge access is also much better with the Sapphire Reserve than the Platinum card because the CSR allows unlimited guests while the Platinum card only allows the cardholder access. 

There are some reasons NOT to apply for the card.  If you have opened 5 or more credit cards from ANY bank within the last 2 years, you will likely get denied unless you get pre-approval in branch (must speak to a Chase banker) or prequalified online (you can find out after logging into the Chase website).  Chase has a new credit score tracker called Credit Journey.  Once you enroll, you can see exactly how many new credit card accounts you have had opened in the last 2 years.  I would not apply for this card if you don’t travel enough to take advantage of the $300 travel credit.  I would definitely not apply for this card if you have ANY credit card debt or don’t feel comfortable paying for a card with a $450 annual fee.  You can always wait until March 11^th to apply for the Sapphire Reserve card in a bank branch.  For us, we’d rather not talk to any Chase rep in person and get sales pitches from them.  It’s much less time consuming to apply and get approved online than drive to a local Chase bank branch.

My wife is excited to receive her Chase Sapphire Reserve card, her first card application of 2017.  It’ll be great to have $600 travel credit this year ($300 for each of us).  We are already thinking about our next free international trip!  You can apply for your own Sapphire Reserve card here. 

Churning the Barclaycard Arrival Plus MasterCard

Over 2 years ago, my wife and I both signed up for the Barclaycard Arrival Plus MasterCard.  We redeemed many of our Arrival miles towards a free cruise vacation!  At the time, the sign up bonus was 40,000 miles, now the sign up bonus is 50,000 miles 40,000 miles after spending $3,000 within 90 days.  We closed our previous Arrival+ cards over 2 years ago since we did not want to pay for the $89 annual fee. With this new increased sign up bonus, the Arrival+ card is worth another look.

All purchases made with the Arrival+ automatically earn 2x miles per dollar spent.  Barclaycard uses the term “miles” loosely since redeeming the Arrival miles earned is different from other points and miles earning credit cards.  Arrival miles can be used to pay for all travel purchases made within the last 120 days.  Pretty much any purchase that is travel related qualifies for redemption of miles(airfare, hotel, motel, cruises, airbnb, travel agencies, railways, car rentals, tour operators, taxis, limos, buses, ferries, theme parks, museums, and tourist attractions).  Miles are redeemed as a statement credit at a rate of 1 mile = 1 cent.

Over the last year, there have been some big (mostly negative) changes to the Arrival+ features.  Barclaycard increased the minimum redemption of miles to offset a travel expense to $100 or more, when it used to be a minimum of $25.  The Arrival Plus card used to refund 10% miles back per redemption, but Barclaycard has lowered it to 5%.  This turns the card into a 2.1% cash back card for all travel expenses (over $100).  For our travel redemption needs, $100 travel charges should be just fine.  This card has an $89 annual fee, however it is waived the first year.

For our upcoming trip to Japan, we are looking into Airbnb stays.  This is because my father, sister, brother-in-law, and niece will be traveling with us (7 total).  Airbnb stays for larger groups can offer tremendous value and include niceties such as laundry washer and dryer.  According to various reports from users on Reddit and Flyertalk, the Barclaycard Arrival Plus MasterCard is churnable, meaning you can sign up for the same card and get the sign up bonus again.  The only rule is that you can’t currently hold the Arrival+ credit card, nor the no annual fee regular Arrival card.

Since I did not have an active Barclaycard Arrival credit card, I was eligible to churn the sign up bonus again.  I went to apply for my own Arrival+ card here.  It took less than a minute to fill out my application and within 30 seconds I found out that I was approved!  

The Arrival+ is my first new credit card for 2017 and I’m looking forward to redeeming my bonus miles towards our upcoming trip!

2017: Happy New Year, December side hustles and year end summary

Happy New Year!  Did you all have a fun and safe time ringing in the New Year?  After our son joined our family in 2015, our new years celebrations toned down considerably.  Our friend hosted a very nice dinner at his house.  By 8:45pm, we left for home to put our little one to bed.  By 10:30pm, we were fast asleep in our bed – and this is staying up late for us!  Can you believe that 2016 is already over?  Whether it was a good or bad year for you, it’s over. 

Looking back at 2016

Writing posts for this blog helps us categorize our financial achievements and setbacks.  It’s nice to look back and reflect on 2016.  It was another good year for credit card points and rewards.  We are getting our son accustomed to airports and airplanes.  He continues to grow so fast and learn his way in the world around him.  He's starting to express himself more with his voice and body.  He's slowly learning to play nicely with other kids.  We continue to work as hard as we can to provide for him.  We hit a financial milestone of over 250K invested.  Unfortunately, it was also a very expensive year for us.  Thankfully, our side hustle income helped to offset a lot of our expenses

The addition of my Sapphire Reserve completes my Chase Ultimate Rewards collection!

Trips booked with points

We are very thankful for all the points we earned and money we saved on travel in 2016.  Here’s a list of travel that we booked with points this last year.

- One overnight stay at the Westin San Diego with 10,000 Starpoints

- 2 round trip flights to San Jose, CA with 21,270 Southwest Airlines Rapid Rewards points and $139.78 from free Southwest gift card credit

- 2 one-way business class tickets from Virginia to Los Angeles on United Airlines (50,000 miles) for sister in law and niece to visit us

- 2 round trip business class tickets to Tokyo from Los Angeles with 327,250 Singapore Airlines Krisflyer miles

- A one-way ticket for my father to fly from Taipei to Tokyo with 15,000 United miles to join us on our Asia trip

- 3 one-way tickets for my family to fly from Osaka to Taipei on Cathay Pacific booked with 23,250 British Airways Avios

- 2 one-way flights from Taipei to Tokyo on Cathay Pacific booked with 21,000 British Airways Avios

- A round trip flight to San Francisco with 9,093 Southwest Airlines Rapid Rewards points

- 2 free round trip flights to Portland with 36,268 Southwest Airlines Rapid Rewards points
Paying for flights and hotel stay with points helps save us a considerable amount of money.

We spent a lot of money in 2016

While we saved and invested a significant portion of our income, we also spent a lot of money in 2016. 

We love our home and intend to stay here for a long time.

Here is a list of home improvements and upgrades we made:
- Dual pane energy efficient windows: $6,960
- Water heater: $593.20 plus $200 installation fee
- Paint and stucco on our home exterior: $8425
- LED lighting throughout the house: $563.72
- Couch: $900
- Fencing on the side and rear of our home: $2,707.50
- Nest smart thermostat: $175.15
- Arlo Pro wireless security cameras (4 pack): $620.99

Total home improvement expenses: $21,145.56.  Ouch.  Our home is now 36 years old and very little improvements have been done over the lifetime of the home.  If we were renting, we could have saved this much money.  Thankfully most of these upgrades will last many years.

Pet sitting fees really add up.  If you love animals, consider this side hustle.

Here is a list of unexpected expenses:
- Main water leak piping replacement: $1,179.88
- Electrician fees for our rental property: $150
- Dog sitting fees: $715.  When we leave on trips, we hire someone to come and dog sit for Abby, and also watch the house in our absence. 
Total unexpected expenses: $2,044.88

Biggest purchases of 2016:
- New Toyota 4Runner: $36,313.64.  We bought it for the extra room and the fact that it seats 7, a nice feature we’ve used whenever seeing family.  Yes, this was a huge purchase for us.  It’s also not very fuel efficient (17mpg city and 22 mpg highway).  Mr. Money Mustache would probably punch me in the face if he found out about our SUV purchase.  That being said, we will keep this vehicle for a very long time.  Buying new and paying it all in cash was important to us, and having no monthly car payments is great!  We don't expect to make any car payments for a very long time.
- Car seats: $184.44 and $222.31
- Stroller: $221.02
- Umbrella stroller: $82.06
Total large expenses: $37,023.47

Yikes.  Looking at how much money we spent in 2016 makes me cringe.  There are all sorts of other things we spent small amounts of money on in 2016, but I’ve only listed the big items. We both have been getting steady promotions and raises and it seems like our lifestyle has crept up quite a bit.  Tracking all of our expenses helps us look back and see where our money went.  If you never track your expenses, you’ll have no idea where your money is ending up. 

There’s that old saying: “work hard, play hard” which many people say to justify spending more when you are earning more.  I don’t want us to fall into the situation where the more money we make and spend, the further from financial freedom we become.  The White Coat Investor has a great write up about moving away from financial independence. I want to make our motto for 2017: “work hard, invest hard.”  With this new year, it’s another chance for us to continue to be relentless in our pursuits of financial freedom.

December side hustles 2016

Here’s our monthly summary of side income that we have generated in the previous month of December.