r/personalfinance • u/cop-disliker69 • Oct 18 '18

Just discovered my credit card's "Cash Back" program. Is it really just free money? I find it too good to be true. Credit

I was paying my credit card bill online and I found a link on the Bank of America website said I had unredeemed cash rewards, several hundred dollars. I had never noticed this before. It gave me a few options for how to redeem it, it said they could send me a personal check in the mail or I could deposit this money directly into my savings account with the bank. It says I get 1% cash back for every purchase I make, and 2-3% for certain purchases.

Is this really how it works? I get paid a small bonus every time I spend money using my credit card? And it's just free money no strings attached?

I was always taught if it sounds too good to be true, it is too good to be true. I suppose it's not that much money, because I think these hundreds of dollars were earned over like five years since I first got this credit card. Still, what's the angle here?

EDIT: Disclaimer. This is not native advertising. Bank of America is a racist, redlining, predatory-lending, family-evicting pack of jackals. This was a genuine question I asked in good faith and did not expect to get huge like this.

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1.2k

u/Coomb Oct 18 '18

Who the hell do you know spending $200,000 a year on travel?

585

u/[deleted] Oct 18 '18

[deleted]

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u/mrhindustan Oct 18 '18

Consultants travel a lot but often don't have huge expense accounts. The top sales guys, fuck they pretty much have a bottomless pit of expensing so long as it is productive.

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u/Hold_onto_yer_butts Oct 18 '18

Consultants travel a lot but often don't have huge expense accounts

Bruh. I just looked at my statement from 2013, which was 2 years out of college for me. I was entry level in consulting.

My credit card expenses exceeded my take-home income, and we didn't even pay for flights on our own credit cards.

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u/[deleted] Oct 18 '18

Currently do consulting work. Flew every week from January to early June. Switched clients in July and have been driving (car rentals or personal, no flights) ever since. Closing in on $50k in expenses for 2018 alone. Would definitely be higher if I needed to fly to my current client.

Not exceeding my take-home, but that's a good chunk for rewards.

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u/Zormm Oct 18 '18

What exactly does consulting entail ?

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u/no1lurkslikegaston Oct 18 '18

Telling clients things they already likely knew about themselves, but now that it’s from an actual outside expert they will hopefully take it seriously

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u/Hold_onto_yer_butts Oct 18 '18

This is certainly an element of it, but that's a pretty overblown meme at this point.

Consulting is frequently "smart folks in a room for rent," often combined with deep industry knowledge and analysis performed partially outside the internal politics of the client organization.

I've been on both sides of the consulting equation at this point, and there are absolutely areas where they provide value.

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u/no1lurkslikegaston Oct 18 '18

Yup, I probably should have made it clearer that I was being semi facetious lol

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u/So_Much_Bullshit Oct 19 '18

I could tell.

Many people just do not have that ability to understand different types of humor, other than, "What's big, red, and eats rocks" or slap-stick pratfall humor.

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u/ILikeBigBeards Oct 19 '18

Employees aren't likely to tell their employer that they could do their job in a few hours a week, or that there are parts of it that aren't their forte. A consultant who is good at assessing people's strengths and can reorg efficiently can really trim a bottom line.

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u/aaaaleon Oct 18 '18

What kind of industry does this count as and what kind of requirement is needed for work in it??

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u/[deleted] Oct 18 '18

I got in through finance, but to be honest anything works as long as you have some ultra basic business skills on your resume. Analytics, maybe a language like SQL, basic knowledge of accounting, math, and to be honest the rest you learn more on the job.

Being fluent in multiple languages helps too, and fluency in Chinese might be a requirement for some areas. But there are a lot of avenues towards getting intoj consulting.

Flying everywhere is honestly overrated though. You spend way too much time at airports and sometimes you might get stuck with a place like Yokohama where there really isn't much to do.

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u/KillerPlatinum Oct 18 '18

Not OP but I work in software as a consultant. My actual job is database conversions but there are multiple kinds of consultants here including more technical ones (myself) and functional ones (trainings, onboarding, etc.).

Lots of enterprise software companies have technical/solutions consultants.

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u/bruinhoo Oct 18 '18

Earn good grades and a BA from a top college and/or 'earn' a BA from Harvard/Yale/Stanford/fancy pants traditional northeastern US college with a bunch of old wealthy alumni, or an MBA from a good business school. If outside the US, substitute your nation's equivalent universities where the elite/wealthy send their children off to.

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u/[deleted] Oct 18 '18

Lots of tech consulting. Lots of tax and advisory consulting. A Master's degree in Information Systems is a great way to get in the door for Big 4 tech consulting

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u/[deleted] Oct 19 '18

Best explanation I’ve heard

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u/atlas-85 Oct 19 '18

Client hires a consultant to figure out what time it is. Consultant asks to see clients watch. The client then gives the consultant the watch as payment.

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u/glockops Oct 19 '18

I work at a Fortune 200 and completely agree with this statement.

We like to bring in consultants to tell leadership we already know what we're doing. It's actually a quite effective, yet insanely expensive sanity check.

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u/Zormm Oct 18 '18

Basically telling rich people how brilliant they are then

3

u/no1lurkslikegaston Oct 18 '18

I was being somewhat facetious, but I meant more along the lines of being hired to investigate/solve a problem, except there are plenty of times they could have probably solved it themselves internally.

Of course, there is a whole range of consultancy fields, ranging from highly technical engineering to management.

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u/[deleted] Oct 18 '18

It's more the opposite. I always tell my friends that my job was a mix between learning how to sit in an airplane for 10+ hours and telling people that they're stupid.

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u/Gboard2 Oct 18 '18

Provide"objective" opinion on any given subject that client often already knows but needs a 3rd party to confirm so that required action is justified

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u/[deleted] Oct 18 '18

Compared to sales though... My expense account is $60,000 a month for sales.

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u/BaconIsntThatGood Oct 18 '18

Wait.

Your company pays more in expenses for you to be able to do your job than they pay you for... Doing your job?

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u/[deleted] Oct 18 '18

How the hell does one become a consultant? What is it a consultant even does? Fly in, take a look around, explain what people are fucking up at and how to improve, fly out? I've always heard about these "consulting" firms and it all just strikes me as managerial bs, but I must be totally misinformed.

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u/Hold_onto_yer_butts Oct 19 '18

Our firm was like 90% mathematicians, engineers, and hard scientists, doing management consulting. Our clients hired us knowing we would burn 70-100 hour weeks, building brand-new models from the ground up to solve whatever problem it was they had. We could package up our answer and tell a cohesive story outside of whatever internal bullshit politics they were dealing with.

I’ve been on both sides of the equation, and there’s absolutely value in consultants. Many are bullshit, but many are not. A good project is scoped so they can’t bullshit you.

As for becoming a consultant - go to a top-tier school, get good grades, and network like hell. At least for regular old management consulting. For industry-specific consulting, time working in the industry can help.

1

u/[deleted] Oct 19 '18

Sounds interesting. I always kinda figured that was pretty much it--smart people come in and explain that the stuff that's bad is bad, etc., from an outside perspective so that all the internal politics can be cast aside in pursuit of actually fixing shit. Was just always blown away by how much people make, but wasn't familiar with the hard sci/math side of it.

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u/I_eat_insects Oct 19 '18

Well, it takes a certain caliber and mix of people to be able to ID what's wrong and how to fix it. It's not as simple as: "let's try changing this... oh that didn't work? How about changing that?"

Clients often pay our firms millions per month for these services and they expect you to deliver amazing insights promptly.

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u/[deleted] Oct 19 '18

Right, makes sense. I guess I'm assuming that a certain part of that value is your objectivity and ability to call a spade a spade without having to navigate the existing political and social structures that are likely perpetuating wasteful and/or impractical practices, policies, procedures, and so on.

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u/I_eat_insects Oct 19 '18

Yes, definitely that as well.

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u/WayneKrane Oct 18 '18

That’s the truth about sales reps. I worked in accounts payable at a marketing agency and the CFO told me to just automatically approve all of one sale’s reps expenses. He stayed at $700 a night hotels, frequently spent $1k on dinners and drinks, always flew first class and even expensed his clothes. He brought in many millions though so upper management didn’t care. Other sales reps would get chastised for spending slightly too much on food.

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u/Aamoth Oct 18 '18

This is why great sales guys stay in sales.

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u/WayneKrane Oct 18 '18

Yeah it seems to me that only 1 out of a 100 sales guys are cut out for sales but man is that 1 out of 100 guy amazing at his job. Our best sales guy brings in 10 times what the next best sales guy brings in. He has a corner office that he never uses because he travels pretty much 24/7. I don’t know how he does it but man the guy can sell.

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u/Cimexus Oct 18 '18

It actually might be cheaper now - a big part of that cost is the airfares, and those are substantially cheaper now than the 90s.

I’m a consultant doing mostly domestic US trips and I usually end up around $1400-$1500/week. Typically about $700 of that is the airfare (higher bucket economy, though not full Y most times), the rest hotel/rental car/meals. Some routes are highly seasonal though (there’s a place in Michigan I fly to semi regularly where the return airfare is pushing $800 in summer, but only $300 in winter).

Having said all that, we use a corporate credit card for travel, not a personal one, so no freebie points for me unfortunately.

1

u/Orome2 Oct 18 '18

Can confirm. I travel lot and it ends up being between $1,200-$2,000 a week. I float everything through my credit cards and get reimbursed for it.

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u/Gwenavere Oct 18 '18

If your corporate card is Amex, you may be able to earn personal points on the spend. If your company allows it, you can contact Amex and offer to pay an annual fee on the card to receive the membership rewards points that your spend would earn.

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u/[deleted] Oct 18 '18

Unfortunately I have to use my company card which does not have cash back

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u/[deleted] Oct 18 '18

[deleted]

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u/[deleted] Oct 18 '18

Ours is points. I knew a director who traveled enough to get a nice home audio system but yeah you have to use the points to redeem for the crap on diners club website

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u/[deleted] Oct 18 '18

Same, points add up pretty quickly though and not everything is crap. Helps a lot for when you want to go on vacations, at least.

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u/Not_as_witty_as_u Oct 18 '18

FWIW the best usage of points is air travel. When you do the math, you pay a ton more points for anything else.

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u/[deleted] Oct 18 '18

Right but it’s not an option. We have a limited list of physical items we can use our points on

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u/BobHogan Oct 18 '18

At a rate of 3% cash back, to earn $500 as cash back in a month you would have to spend more than $16,600 just on that card. This is not only far above what the average person can afford to spend (this is already significantly higher than the average pre-tax income for the US), but at that point its still just a crumb of what you are spending, despite what /u/TradinPieces seems to think

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u/choutlaw Oct 18 '18

I’ve worked at two companies with corporate accounts. One basically said you were allowed to use a personal card for travel/expense related stuff, but you had a high risk of having expenses rejected. The second one is less strict on it, so some people just use a personal card for their monthly expenses. You could definitely rack up some rewards quickly, especially with cards like Chase Sapphire or Southwest.

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u/gigibuffoon Oct 18 '18

My company rejects payments made with personal credit card as soon as they issue a corporate credit card to you and they make you get a corporate card as soon as you start seeing some travel coming up. Most of my benefits from travel come in form of airline miles, rental car miles and hotel points... I've rarely seen anybody in my company make credit card points off of their travel

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u/HH912 Oct 18 '18 edited Oct 18 '18

As someone who works for a travel management company as a global account manager (tmc=travel agency for businesses), they want you to use their corporate card because they are getting the rewards and the rewards (rebates) go back to your company :). There are also other benefits - credit card reconciliation services, travel insurances etc etc.

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u/gigibuffoon Oct 18 '18

Good for them I guess, haha! I'm still getting all the other points in my own accounts so I don't feel bad on missing out on the credit card points

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u/calcium Oct 18 '18

Yup, recently traveled internationally for my company and was gone for less than a month. Negating flights, I spent around $8k when including food, lodging, and transportation. If I had included flights, it would have been around $20k. Do that a few times a year and you have a nice amount of credit card bonuses earned, and even 3% back on 25k of charges is $750.

Whenever I do business travel for work, I try to open a credit card around that time to meet the minimum spend on a new credit card to obtain the signup bonuses. Once I meet the minimum spend I typical switch back to my Chase Sapphire as that gives the best bonuses and awards.

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u/Coomb Oct 18 '18

Even if you travel for business, $200,000 a year is a lot of travel. That's $550 a day, every day, for a whole year. If you're literally spending 80% of your time on assignment in NYC or SF it might be reasonable but at that point you have a job that is extremely rare.

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u/Frozenlazer Oct 18 '18

I don't know man. Back in 2004 when I graduated I was working for one of the typical big consulting companies. We had about 25 people on our project flying to Tulsa each week. My weekly expenses were about 1000-1200 a week on top of the 5000 a week (125/hr) in fees the client was paying. All for a 23 year old kid making 45k a year who was clueless on what he was doing, (just like the 10 other first years in the project)

If I was in a city where rooms were more like 300 a night (vs 120) and flights were more like 800 instead of 330 it can easily get that high.

And PwC, Delottie, EY, Accenture, etc all have armies of people doing this. It's not that uncommon.

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u/girandola Oct 18 '18

MBB?

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u/chriise Oct 19 '18

125 hours a week....? Wtf

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u/Frozenlazer Oct 19 '18

No. It was a 40-45 hour work week. Our billing rate was $125 per hour for new associates. I think my boss (senior manager) billed for about $300 an hour.

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u/[deleted] Oct 18 '18

[deleted]

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u/Frozenlazer Oct 18 '18

That 45k was for straight out of college 14 years ago. Probably pays 55-60k now. After 2-3 years they would be at 80.

Also keep in mind that while you are on the road you aren't spending a dime of your own money. No gas, no meals, no tolls, etc.

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u/Buffett_Goes_OTM Oct 18 '18

Starting consulting salaries are usually in the 70s now and 90-105 after 2-3 years.

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u/PM-Me-Your-BeesKnees Oct 18 '18

Keep in mind that you're also paying no expenses when you're on the road, so it's really like $45k plus thousands of dollars in free meals and other expenses that would normally be your responsibility at home.

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u/Coomb Oct 18 '18

Reading all these stories about how consultants spend all this money on travel really makes you think that the value they are providing must be tremendously larger than the wages they're being paid if it's still profitable for the company to spend multiples of their wage on travel.

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u/Frozenlazer Oct 18 '18

Keep in mind the client pays all those fees not the consulting company. The benefit to the client is thst they have a short term highly specific project that needs external expertise.

The general model is to have a few senior level experts managing a team of eager young professionals to do the work.

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u/thedude388 Oct 18 '18

ind the client pays all those fees no

You're right in the general sense, but a lot of companies (at least mine) are shifting toward flat-cost contracts with the clients so the consulting firm keeps the difference. The only real difference is that the consulting company cares about your expenses a lot more when they can't directly bill those to the client.

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u/Buffett_Goes_OTM Oct 18 '18

Maybe, I haven't been on any assignments that are fixed-fee, but I'm sure they exist.

Most contracts we sign are TTE. Time Travel and Expenses are all billed to the client directly.

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u/thedude388 Oct 18 '18

Lucky :) Things that I never would've thought in a million years would be contested are now being rejected. i.e. My dinner per-diem line item was called out because "the firm bought you dinner that night" which was a cheese plate which some of the team couldn't have due to dietary issues. It was a $15 delta

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u/[deleted] Oct 18 '18

It's around 80k for entry level now, plus you save a ton of money since the majority of the money that you put down isn't yours.

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u/Lockon007 Oct 18 '18

Try Oil and Gas.

Go check the hotel price in Odessa,TX.

I max out my bloody limit every time I go there. 🙄

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u/Coomb Oct 18 '18

I just did and I see several hotels with less than $100 per night rates and a lot with less than $150.

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u/[deleted] Oct 18 '18

people at that level do not stay in $100 a night motels.

they stay in nice hotels, have generous per-diems for food, and can expense all kinds of incidentals.

and it's entirely possible (probable even) that if they are in sales, they are picking up the tab for groups of clients.

hell, the last travel-sales job my husband had, he was even given a budget for booze.

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u/Coomb Oct 18 '18

/u/Lockon007 didn't tell me anything about his "level", just a location.

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u/Lockon007 Oct 18 '18 edited Oct 18 '18

Ah sorry,

I'm just an entry level field engineer.

All I was trying to say is - if you look at your local standard "business" hotel like Courtyard, Holiday Inn or etc. they're massively inflated compared to any other neighborhood.

I took a quick look for a hotel 2 weeks from now. Same prices as they have been for the past year or so.

Hotel Per Night Cost ($)

Courtyard 336

Fairfield 228

Hilton Garden 374

Best Western 296

Which I think is ridiculous, since I can get a room at the MGM Grand in Vegas for the $304 the same week...

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u/Buffett_Goes_OTM Oct 18 '18

That's nuts, I stay in downtown Houston every week at 4 star hotels for usually $170 a night and this is for hotels much nicer than those you listed.

Heck, I just stayed at the Standard Hotel in NYC and it was only $280 a night and that's a 5 star hotel. Not sure how those hotels cost that much or anywhere near that.

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u/Lockon007 Oct 18 '18

I agree! It's bloody ridiculous. There's nothing of interest in Odessa (Unless you're a big Friday Night Lights fan I suppose).

The main reason it's so expensive, is that a good chunk of people working in the field commute there week to week. So during the work week, there's a super high demand, so the hotels can get away with it. During the weekend, when no one is around, they drop back to their standard $100ish prices.

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u/highoctanecaffeine Oct 18 '18

Try closer to the field, Pecos TX is usually ridiculous.

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u/mictlann Oct 18 '18

He might be talking about 4-5 star rated hotels that cost $300+ a night

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u/Lockon007 Oct 18 '18

No sorry,

I'm talking about standard mid level business oriented hotels.

I'm not important enough to be frivolous with company money unfortunately.

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u/dlerium Oct 18 '18

But even then Odessa isn't expensive. Your standard 3 star Courtyard is $129 which is what it's like in most suburbs. Good luck getting that rate in San Francisco. It's easily double that. And given the sheer number of tech shows we have here, good luck coming here during DreamForce, WWDC or any other crazy week.

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u/Lockon007 Oct 18 '18

I don't know how you're getting those prices.

A standard Tue-Friday trip 2 weeks from now at the local Odessa Courtyard is clocking in at a cool $336 right now. 120 is closer to weekend price from what I can see.

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u/girandola Oct 18 '18

Odessa,TX.

bloody

What are you?

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u/Lockon007 Oct 18 '18

A weird mix of a bunch of unrelated stuff. 🤗

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u/justatouchcrazy Oct 18 '18

You’re forgetting about flights. Especially if you fly first/business class it adds up when tickets are around a grand for domestic and several times higher for international flights.

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u/FFF12321 Oct 18 '18

Where can you even fly business class domestically? I've flown quite a lot, and business class isn't a thing really, is it restricted to the cross-country non-stops? And no company I know of will fully reimburse you if you purposely buy a first class ticket unless it is an extreme situation and it's the only option available. I mean, good for these people where they can do that stuff, but flying first class is not typical for most business travelers.

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u/aphex732 Oct 18 '18

It depends - some companies (Porsche for example) mandates first class if the flight is over 7 hours. The idea is that you want the person to arrive fresh and ready to do business.

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u/Coomb Oct 18 '18

Business class (or first class) is available even on most short domestic routes if you fly a legacy carrier. If you fly a budget airline like Southwest or JetBlue you will usually only see it, if at all, on transcontinental flights.

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u/FFF12321 Oct 18 '18

I don't typically think of first and business class as being the same. If you lump business in with first, then yes, domestic flights almost always have that section. I was thinking more based on international flight class designation, where business and first class are generally separate classes.

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u/justatouchcrazy Oct 18 '18

Domestically yes, they are lumped together as the same product except one some long haul transcontinental flights.

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u/mrhindustan Oct 18 '18

I have a family member who spends over $30,000/month on his business travel (he is self-employed).

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u/aphex732 Oct 18 '18

So he spends $1,000/day travelling?

I'd question his math.

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u/awoeoc Oct 18 '18

Not everyone is in the back of the plane renting an economy car and sleeping in a $100 hotel.

$1k a day is easy for business travel I've personally done this several times though not as frequent as the example above. Owning a company I like being frugal but when I worked for a big corporation you can bet I didn't take the cheapest options, being well rested before important meetings is huge.

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u/aphex732 Oct 18 '18

It's possible, but not "easy", especially when you have to do it every day for a month.

Even if you spent 20 nights a month in a NYC hotel at $500/night, you're only hitting $10K. Add in 20 days of food at $200/day, you're not at $15K. You'd have to be flying several times a week to make $30K/month...it's possible, but I'd say almost no one does that every month.

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u/mrhindustan Oct 18 '18

Fly Emirates First. Stay in 5 star hotels (Four Seasons, Mandarin Oriental, Park Hyatts, etc) All meals.

Spend 20-25 days/month on the road. When one set of flights is over $15,000 it starts to make sense.

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u/byungparkk Oct 18 '18

Business flights are often booked last minute which drives cost up, plus hotel nights and per diem spending can definitely add up. That’s still a ton of travel though

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u/STFUandLOVE Oct 18 '18

It’s not too far fetched. I travel internationally for business at least once or twice a month. Depending on where I’m going and how much notice I have, flights range $3000 to $12,000 for business class flights. Throw in hotels and I’ve had years approaching $150,000.

Just work for a US company that has proprietary technology that Asia/India/South America want. Pretty easy to rack up expenses.

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u/trondersk Oct 18 '18

That's if you only count the actual cost of travel. I expense about 15-20k a year on travel, but another $60-70k a year on client expenses, dinners, per diems, misc. expenses... A big dinner with 10 people in any big sales opp can easily surpass $5,000 a night.

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u/m7samuel Oct 18 '18

Breaking a poorly enforced company policy for the sake of rewards sounds incredibly sketchy.

If it were a "I couldn't be bothered", I can see that being excusable but doing it intentionally seems like you're asking for trouble.

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u/swellfie Oct 18 '18

Businesses, easily. I spent $80,000 in travel in one year as an associate. My boss was traveling 4-5 times as much as me.

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u/smegdawg Oct 18 '18

Ok this is going to be a dumb question that I am sure I know the answer to. I pay for lots of things at my work with a credit card, Overweight Truck Permits, non standard materials, random office supplies. I fill out my expense report and I am paid back by the company. It's great cause it's essentially "free" rewards points/credit building.

Because I am paid back after turning in my expenses I can't write off those expenses, correct?

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u/swellfie Oct 18 '18

Your company is paying for it, not you. They get the write-off.

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u/smegdawg Oct 18 '18

Yep, what I've always just assumed, figured I'd ask the dumb question though.

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u/SwiftStriker00 Oct 18 '18

Not a dumb question, when it comes to taxes, any clarifying question is a good one to ask.

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u/PM-Me-Your-BeesKnees Oct 18 '18

Especially since the defining rule for tax law isn't what's fair, it's what the law says. Those are often two very different categories.

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u/[deleted] Oct 18 '18

[deleted]

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u/jmlinden7 Oct 18 '18

Only if you get reimbursed

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u/STFUandLOVE Oct 18 '18

You’re 100% right that I am wrong, but I can’t find anything on reimbursement causing a requirement to claim points on taxes. Only requirement is if you get $$$ for opening a bank account or depositing money into a bank account. Is there something I’m missing?

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u/jmlinden7 Oct 18 '18

It’s technically profit if you get reimbursed. Practically the IRS doesn’t care

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u/[deleted] Oct 18 '18

To the extent that the US tax code has general rules:

You can only deduct an expense if it’s related to a stream of taxable income. What you described is an “accountable plan,” which is one of the few ways to get money from your employer that doesn’t show on your W-2. But, as you noticed, that’s money you already spent - you don’t get ahead. You’re in the hole, and the company is just bringing you up to ground level.

By the same token, you can’t deduct expenses against tax-exempt income. If your investments are all municipal bonds, you can’t deduct management fees for that. Same with hobby income, you can take expenses per to the amount the hobby earned, but you can’t expense more than that for a loss.

So the short answer is, you already “pre-deducted” those work expenses, it’s just that the math happens before the numbers hit your tax return. (The company deducts the expenses as if it had been the one at the airport eating bottomless nachos or whatever business travelers eat).

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u/Terza_Rima Oct 18 '18

bottomless nachos

The only thing you can get bottomless at an airport is a senator

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u/[deleted] Oct 18 '18

[deleted]

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u/Coomb Oct 18 '18

If you know a lot of consultants, especially consultants who are worth enough to be spending $200,000 a year on travel, you have to understand that your experience is not remotely representative of most of the country.

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u/TradinPieces Oct 18 '18

You also have to count food though. I probably average $5k/month on food for me and my family, which is definitely above normal but not out of the question if you eat at nice restaurants often.

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u/Coomb Oct 18 '18

You also have to count food though. I probably average $5k/month on food for me and my family, which is definitely above normal but not out of the question if you eat at nice restaurants often.

You literally spend on food the entire pre-tax income of the median American family. That is out of the question for, I can say comfortably, 95%+ of Americans.

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u/[deleted] Oct 18 '18

This is the same guy who apparently works in the finance industry and anticipates making 1.2 million this year, and for some reason needed to ask /r/personalfinance what kind of car he should be buying.

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u/inventionnerd Oct 18 '18

Dear personalfinance, should I buy a Ferrari, Lamborghini, Rolls Royce, or all of the above?

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u/YouNeverReallyKnow2 Oct 18 '18

Holy shit he spends 60k a year on just food? That is more than i make in a year.

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u/jerkularcirc Oct 18 '18

post-tax too so more like 70 or 80k

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u/TradinPieces Oct 18 '18

Right, but 95% of Americans are not the ones taking advantage of credit card rewards. I understand this situation is not the usual but the idea still applies if you change the numbers.

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u/[deleted] Oct 18 '18

Uh yeah, 5k a month on food is WAY above normal.

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u/HatrikLaine Oct 18 '18

You spend 5k a month on food? Holy fuck

0

u/TradinPieces Oct 18 '18

Mon-Fri: 2 coffees a day $10/average. Order in for lunch for $15/day on average. Order dinner for my family for $50/day on average.

Saturday: Nice dinner and drinks for 2, $300

Sunday: Pick up breakfast/lunch and order in dinner, $80

Groceries: $100/week

Bars: no idea really but guessing around $25/week

Weekly Team Lunch: $100/week

That's 75*5+300+100 = $980/week

So it comes out to more like $4200/month on average. If one of the dinners is an expensive tasting menu or we take one of our couple friends out it can come out to quite a bit more though.

13

u/HatrikLaine Oct 18 '18

Wow I guess we live very different lifestyles

15

u/Emerald_Flame Oct 18 '18 edited Oct 18 '18

$5000 a month for food? That's $60k a year! That's so far into stupid budget it's unreal, that's seriously a 1% elite kinda lifestyle there.

To put that into perspective, the median household income (so generally 2 people working) in the us is $59k (that's before taxes).

That food budget is so high that the average family couldn't even afford it if both parents were working and spent every single penny on food. Even if they didn't pay taxes, somehow managed to have no rent/mortgage, and didn't own a car, they still couldn't afford it.

Your view is extremely skewed on this one.

7

u/lasagnaman Oct 18 '18

seriously a 1% elite kinda lifestyle there.

No way, that's like a 0.1 or 0.05%er. Source: Am 1%, spend around 1.3k/month on food for me and GF.

3

u/jktmas Oct 18 '18

I’m just an IT FTE with a desk job and my travel & food budget is like 25K/year. I can see just about anyone having more than that.

1

u/[deleted] Oct 18 '18

[deleted]

2

u/bestdegreeisafake Oct 18 '18

I went to a few Intel IDF expos in SF, and they usually gave us a pre-paid Visa worth $500 for "food". Of course, most people there already have their own expense accounts and there's a decent supply of free food available.

I won't say it was me, but I know of some people that went to a nearby strip club with full cards and pooled them for a 2K tab.

1

u/Mike_R_5 Oct 19 '18

Consultant here. All purchases go 9n my card specifically for the cash back. Then just stay on top of your expense reports.

It's a nice perk in exchange for having to travel

1

u/efitz11 Oct 18 '18

CSR is actually 4.5% for travel and dining

1

u/VicCity Oct 18 '18

I run my entire business through my credit card. Free flights all year and a few hundred dollars extra per month in cash back.

1

u/sfo2 Oct 18 '18

When I was a consultant, I'd submit probably $10k/mo in travel expenses. More if I was international.

1

u/vettewiz Oct 18 '18

We spend about 40-50k a year on personal travel (hotels, meals, flights). As far as rewards go - we spend anywhere from 3-500k a month on business cards - the points add up like nuts.

1

u/girandola Oct 18 '18

Nosey question that doesn't require an answer if you don't want to but what do you do to be able to spend that much on personal travel?

1

u/Chinlc Oct 18 '18

I remember reading someone saying they paid for all their flights on their CC and then got reimbursed by their company as a company endorsed travel.

So these people get free plane ride and rake in the benefits with CC compnay

1

u/STFUandLOVE Oct 18 '18

I’m currently at $85,000 for business YTD, but unfortunately I don’t get to see any of the points/cash back from that business credit card. I do get the airline / hotel points though.

1

u/Buffett_Goes_OTM Oct 18 '18

I don't spend 200k a year, but I've already spent 90k this year on travel. Consultants dude.

1

u/duderduderes Oct 18 '18

Chase Sapphire Reserve earns 3% on travel and restaurant purchases. Each Ultimate Reward Point is worth 1.5c when redeemed on their portal (basically expedia).

$500 * 100 = 50,000c / 1.5 = 33,000 points / 3 points/$ = $11k

High but not that high for some people for all food costs and travel costs in a year. Value goes higher if used to transfer to airline rewards programs but this is a bare minimum (re: r/churning)

1

u/Judgm3nt Oct 18 '18

That's a pretty misleading question. You don't need to travel in order to stockpile rewards.

1

u/Sharkeybtm Oct 18 '18

People traveling on company time. Do the usual, send in receipts, and keep the points. It doesn’t have to be in huge transactions, mileage here, cellphone allowance there, hotel rooms, meals, and other reimbursements and it all adds up.

I’m about to drop $1100 on some EMT training, department reimburses 2/3, and I get a certification that I can take anywhere in the country.

1

u/geli7 Oct 18 '18

Job related expenses can also be paid with credit cards.

Personally, while I don't spend that much I do spend a lot on my cards. For my family, it's about 5-7 grand a month on my credit cards. The cash back or rewards points do add up. I spend mine on personal travel and haven't paid for airfare in a long time.

1

u/[deleted] Oct 18 '18

I spend about 100k a year for travel for work.

1

u/LtsThrwAwy Oct 18 '18

I do upwards of 75k and I don't travel like some people do. No international and plenty of weeks at home. Think about flights, hotel, cars, meals, taking customers out for expensive dinners and drinks and excursions. I can see that no problem.

1

u/Levitlame Oct 19 '18

I know there are people that live those lives, but I always have to laugh when people throw comments out like that like it's not a small percentage of people in that position. The point was still sound, but it's pretty funny to see.

0

u/TradinPieces Oct 18 '18

Travel and dining give 3%. If you ever book international business class on your personal card, it adds up really fast.

-2

u/Coomb Oct 18 '18

Pretty much nobody books international business class travel, much less on their personal card.

1

u/nerevisigoth Oct 18 '18

People flying internationally for business often book international business class travel. I don't get to use my personal card, but I do get the airline miles.

1

u/girandola Oct 18 '18

How does this work? Do they just transfer the miles to your name?

1

u/nerevisigoth Oct 18 '18

You earn airline miles in two relevant ways: 1. Through the airline, by being the traveler. Just make sure your frequent flyer account is linked to the ticket. 2. Through your credit card, by purchasing the flight on your card.

When you book your travel on your own card, you get both. When someone else pays for your travel, you still get (1). If you pay for someone else's travel, you get (2).

In my case, my employer pays for the flight so I only get (1), which are the important ones because they count toward status. I believe this is the most common business travel arrangement.

2

u/girandola Oct 19 '18

Ah I see, thanks for the in-depth explanation :)