We Paid Off Our Student Loans – Now What?

We’re spending Memorial Day weekend on Cape Cod. I’m sure we’ll be spending time at the National Seashore, one of my favorite places, especially Marconi Beach. (Maybe if you hurry up, you can find us!) I’ll be using some photos from our earlier trips here.

And as part of our trip, we’ll be celebrating a big milestone…

We are now student loan free!

Maebys Marconi Sprint (4)

That’s one happy puppy

Yes, twelve years after graduating college, and hot on the heels of paying off our car loan, we just extinguished another type of debt from our balance sheet. Now the only debt we have is mortgage-related. How did we do it?

Well, over the long-term, we haven’t done much except meet our normal monthly payments. Occasionally I would make an extra payment or two, but if you look at our debt chart, you can see the student loan debt is a simple, straight line until the end. Mainly, between the two of us, we have just been paying the $211 per month dutifully for twelve years.

Marconi Beach Day1 (4)

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Is Pet Insurance Worth It?

Last Sunday, Marge scheduled a play date for Maeby at a local dog park. Maeby’s been to dog parks before without incident. She loves to sprint and run around for a few minutes, either letting other dogs chase her or chasing other dogs. Other than that, she stands around and watches. I don’t think greyhounds understand “play,” only running.

An ideal day out for Maeby is a solo run followed by enjoying some nature smells.

IMG_0423 TU

On her way out the door, Marge said, “I hope nothing bad happens.” I have no idea why she said this, and neither does she. I thought she was just worried about getting lost on the way to the park since this was a new one she’d never been to before. Well, they made it there fine, but something bad happened anyway.

Right after arriving, Maeby ran off with some other dogs. And when she came back, someone said, “What is that on your dog’s side?” And Marge said it was a scar, because Maeby has always had a scar on her side since we adopted her six years ago. It’s slowly grown hair and you can’t really see it anymore. But this was on the other side. Maeby had a fresh new gaping wound.

Maeby stitches (2)

Post stitches

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Keeping Birthdays Frugal

Well, it was my birthday quasi recently. Actually, it was two months ago. But that doesn’t matter. “Recently” is all in the eye of the beholder., right? The point is that I had a birthday relatively recently, and hasn’t everyone had a birthday relatively recently?

There’s always an urge to go all out and “treat yourself” for your birthday, or treat your spouse on their birthday. Treat your six kids on all of their birthdays. But in the early retirement lifestyle, all things must be kept in check, and that includes birfdays. You can splurge, but within reason. And at this point in our life of eternal optimization, it takes very little to feel like a huge splurge!

Here’s what we do on birthdays to make it fun and keep our savings in checl:

Eat Whatever You Want!

After abolishing Takeout Fridays, Marge and I hardly ever eat out or get takeout. We’re not lazypants, we like to cook food for ourselves. It definitely costs less, although I refuse to accept the notion that cooking is inherently healthier than eating out. It’s all in what you make of it (the food), but let me say this: Making our own meals definitely means less sodium intake. There’s so much salt in food out among the English. The only times we do eat out is when traveling to fantastic places… and on our birthdays! And on birthdays, all rules are out the window.

Flying ChickenUsually these birthday meals turn into birthday meal weekends. How exciting it is to pick out a favorite home-cooked meal from the past or something from one of our favorite area restaurants. For the past few years, my birthday dinner has been fried chicken and waffles from a local place.

I still managed to especially frugalize this birthday. I was all set to order the fried chicken dinner and noticed on their website that they are now on GrubHub. That’s an online ordering platform, I guess, but the point is that I could get $7 off my first order since I’ve never used the service before. Seven dollars is worth like two fried chicken thighs and a drumstick! Sign me up!

Birthday Beers 2016My other special birthday treat is a handpicked six-pack of craft beer. This is basically the only time I’ll buy a six pack during the year. Maybe one other time if I’ve really “earned” it through DIY work around the house.

Birthday BreakfastSpecial birthday meal for me usually extends to Sunday breakfast as well, which usually means fried eggs, corned beef hash, bacon, and a couple apple cider doughnuts from a local baker. It’s your birthday! Treat yourself! And the treats don’t end there!

Customized Birthday Cake!

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Leaving It To The Professionals

Last week, part of our ceiling collapsed.

Tub Drain Leak (6)

It’s not as bad as it sounds. It was a drop ceiling in the one room in the house that still has that. A leak sprung from our second floor bathtub’s drain pipe and started water soaking into the big drop ceiling tile. The tile got so saturated with water that it collapsed to the floor. Luckily, we have two bathrooms, so we can just use the other shower while we fix the drain pipe.  No buckets for water collection necessary!

I got up into the drop ceiling to see what was up, felt around pipes and found exactly where the leak was: Where a metal pipe fits into a PVC pipe. So I got out my wrench, gloves, and bottle of Blaster to try and and take apart the pipes.  (It turns out you’re not supposed to use Blaster on PVC anyway, kids!) After stinking up the place with Blaster and rubbing my fingers raw trying to get the pipes apart, I had a flashback…

Tub Drain Leak (2)

The culprit

A few years ago, one of the toilets wouldn’t stop running. The water would keep running through the tank. The seal wasn’t tight anymore. So I attempted to fix it. But this toilet was so old that the style of flushing mechanism (technical term) wasn’t manufactured anymore, so I couldn’t buy a replacement part.  Instead, I had to take the whole thing apart, take out the whole flushing thing-a-majig, and put in a new one.

Each screw was excruciating to take off. The toilet probably hadn’t been taken apart in forty years, when it was made. The screws were rusted in place. I spent weeks trying to slowly get the thing apart. I eventually did it, but was a trying experience.

With this drain pipe in the ceiling, I could suddenly see the same thing happening. I saw myself spraying Blaster up there after work, night after night, and pathetically trying to yank the pipes around in their little enclosed area, then probably having to buy tools that I might or might not ever use again.

So instead, I decided it was time to call the professionals. Marge called a guy the next day, he came over a few houes later, and by 5PM, it was fixed. And our pockets were lighter by $149. Ouch!

Call it a Frugal Failure, but sometimes I think it’s worth it to go to the professionals. We paid up to get the bats permanently out of our house last year. Whenever a job takes specialty knowledge, expensive tools, or is obviously going to take us forever to get done, I consider them.

Other times I look to professionals instead of DIYing it

Certain types of food. I’ve never tried making my own beer or wine. I know people do it. And I imagine it tastes somewhere on the scale from “okay” to “something died in this.” But there are people who spend their lives dedicated to the alchemy of alcoholic drinks. I could try to learn some things and waste my time buying equipment and making my own barely palatable swill. Or, for the few times a year I buy beer or wine, I could just go to the experts who live and breath this stuff and buy something that has been tested and judged to be nummy by all.

Birthday Beers 2016

Birthday Beers 2016

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Our Own 1,500 Days…

That’s right. 1,500 days.

Yes, you read that right. 1,500 days until we can potentially retire.

If that name rings a bell, you’re not alone. There are other more famous people out there who have launched websites based on that number and their own calculations. I only point it out because that number came up for me, too. According to the countdown clock on my enormous financial spreadsheet, 1,500 days from today, in June 2020, we should be able to quit our jobs if we want to.

This is what I refer to as QT (Quttin’ Time), a time that Maeby enjoys all day.

IMG_4042

Please wake me up to have my meal

What goes into this calculation?

I project out all of our savings based on our predicted income and where our savings will be saved. We (probably) won’t have $1 million in 1,500 days. But I will be 38 years old and will have put in exactly 15 years at my current workplace.

With that many years, I will be able to claim retirement at age 55 and begin getting 16% of my final average salary. Unfortunately, there’s no accounting for inflation. It will be 16% of what my final salary was 17 years earlier. But as I showed in my classic post pitting a defined benefit pension against a DIY “pension,” having a pension at your job acts like a weak pair of golden handcuffs. Saving on your own, you can make much better returns. Especially if you’re using savings to buy rental properties.

And if we wanted to quit our jobs in 1,500 days, that would be how we (potentially) could do it. In 1,500 days, we probably won’t have enough financial assets that they will be worth 25 times more than our annual expenditures. But bring expected rental income into the picture, and we have enough, between income and assets, to cover our 2015 average expenses of $3,000 a month. After the pension kicks in at age 55, we would have more than enough, and we could sell the rental property.

So… Annual Rental Income of $15,000 + Some Withdrawls From Savings + No Debt + Pension Kicking In At 55 = Ability to pay for 2015’s expenses ($3,000/mo) adjusted for inflation, for all time.

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What Do You Do With Excess Cash?

For me, frugality is a never-ending game of optimization. I’m always looking for ways to either cut costs or get more out of my money. This leads us to do weird things like cancelling the newspaper, cancelling the cable, buying wood stove pellets instead of rabbit litter, and either riding a bike or taking a bus to work. (ed: Self hyper-linking skills are on fleek) The way I’ve forced myself into this position over the years is by promising to always increase our monthly savings as measured in Quicken.

Forced Savings

From the time Marge and I moved in together, our savings plan has basically been this: Force a certain amount of savings per month by using automated investing. Money disappears from our checking account before we even notice it was there, and it escapes to a investment vehicle where it goes to work for us. The investments happen on a weekly basis to maximize dollar-cost averaging.

We started this back in 2006. I arbitrarily picked $1,000 as a savings goal for the month. When it became clear that this was too easy a hurdle, I pushed it up to $1,500 a month. Once we hit that goal for three months in a row, we increased it $100. And we’ve followed that model ever since. The amount of monthly forced savings has increased $100 or more every three months.

Now we are at $4,000 a month. As you can tell, I’ve found this method to be really effective. Every few months, we have to optimize, because the money just isn’t there! The savings must be found.

To be honest, some of this is only short-term savings. Some of the savings are used as a DIY escrow account to pay for our property taxes and home insurance, or if we owe any income taxes at the end of the year. All other expenses flow through the monthly expenses and count against that $4,000 number.

And since months can be lopsided, I sometimes have to push expenses ahead a month or two in Quicken, or push income back, to make that average savings goal appear. Funny math, but you get the picture. Regardless, that monthly savings goal is being forced into savings using automatic investments either through our workplace retirement plans or Vanguard accounts every month. If there is a temporary cash shortfall, I keep $3,000 as a buffer in a savings account.

Then every once in a while, there’s a monkey wrench thrown into the works. We get three paychecks instead of two. A tax refund. Some unexpected income shows up and I’m at a loss of what to do with it. And we are having some of those days again. Oh, joyous days! Continue reading

Our Rental Property Income Statement, The First Seven Months

Rental House (22)I really can’t hardly believe it’s been almost nine months since we bought our rental property. Between the purchasing, the cleaning up, taking photos, advertising the apartments, searching for, denying and approving prospective tenants, and collecting a few months’ rent, it’s been a load of new experiences. It feels like much more time has passed since we purchased the house at the end of last July.

Rental House (13)I’ve told you about my trials and tribulations searching for tenants. It took a while, but we have tenants we love in both apartments now. I also told you about my experience using Cozy.co to vet tenants and collect rent online. Overall, the apartment rental scheme has had a few minor bumps, but it’s basically been pretty easy.

I’ve even run the optimistic return projections. But one thing I haven’t done is finish an actual income statement… until now!

The Numbers

I treat the rental property as its own entity, aside from our personal income and expenses, so I can see how it’s doing as its own business. Is it self-sustaining? Sure seems like it. I mean, I see the rent roll in each month, but what kind of profit is this place really making?

Even though we bought the place in July, I am counting from September 1 to March 31, since September is when we made our first mortgage payment.

Rental Income
Apt 1: $2,981.94 (2 + 3/4 months)
Apt 2: $5,209.68 (5 + 1/2 months)
Total Rental Income: $8,191.62

We were lucky enough to find tenants for Apt. 2 immediately after advertising it in September. Apartment 1 took some more time. We didn’t find tenants that we wanted until December, and they didn’t move in until January. So during the seven months, the units sat empty for a while.

Rental Expenses

Mortgage Payments $5,307.75
Home Equity Loan Payments $784.49
Property Taxes $3,606.61
Insurance $2,351.00
Maintenance $5,317.35
Electric $427.33
Gas $542.16
Water & Sewer $102.65
Miscellaneous $35.00
Total Expenses $18,474.34
Less Loan Principal 3,255.24
Expenses Less Principal $15,219.10

 

After seven months
Rental Income: $8,191.62
Total Expenses: ($15,219.10)
Total Profit: ($10,282.72)

Well that’s not very encouraging! A ten thousand dollar loss so far?? Let me explain why we are showing a loss.

Maintenance – The biggest expense so far has been what I label “maintenance.” This includes many things that we had to get done before we could get tenants moved in.

Rental House (5)Washer and dryer – We knew that when we bought the house, one unit had a washer and dryer in it. Well, apparently they were strictly for decoration, because there was no electrical hookup or plumbing hookup. Someone between our inspector, our realtor, and us, should have, but didn’t notice this. I only noticed it about a day after coming home from Japan, and the day before the tenants were going to move in!

As much as I would’ve loved to do everything DIY, there just wasn’t enough time.  We promised the tenants a working washer and dryer, and I had to scramble just to get an electrical contractor to put in the correct 220 volt outlet and a vent for the dryer, and a plumbing contractor to put in the washer and dryer connections. All told, our tenants were without a washer and dryer for a week and a half, but were very understanding about it.

Chimney – We’re lucky that our inspection went so well. We knew the house was in very good shape, and our inspector found nothing wrong with the house except for the hot water heater exhaust was clogged with dust from the chimney.  Long story short, we had to get the chimney re-lined, and that cost $1,805. We were happy to just get it done and not worry about it.

IMG_5966The other washer and dryer – Even though our first apartment was rented in a heartbeat, our second one sat on the market for weeks without an inquiry. We decided it was because there was no washer and dryer in the unit. What I thought would be a good way to attract two different types of tenants to the two different types of unit (one with w+d, and one without) didn’t work out. We spent $950 (after Lowes coupons) on a new washer and dryer and actually had our tenants agree to move in just based on the promise that the washer and dryer would be there by their move-in date.

Property Taxes – $3,606 is the bulk of our property taxes for the year.

Gas  – Since the heating is gas, and it is included in the rent, we pay for it. This statement covers the coldest months of the year. This should be much lower for the next five months. We’ll see how close my initial estimate of $100 on average per month will be.

Okay, so imagine that we drop all of the maintenance expenses ($5,317) and that the two units were occupied for all seven months (another $5,983 in rent), and suddenly we’ve turned a profit.

The good news is that, so far this year, we’ve made a profit in January and March, and probably will in April. The only reason February was not in the black is that part of our property taxes were due, and we bought that washer and dryer. I see our property turning a tidy profit soon. I’ll post another income statement after the first twelve months.

Any rough experiences out there for first time rental property owners?

Quarterly Expenses and Goal Progress: Q1 2016

Well it’s the first quarter of a new year, and a new year means a new set of goals to keep. Let’s see if everything is “on fleek” so far. Did I just use that correctly?

Total Expenses: $16,323.43
Avg Per Month: $5,441.14

Without Debt Payments
Total Expenses: $10,668.49
Avg Per Month: $3,556.16

Savings Rate: 45.8%

The Necessary Evils :

Quarterly Total Monthly Average
Mortgage $2,083.74 $694.58
Student Loans $2,578.08 $859.36
Car payments $993.12 $331.04
Home Insurance $960.00 N/A
Property Taxes $2,162.99 N/A
Medical $209.52 $69.84

That there is the final car payment! Marge’s 2013 Toyota Corolla is officially paid off. Fun fact: The car has 15,000 miles on it, which after 2.5 years means it is averaging only 6,000 miles per year.
Marge and I both had several doctors and dentists’ visits this quarter, making for an unusually high Medical expense.
That is our home insurance for the entire year, and we made $2,000 in extra student loan payments to help get them paid off very soon. And that is also just more than half of our property taxes for the year.

Wine Club Feb 2016 (5)

Food:

Quarterly Total Monthly Average
Groceries $1,225.60 $408.53
Wine & Beer $70.50 $23.50
Dining Out $127.52 $42.51
Takeout Food $157.33 $52.44
Total Food $1,580.95 $526.98
Moroccan Stew

Moroccan Stew

I think there is some leftover Christmas party and gift food inflating that grocery bill, and many, many cinnamon babkas made for friends and parties. We also hosted about sixteen people for a wine-tasting party with mucho food, and Marge competed in a mac & cheese competition (if you’re curious, reuben mac & cheese, and no). All things considered, this is a pretty good total. And a lot of good food.

 

 

Poets Walk (1)

Kingston Rhinecliff Bridge seen from Poet’s Walk

Transportation:

Quarterly Total Month Average
Auto Maintenance/Other $54.00 $18.00
Gas $197.16 $65.72
Parking $77.76 $25.92
Bus Tickets $130.00 $43.33
Total Transportation $458.92 $152.97

Mostly just commuting this quarter, although we did meet my parents down in the Hudson Valley for lunch and then Poet’s Walk hike in Rhinebeck. $65.72 a month for gas is about $10 less than what we spent on average last year. No car insurance or work on the car this quarter. All is good!

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DIY Retirement Income: Pension Vs. Savings Vs. Rental Property

I’ve been thinking a lot lately about income during retirement. In the personal finance “blog-o-sphere” it’s always about hitting that financial independence milestone, where your annual expenses are 4% of your total investments, so you can live off of entirely passive income.

That’s a nice idea. But who said you had to rely just on dividends and withdrawls from your investments in retirement? There are other options. Today I’m going to be comparing and contrasting two other options we have available.

The pension

Rabbits: Content without a pension

Rabbits: Content without a pension

I work for a huge employer that still offers an honest-to-god pension. So the pension has always been a part of my retirement planning. And so it is for everyone else who works for this employer. In fact, from the way they talk, you’d think they were all planning to be completely reliant on the pension to cover their living expenses!

The talk is always about how many years they’ve put in, or how many years they “have left.” Like it’s some kind of prison sentence. I don’t know if this is an actual reflection of people’s financial standing, or just a misunderstanding of how pensions work, but everyone seems dead set to work at least 30 years, no matter how old they would be by that point.

numbers

Hopefully this picture will illustrate how many numbers we’re looking at today

The basic pension rules

Under our pension system, for up to 20 years of work, you get 1.66% of your final salary for each year worked. Once you hit 20 years, you get 2% for each year. And then at 30, it drops down to 1.5% for each additional year. So between years 19 and 20, you get a jump from about 31% to 40% of your income. Then it becomes less lucrative to stay longer than 30 years.

Pensions aren’t paid until you’re at least 55, and there is a penalty if you don’t have at least 30 years at that point. That penalty is reduced for each year you delay taking a pension until age 62, when you are not penalized at all.

But what does it practically mean to take a pension early? Let’s look at someone with a salary of $70,000:

Taking retirement at age 55:

15 Years of Service $12,770
20 Years of Service $20,440
25 Years of Service $25,550
30 Years of Service $42,000

 

Taking retirement at age 62:

15 Years of Service $17,493
20 Years of Service $28,000
25 Years of Service $35,000
30 Years of Service $42,000

According to my calculations, there is no incentive to delay taking your retirement until age 62. Even with a 27% penalty, it’s worth it to take the pension for those seven years.

In our 15 Years example, after seven years of saving all of the $12,770 at 7% interest, it would total nearly $115,000. At that point, the $115,000 at 7% would be generating $8,000 a year, turning that $12,770 pension effectively into a $20,770 pension.

But if you held out on collecting retirement until age 62, you’d be waiting seven years to turn that $12,770 pension into a $17,493 pension. That’s an extra $4,723 a year. So, in a way, you’re losing money by not taking the penalty!

As someone planning for an early retirement, I’m looking to skew towards the lower end of the Years of Service spectrum. But is it worth? Am I leaving so much more money on the table by quitting at 20 instead of 25, or 15 instead of 20?

Numbers Education Indicating High Tech And Learned

beep bop boop beep NUMBERS!

Savings needed to replace a pension

Now that we know that it’s not worth delaying taking a pension from age 55 to 62, we’ll forget collecting at Age 62 and just focus on the Age 55 chart. How much money in savings would it take to replace the annual income from working a few more years for a pension? Using a 4% withdrawl rate, here’s how much you would need to have saved up to replace each five year increment:

15 Years vs 20 Years

15 Years 20 Years Income Gap Savings Needed
$12,700 $20,440 $7,740 / year $193,500

 

20 Years vs 25 Years

20 Years 25 Years Income Gap Savings Needed
$20,440 $25,550 $5,110 / year $127,750

As expected, the jump from 15 to 20 years is bigger than the one from 20 to 25 years because of the bump at Year 20 from 1.5% per year to 2%.

For working from year 15 to 20, you get an additional $7,740 in income.  That would require an additional savings of $193,500 in the bank to replace.

But don’t forget, that pension doesn’t kick in until age 55. Say I’m retiring at age 40. We don’t need $193,500 right now to make up the gap. In fact, $70,142 invested at age 40, left alone and growing at 7%, turns into $193,500 by age 55. Why, that’s just one year’s income for our $70,000 earner! Or, if you like, two years with a savings rate of 50%, like we saved last year. Suddenly that 15 year pension turns into a 20 year pension through your own shrewd investing!

Hmmm… maybe a pension is not as much of a golden handcuff as I had thought. Let’s look at another example.

Rental Property Income

Our first investment property income statement is forthcoming, so right now, let’s use our very optimistic income projection as a basis. In our example, with a 2-unit property, we are bringing in $5,525 a year in cash. When it gets interesting is when the mortgage is paid off. Without mortgage payments, that would leave another $10,440 in cash flow for us! That’s nearly $16,000 a year total.

You can probably see where I’m going with this. One fairly simple income property bringing in $16,000 is worth more than a 15 year pension!  By buying one more similar investment property, we’d have $32,000 a year, which would cover almost all of our living expenses in 2015.

But unlike stocks, bonds, and a pension, an investment property is not entirely passive income. Things need to be fixed. Tenants need to be vetted and apartments need to be filled. But after not hearing a peep from our tenants for the last two months, I’d say it really is close to passive income. And besides, don’t you need something to do in retirement anyway?

Garage Demo (9)

Things might need to be demolished, like a garage!

Real Estate, Savings > Pension

But the one big advantage the Savings and Rental Property methods have over the Pension for early retiree wannabes like you and me is that the income is happening now instead of at age 55. No need to wait. This is something the pensioners at my work don’t seem to get. Dividends will show up in your bank account right now. Withdrawls from a 457 Plan can happen right now. And you don’t have to wait until age 55 to have access to rent payments. You can create your own pension. Call it a DIY pension, or a “pensionhack” if you’re nasty.

What about a pencil-sharpening business?

What about a pencil-sharpening business?

So if you don’t have a pension in your future, and most Americans hired today won’t, don’t worry! By owning a rental property or squirreling away your money, you’re basically creating your own pension! Sure, a rental property is just a little bit more work. But if you look at it another way, by not putting in all those years at a workplace to secure a pension, in the long run, owning an investment property requires far fewer work hours.

Not that there’s anything wrong with a pension

This is not to put down the pension at all. The one big benefit it has other the other methods is that it is a defined benefit plan. What you receive every month is not affected by the stock market or by unexpected expenses at a rental property.

And not everyone is as financially astute as the readers of Ridinkulous. People like the security and “sure thing” nature of pensions or Social Security. We know that people have a problem saving for retirement on their own and I think the disappearance of the private sector pension is going to be hugely economically damaging in the near future. People just don’t save on their own. Politicians would count the disappearance of the pension and the rise of the 401(k) as an indicator of our economic freedom. Yes, it’s true! People are now free to save nothing for their retirement! We also have the freedom to be ripped off by investment advisors and fund managers!

I believe in saving people from their worst impulses, and that includes not saving for retirement. Many people just don’t see the value in it since the payoff seems so far down the road. That’s exactly why pensions are important. It’s the long view that causes people to put it off until it’s too late.

What are you doing to hack your own pension?

The things we do for frequent flyer miles

I’ve always been into any scheme that lets me get something for nothing. That’s why I fell so hard for the credit card-churning game. For very little effort, I can reap huge (“YUGE!”) benefits. Fifty thousand points one month, forty thousand points another month… It adds up, and before you know it, you’re swimming in 3 million rewards points.

But sometimes this travel hacking scheme takes a little work. Gone are the days when people would do “mileage runs,” basically paying for and taking cheap flights strictly because of a bonus mileage offer. Gone are the days of the US Mint dollar coin deposit trick. But there are new schemes all the time. All it takes is someone like Barry Egan to figure out that each individual pudding cup is worth 250 frequent flyer miles.

Barry Egan stockpiling miles

Barry Egan stockpiling miles

So it was with the recent IHG Priceless Moments promotion. IHG is the group that owns the Holiday Inn, Crowne Plaza, Intercontinental, Staybridge Suites and other hotel brands. The Priceless Moments promotion is supposed to work like this: For every stay at one of their hotels, you get an entry to an online contest. And with each entry, you can win anything from 500 IHG points to 1 million points to a private helicopter ride over NYC.

The loophole is that, for some legal reason, there is “no purchase necessary.” And so buried deep in the contest’s terms and conditions is the rule that, instead of staying at a hotel, you can also enter the contest by sending them a 3×5 piece of paper in the mail with all of your IHG member information on it. And since the contest ran for 3 months, there were 94 nights you could possibly be staying in their hotels. So to make things even, you are allowed to enter by mail 94 times.

Someone also figured out the ratio of hotel point prizes and calculated that the average person will get about 47,000 IHG points. Sounds worth it to me!

Ladies and gentlemen, this is what 188 envelopes looks like:

IHG Mailing (3)edit

Many thanks to the intrepid soul who figured this one out, because we benefited from their discovery. But not without some work.  See, each entry had to be filled out by hand with 8 different bits of information (Name, member number, date of birth, daytime phone number, etc.) Filling out 94 notecards with all of that takes some time! I did it while watching a movie or two. Luckily, the envelopes could be addressed with pre-printed labels!

There was also the matter of sealing the envelopes. Does anyone really wan to do that much licking? So Marge invented the method seen below. She remembers using an old ceramic stamp moistener at an prior job to seal envelopes, and put together the wet paper towel and bowl method seen below.

IHG Mailing (1)edit

What’s the price of all of this? 94 first class stamps are $46.06. I got 100 notecards for $1, and 100 envelopes for $3, so about $50 total.  A week after I sent in my entries, I started getting contest entry emails. You had to click a link in each email to see what you won.

More often than not, you get this screen:

IHG PointScreen

But sometimes you get 1,000, 2,000 or 5,000 points. After everything was done, I had won 57,000 IHG points. At $50 spent, that comes out to .09 cents paid out of pocket for each point. That’s great, because I’ve gotten about 0.8 cents of value from each IHG point from my redemptions so far. That also means the 57,000 points is worth $456 of stays at IHG hotels.

You might have noticed I didn’t mention what Marge won.  She also filled out 94 cards, and we spent $50 on notecards, envelopes and postage. But in the end, she didn’t receive any entries. It took me a while to figure out why. I knew the cards were filled out correctly and I had sent them at the same time. The problem was I forgot to register her on the website for the promotion! Always remember the cross your T’s and dot your I’s, kids!

So in the end, we actually paid .18 cents per point. Still good, but not great. Mostly I’m annoyed that we potentially missed out on another 57,000 points!

What schemes have you been running?

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