Credit Card Hacking for Travel - WCI Podcast #407

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This is White Coat Investor podcast 407 credit card hacking for Travel this episode is brought to you by SoFi helping medical professionals like US bank borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts as well as an investment platform, financial planning and student loan refinancing featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com SoFi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth, LLC. The brokerage product is offered by SoFi Securities, LLC, member of FINRA SIPC Investing comes with risk, including risk of loss. Additional terms and conditions may apply. Our Quote of the Day today comes from Daymond John, who said, make sure you have financial intelligence. I don't care if you have money or you don't have money, you need to go and study finance no matter what. I think that's actually pretty good advice. It's particularly valuable though, if you actually have money. You know, what we do here at the White Coat Investor is we try to give you basic financial literacy. Because if you combine basic financial literacy with the high income that physicians and other high income professionals have, it can do some pretty amazing things. Not only in your life, but enabling you to take care of other people that you care about, like your patients, your family, your friends. And so it's pretty awesome when you combine those two things. Thanks for what you're doing out there, by the way. It's not always easy work and I know you don't always get thanked very much for it. I'm grateful for my healthcare providers. I'm seeing a physical therapist a couple of times a week and I know I'm grateful for his encouragement and hard work. I think his hands are as sore as mine are at the end of our therapy sessions right now, but I'm grateful for the progress that I'm making there. I'm also grateful for my surgeon. I texted him the other day and he said no, no, no, no no, you're doing great. Your progress is excellent. We are not putting you in this crazy gas splint, not for your injury. So he talked us out of something we were thinking about doing for therapy and I'm grateful for that. I'm grateful for his expertise. All right, don't forget first years, okay? The Champions program ends in, like, a month if nobody has handed you a White Coat Investor guide for students yet. This year, you need to sign up to be your class champion. You can do that@whitecoatinvestor.com all you gotta do is, like, getting something signed by the dean's office saying there's 107 people in your class and give us your mailing address and we'll send you a copy of that book for everybody in your class. All you have to do is pass them out, and you will be not only our champion, but their champion. I figure that you're probably saving each of them something like a couple million dollars over the course of their career if you can make them financially literate up front. You know, a couple million dollars times, you know, 100 people in your class, right? That's $200 million of value that you can provide just by taking a few minutes to pass out some books. Please sign up bytecoininvestor.com Champion. This is for first years. When you're a second year, you gotta buy the book, but we'll give it to you for free if you're a first year. All right, we have a great interview today. It's a little bit long, but that's fine. Cause there's three of us on it and we have a pretty good discussion. We brought back our friend of wci, Leisha Taylor, and we've got a special guest as well. Let's get him on the line. We're back here at White Coat Investor doing another one of our Friends of WCI episodes. And our friend today, as you know from prior episodes, is Leisha Taylor. Leisha, welcome back to the podcast.

Thank you so much for having me. I'm excited to be back and super excited about this topic we're going to delve into today.

Yeah, we've got a great topic. And we have a guest today with us helping with this topic. Dr. Devin Gimble from Point Me to First Class, which is the name of a podcast and our website, as well as a Facebook group. And there is a Facebook group, Point Me to First Class, for women physicians with like 28,000 people in it. Is that what you told me it was?

Yeah, that's about right.

Awesome. Well, welcome to the podcast, Devin.

Thank you so much for having me. I'm a huge fan of you, the work you do. Leisha is someone who I admire very much. We've had great conversations before. So I have been looking forward to this conversation for a very long time. I'm so excited to be here.

Yeah, and we're excited to have the conversation too. Our topic today is credit card slash travel hacking. And this kind of comes in two varieties. There's the 101 variety where you have a card that gives you some rewards and I've got a card that gives me 5% back on gas. Basically, I buy all my gasoline at a discount. Right. That's the 101 level. But there's a whole other level to this. We'll call it the 401 level, where mostly you're working not so much to get 1 or 2 or 4% cash back, but you're getting bonuses for initial spend on the card or sign up bonuses sorts of things can add up to substantially more than 1 or 2 or 3 or 4%. And kind of the trigger for this podcast was a, was a quote that our social media folks put out on Instagram that came from a post that was written by Tyler Scott, who's one of our columnists. And he said something to this effect. He said, I'm baffled by the lengths people will go to and the complexity they're willing to add to their lives by having 11 credit cards to get 3% back on gas, 4% back on restaurants, and 5% back from Home Depot versus just having a single 2% cash back credit card. That extra 1% on gas or 2% on restaurants is not the difference between winning and losing the single player game of home personal finance. And you know, the quote was taken out of context. That wasn't what this entire blog post was about for sure. But it blew up on social media and in the Point Me to First class Facebook group. And I think what it really tapped into is that there's a whole bunch of people out there, including many physicians, who have seen a lot of benefits in their lives from travel hacking, from credit card hacking and really think it's fun and cool. And so we're going to talk a little bit more about that. But the first thing is let's talk about why people reacted to this so strongly. Lisha, you want to start out with why you think there was such a strong reaction to that quote?

Well, I think that there was a strong reaction to the quote because a lot of people find a lot of value out of this hobby, out of credit card hacking. And usually when I am talking about this topic, when I'm introducing this topic, I usually start off with talking about why I do it. Why this is of interest to me, and I think there's three main reasons. Number one, credit card hacking and travel hacking, however you want to call, prevents me from having to always do so much delayed gratification to meet my financial goals. Let me explain that a little bit, Jim. You and I both have podcasts. You and I both spend a lot of our time helping doctors with personal finance, whether that is saving money or paying down debt or minimizing taxes or investing for retirement for, right? But I find that in order for a lot of people to do that, in order for people to do that successfully, there's this constant tug. There's this tug between YOLO and fiscal responsibility. There's this tug between I only live once, I want to buy what I want because it would bring me joy, and I actually should save and maybe invest for retirement. So there's this tug, right? I want to do this other thing, but I know I should do this thing. And I find that travel hacking and credit card hacking prevents me from always having to make that choice. Right? I can use my own money to invest for retirement, pay down debt, save and build an emergency fund, and I can use credit cards to fund my travel. And so that's point number one is that doing this hobby prevents me from having to go through so much delayed gratification to live the life I want. The second thing I find is that doing this hobby prevents me from leaving free money on the table. Jim, you talk about this all the time, right? If you work a job and you get a retirement match, right? You not taking advantage of that match is you leaving free money on the table. Well, I like in credit card hacking to the same thing, I already have to buy things. I am not carrying around wads of cash. So I usually use a card. If I'm going to use a card, I might as well use a credit card. And if I'm going to use a credit card, I might as well use a credit card that earns me perks and rewards. And if I'm going to earn perks and rewards, I might as well use the kind of card that allows me to earn more perks and rewards and allows me to do more things with those rewards that I earn. And so it prevents me from leaving free money on the table. That's point number two. And then my last point is, you know, Jim, I consider myself a Henry. I consider myself somebody who's a high earner, but I'm not rich yet. And that means that I'm somebody who wants to live this rich life, but I don't necessarily have all the rich money, right? I don't have all the money in the world. And I find that credit card hacking allows me to live a life of luxury without paying luxury prices. Right? I don't have to choose between saving and going on vacation. I can actually do both. And so that is sort of the three main benefits that I get out of this hobby, right? I don't have to delay so much gratification. I prevent myself from leaving free money or free perks on the table. And I can live this life of luxury without paying luxury prices.

Awesome. Devin, this. This blew up in your Facebook group. People felt like they were being afternoon.

And all of a sudden everything started happening. I remember this very, very well. You know, I think what's so great about this, first of all, is the conversation that it spurred. And I think it was really funny when you led into this conversation, you said, you know, kind of what triggered this whole. I think trigger is an absolutely perfect word for this because this one specific post, I mean, it's literally a screenshot, you know, of like three sentences, really did trigger a lot of people. And I agree with everything that Leisha said. So I'm not going to reiterate all of that, but I think speaking to your point about kind of why, why was this specific poster, this specific sentiment, why did it generate as much discussion, as much interest as it did? And I think coming from my community, again, you know, I run a private Facebook group about 28,000 female physicians. So that's the entire audience. And the whole point is to talk about credit card points. How can we use them, earn them, you know, expand our experiential wealth, you know, through travel, using credit card points. And I think what really kind of hit on a lot of people about this quote that I know now was taken almost entirely out of context is that it showed, number one, I think, a common misconception around this whole idea or this whole hobby of strategically and responsibly earning and using points, which is basically that it's not worth it. Like you're either going to have to have a million billion credit cards, you're going to have to spend a thousand hours a week in order to get anything out of it, and that's just not worth it. And I think that that reflects a fundamental misunderstanding of really what this hobby can be, especially for the high earning, probably working a lot of hours a week already. Professional, like, you know, physicians, lawyers, practice owners, all of these different types of folks who can really benefit from points. And I think even underneath that, the piece of it that I know a lot of people reacted to is, again, we're only talking about this one quote. How you can interpret a quote about someone being baffled about why anybody would want to do this kind of hobby is I think that there was a tone of almost like for one individual person to decide that something is good or right or responsible for them, but then kind of apply that blanket to everybody else, you know, because there is something available, a hobby available to someone that they personally don't want to engage in, that it doesn't make sense to them why anybody else would even consider it. And I think that that is the piece that people really want to have a conversation about. Because it has been my personal experience, again, as one of a two, you know, two adult physician family, it's been my, certainly my experience now that I've had the pleasure to teach hundreds and, you know, thousands of women and physicians how to do this whole thing, is that points actually can be a significant form of benefit, even for high earners. And it doesn't mean that it's right for everybody. Just like I don't think it's right that nobody in this community really learned how to do this well. And I think for me, what it really kind of opened up was this need for a bigger conversation, a more nuanced conversation about what does this hobby actually look like? How do you know if you stand to benefit from it, or. Or how do you know if. No, you actually are way better off sticking with a great solid cash back card. Right. Like, I don't believe there's a one size fits all for personal finance, and I don't believe there's a one size fits all in terms of credit card points. But what I really want to expand the conversation around, especially for physicians and high earners, is what does the actual opportunity and possibility of this hobby look like? And now you can go out and make an informed decision about whether or not this fits into your life. And I have to say that for you to have as huge a platform as you do, especially around personal finance, I have always been really surprised that this has not been a bigger conversation in the white coat investor community. And so I'm so excited that that one random quote got pulled out of context and posted on social media so that it really could start to open up this conversation that I think so many people can potentially benefit from.

Yeah, I think part of the reason it probably hasn't been discussed a lot in the community is that I operate at the one on one level, right. I don't go chasing a bunch of, you know, I don't have a spreadsheet with 25 cards and bonuses and cross stop when I cancel them or anything like that. I have some cards that I've had literally for years and they pay a decent percentage back, but that's about it. Before we get any further in this, let's make some disclosures. Here's the first one. White coat investor actually has a credit card page. We have some credit card. We can get paid affiliate marketing fees if you sign up for credit cards from that credit card page. Now point me to first class doesn't actually do any credit card affiliate fees. You do have a course that you sell on how to do this and that's how you monetize that business. And Leisha, you don't have any disclosures to make as far as, you know, credit cards and you know, conflicts of interest on this topic. But I think we probably ought to start at the very top as we discuss this and talk about where these rewards come from. Right. Because there is no free lunch in life. Right. Somebody is paying for these rewards. And part of that, some of that payment is probably from people who aren't using credit cards very responsibly. And that could easily be some of even our target audience, the people we're trying to teach about how to do this. Right. But there's a lot of studies out there that show that we actually spend more money when we use a credit card to pay for things. And in fact, I've used this to help me spend more money because it truly is less psychologically painful to use a credit card. What are your thoughts on the possibility of people ending up in credit card debt, 29% credit card debt that they're carrying for years and years, or obviously these banks are making more than they're paying out in these rewards or they wouldn't be doing it. What are your thoughts on navigating that aspect of travel and credit card hacking?

Yeah, I think this is a great place to start because I think one of the fundamental things that we all have to understand, like you said, is that banks aren't doing this just to be nice and fun. Right. Like they're going to do things that benefit their bottom line and their profitability. And what that usually looks like is that for this specific type of credit card that we're talking about, Leisha, and they may call these rewards credit cards or points or miles credit cards, there's so many of them that are available to you if you're based in the US and have access to the US based financial system. But essentially a rewards credit card is a credit card that anyt you put an expense on it, you get rewarded in the form of points or miles is usually how they're referred to. And the thing to understand is that these specific credit cards, one thing you have to know about them is they all tend to carry obscenely high interest rates. And we're talking 20, 25, 28% interest rates. And so the banks, like I said, are not doing this just to be nice and fun. The way they make money is, of course, when people don't pay off their credit card statement in full, they end up carrying a balance. They get charged these, again, I think they're like borderline extortion, you know, interest rates. So the thing is, number one, one of the core rules of this is that I never, ever, ever recommend anybody ever get one of these types of credit cards or use one of these types of credit cards if they are not in a position to pay off their entire credit card bill in full every single month. No, stop. There are a lot of people who are not in that position, maybe not in that position yet. I tell them, fine, you can learn about this for free. Wait until you are in that position to even consider this. Because any interest that you pay on these credit cards is going to more than negate any value you get from the points, even when you are very, very good at extracting value from these points. So that's kind of a baseline where I tell everybody, this is where you need to start. Okay? Beyond that, if you are someone who is paying off their credit card statement in full every single month, you stand a great chance of getting more value from these points, of course, than the bank is going to get out of you. But we know that that's not the majority of consumers. The majority of consumers are not paying off, you know, all of their credit card statements in full every single month their entire life. The flip side of this is that credit cards, I believe, can be more useful than just the points. Of course we're going to talk about that. I think it's really fun and exciting. But credit cards offer more than that, right? If you've ever tried to get a loan, a student loan, a mortgage, a car loan, a line of credit, you need a credit score, right? So learning how to responsibly handle credit cards is going to help you boost your credit score. It's going to help you in other areas of your life of Course, that doesn't mean that you need to go out and get 20 credit cards just to improve your credit score. But there are additional benefits to becoming really, really educated about the way that credit cards work. But I think, speaking then this is the last thing I'll say is, you know that point about are we now going to be incentivized to spend money we wouldn't otherwise spend or spend more money? Because now it's gamified. You know, if I spend a dollar, I get a certain amount of points. If I spend $5, I'm going to get five times as many points. I think that it's entirely possible that that can happen. And I think this is where you have to really, really know yourself, know your behavior and know your patterns. If you know you're someone who just that incentive of getting rewarded for spending more money, if you know that that's going to encourage you to spend more money than you already are spending or that you want to spend, I would say that's a really good indication to either not get into this hobby or get into it, but get into it very, very slowly. I think if you're smart enough, you know, to be a physician, you're smart enough to be following white coat investor, be learning about all of those things. I think you're also going to be smart enough to have a really good sense of just what are your own personal tendencies and to be able to say, hey, I want to learn about this, but I don't want to dive all the way in because I'm not exactly sure how I'm going to react to it. You know, being aware of that in yourself so that you can decide at what pace do you want to take this? And so, you know, along with just always pay off your credit card bill in full every single month. I think the second kind of core rule and something that I very much live and teach is that this is not about spending money you otherwise wouldn't. This is about taking the money you're already going to spend, no matter what, and leveraging it so that you can get more out of it than just the thing that you're buying at the end of the day. Leisha, I don't know if you have any additional thoughts, if you disagree with me about any of that.

No, I agree with what you said. And the thing that I will add is, Devin, I think what you said is one of the reasons why you and I both believe that physicians are in a prime position to take advantage of this hobby. And I think going back to your original question, Jim, that's why there was so much traction. It was like, hey, physicians are in a great position to take advantage of this. It's odd that there would be a post suggesting otherwise. And so let me break this down or make it clearer is because physicians tend to make substantially more money than the average American, most physicians also tend to have more monthly expenses than the average American. And so we are already spending a lot of money each month. And so if you are already spending a lot of money each month, why not try to put that spend on a credit card that gives you substantially more perks and points? You know, Devin and I talk about this offline all the time in that, you know, some people who don't make as much money each year as physicians do, they utilize this hobby by constantly taking out credit cards. Right? They're constantly trying to get a new card so that they could get that signup bonus and get these points, and so they end up with a gazillion credit cards. But one of the things that Devin and I are unique about and that I think a lot of physicians are unique about, is we don't always have to get new credit cards in order to earn a substantial amount of points. I don't take out credit cards all the time. I don't have a million credit cards. And so it's not an all or nothing. It is not a. Hold on. I need to get 30 credit cards and have 20 spreadsheets in order to take advantage of this hobby. Wait, I'm actually in a good position to take advantage of this hobby or with the money I already spent.

Yeah. I think it's important to point out that it doesn't take much to get a credit score adequate to get a mortgage either. My daughter just texted me that that she just found out her credit score is 794. Now, bear in mind that six weeks ago she was unemployed and serving as a missionary. Right. She hasn't made $2,000 since then. She's a college student now and is a terrible credit risk. So how does she have a 794 credit score? Well, I put her on my oldest card two months ago. Right. So it doesn't take all that much to get a fine credit score that's going to allow you to get a mortgage and that sort of a thing. If you get one credit card and buy your gas with it for a year, that's going to be enough for you to get a mortgage. So don't think that you've got to do crazy stuff you don't have to have student loans, you don't have to have 12 credit cards. You don't have to do these sorts of things in order to function in life the way normal people function. So don't do it just to get a credit score, just to have, you know, a credit history, that sort of thing. You've actually got to like the game. And I'm getting the sense that the vast majority of these rewards and things that are people are doing is travel. What about people that hate traveling? If you're like, I do not want to go on a first class trip to Europe twice a year, you know, that sounds terrible to me. Are there other options Besides travel?

Yes, 100%. And I think this is where it is so key to kind of understand what matters to you both in terms of the way that you want to handle credit cards and also what are you hoping to get out of these rewards on the other end. And I would argue that if you really are not interested in traveling, I don't think that rewards credit cards are going to be a great fit for you. I do honestly believe that you should always be getting something, benefiting in some way from your expenses. But you can do that very easily, very simply with a solid cashback credit card. So for someone who really doesn't want to travel, I still think it's better to not use a debit card. It's better not to use, you know, a local credit union credit card that may not give you any rewards at all. And get a cash back credit card that gives you 2% cash back on everything. Wonderful. At least at the end of the year you have something in the form of rewards to come back to you for the spending that you've done. Think if you don't want to do travel, then don't even pay attention to rewards credit cards. It's not a match in terms of desire, preference and then outcome. There are really great cash back credit cards now both for personal spend as well as for business spend, you know, so if you're a medical practice owner, you're an online business owner, you're spending multiple six, seven figures a year on your business expenses.

Great.

Go out and get a solid cash back credit card. You're still going to benefit tremendously from that.

Okay, let's have the cocktail party conversation, right? When you go to a cocktail party, people talk about how they bought Nvidia before it went up, right? You talk about your wins, you don't talk about your losses. Let's hear about the big wins with Credit card hacking. Each of each of you, give me an example of a big win you personally had and how it happened and how much it was worth and what you did with it, et cetera.

Okay, I'll go first. You know, I found so much value out of this that pinpointing one big win is challenging for me. So take with that as you will. But I will say two things come to mind. I know I'm sort of breaking your rule here. One of them is a business class flight to South Africa. Devin knows about this because I have talked ag nauseum about this trip on her own podcast and on my podcast. But, and I think, Jim, the last time I was on your podcast, one of the things I talked about is how my dad refuses to give us money for an inheritance and how he instead decides that he's going to buy us family vacations, which, okay, champagne problems here. I recognize that. But our last family vacation was to South Africa. And I'm mentioning this as one of my big wins because I said, well, you know, I live in Atlanta. South Africa is far, far away. I don't want to be cramped up in the middle seat sitting upright for 20 plus hours. That does not seem fun for me. And I think for a lot of people that probably does not seem fun. If you've ever traveled internationally, right? The flight tends to be something that you have to get through. Most of most people are going on Google flights, picking the cheapest economy flight and just saying, if I could just tough it out through the flight, then my vacation will start. Well, with this trip to South Africa, the flight became part of the vacation. I had never traveled business class before. I don't even think I knew what business class was because most of my travel was domestic. Yes, I had traveled internationally before, but I was not rich enough to buy anything other than an economy seat. So I really didn't know what the options were. One of the things I learned is when it, when, when it comes to international travel, not all planes have a first class cabin. They have an economy cabin, some sort of comfort plus or premium cabin. And then they have business class for a lot of these flights. And I'm like, okay, what's business class? Business class is you get a bet on the plane. Business classes, sometimes they give you pajamas. Business classes, you walk on the plane in an entirely different section that I never knew existed. You're greeted with champagne and mimosas. You get chef inspired meals. I actually get to sleep on the plane, like lying flat, like, what? And when I thought about Business class flights. What I always thought about was I have to be a multimillionaire in order to do this right. Who in their right mind can pay $7,500 for this one way business class flight? That's how much it costs. Well, with credit card points, I didn't have to pay that. Instead of paying, you know, $7,500 in cash, what I did is I utilized credit card points. It was 90,000 credit card points plus $500 in cash. And so when I subtract the $500 that I paid in fees and then I do this, how many points per cent of value did I get out of my flight? I got 7 cents per point of value out of that flight. To put this into perspective, most credit card points assign a value of about $0.01 per point. So 100,000 points is the equivalent of $1,000. And yes, $1,000 is better than nothing, right? You could use that thousand dollars to, you know, decrease the amount that you owe on your credit card statement. You could use that $1,000 to purchase an economy flight to South Africa. But Instead I utilized 90,000 of those points for a business class flight to South Africa. So I would have already spent 500 to $1,000 on the flight. So instead of using that money to purchase an economy flight, I used that money and I got a business first class flight to South Africa in luxury. And so that I think is the difference is it turned into, all right, I was already going to take this trip, but instead of taking this trip in economy, I can take this trip in business or first class and it doesn't cost me any extra money. So that's my first point, is it expands what I can do with travel because of this point. And then the second thing is I was able to take trips that I otherwise wouldn't take. I just went to Cabo completely free. Like the resort, all inclusive was free. I did not pay a cent in taxes or extra fees. Ordinarily I probably wouldn't go to Cabo on a whim, but because I didn't have to pay anything, I got a free vacation. And so those are what I consider my big wins, is now I get to travel in luxury and now I get to take trips that I otherwise wouldn't be able to take.

Okay, so how'd you get the 90,000 points?

So those 90,000 points I got from a signup bonus on my first credit card, first rewards, you know, transferable points, credit card.

So you had to spend $3,000 on that credit card and then they gave you 90,000 points or something like that, or what was it?

Yeah, yeah, yeah, yeah. When I first started off in this hobby, the first card I think I got was maybe Chase Sapphire Preferred. And then I got an amex Personal Gold Card. Right. And so if we're breaking this down and trying to figure out how much money I spent and that sort of thing, the Chase Fi I Preferred has an annual fee of $95. And I think the sign up bonus at that time was like spend $4,000 and get 70,000 points or something along those lines. Right. And so for me, I was already going to spend $4,000 or so by virtue of being a high earner and having high expenses. And so now I just put that spend on that card and I earned those points.

Okay, but if that had been a 2% back card, you would have gotten some money for that $4,000. I mean, 1% would have been, what, 40 bucks and 2% would have been 80 bucks. So that's the opportunity cost. Instead of using those to buy, that cost would be $80 plus a $95 annual fee, that sort of a thing. So obviously that's a pretty good Swap to get $7,500 of value for 150 or $200 worth of what it really cost you. All right, a big win for you, Devin.

Yeah. So let me just talk to your point there, where I think it is important to kind of run through this math and say, hey, how much am I actually kind of spending on an average basis? What would I earn if I was going to use a straight 1% or 2% cash back card? I think we can all argue that actual cash is always going to be more powerful, more liquid than getting a certain amount of points or rewards. And so I don't always think it's an apples to apples comparison, but I was running through, for me, the math because I am nerdy and I do keep spreadsheets and this is what I do also as a business, you know, but how many points have I earned on an annual basis? What were the ways I used them? If I had booked the same exact things just outright in cash, what would the cash cost of that have been? Right. Like, I just like to get some of these benchmarks. And for Me Personally, in 2024, I redeemed a lot of points. I redeemed about 2.7 million points for about $150,000 worth in travel. And I was doing the math of, okay, if I had a straight 2% cash back card, again, I have personal expenses. I'm a business owner. My husband is a self employed physician. So he has, you know, his business expenses. We earn points for all of those. If we were to just earn 2% straight cash back for all of our expenses, we would have had to spend about $7.5 million in order to get 2%, you know, cash back of $150,000. And I can assure you, I feel like we are high spenders. We are not spending seven and a half million dollars a year even between our businesses and our personal spend. And I also think context here is important, right? Maybe Leisha can talk a little bit about kind of her background, how long she's been doing this. I've been doing this for over 10 years and I will readily admit I'm biased. I think points are amazing. Again, I do this professionally. I do not purport to be just like your average case study. I like to show people and be transparent about what I'm doing and also acknowledge not everybody's experience is going to look the same as mine, especially not maybe their first year or two in this hobby. But I think what Leisha has done with points is really, really common for people even in quote, the beginning. In terms of just what is possible for you in the beginning. This past year we just got home, my kids winter break. I have two kids, a six year old and a nine year old. The four of us went to the Maldives for a week. We flew round trip business and first class internationally for a family of four which if you've ever looked at international flights to the Maldives, those are not really what I would consider to be budget flights. We stayed one week on a beachfront standalone villa. Again, that entire hotel stay. There was no out of pocket cash cost for the actual reservation. So we made the reservation for the villa for a week. All on points, no out of pocket cash cost. But that's actually not the example that I want to say. Oh, is a huge win because I think that really is an extreme example. I think it's doable for a lot of people who get into points. And also this is the first time I've taken my two kids that far internationally on business class. What's actually much more regular for us is that we travel around my kids school schedule. I think a lot of folks can relate to that. Your spring break, your winter break. This is when travel's in very high demand. It's very expensive even for travel. That I don't think a lot of people would consider to be just out of control luxury and so the example that for me is a really big win is one that I think is actually much more relatable to so many people, which is for my kids, spring break in 2024, we took them for one week to a resort in Costa Rica. This is a direct five hour flight from where we live in Chicago. Round trip economy flights for one week for a family of four, they were pricing out at $9,000. That is a huge amount of money, even for me personally. To spend $9,000 on round trip economy flights like that to me does not scream luxury. If you've been hanging out in economy on United Airlines anytime recently, I don't think a lot of people are thinking, wow, oh my gosh, this is the epitome of travel. But that's what travel costs. To fly a family somewhere is not cheap, even if you're doing domestic or kind of local, international. And so we used points again, I flew my family for round trip. I guess it's not domestic, right? It's international Costa Rica, but round trip economy. We stayed for one week in a really, really lovely hotel. It was a standard room. It was nothing extravagant. It was a 400 square foot room with two rollaway beds for my kids, you know, out of pocket cash cost just to book the flight in the hotel. For that trip, I spent $312. I would argue that is a bargain. And if we were to book the same exact economy flights, the same exact hotel for the dates of stay, all in cash, it would have cost $17,700. And for me, this is as much about what points are about as all of the amazing, extravagant things and stories that I could share and that I share on my own podcast, is that I am not in a place in my life right now where I look at $17,000 for a one week trip to spring break with my kids and think, oh, that's a no brainer. I'm thinking there are so many other places that $17,000 can go. My kids, 529 accounts, right? Taxable accounts, funding an HSA account. And that to me is really what the power of these points are. That yes, you can go amazing extravagant for very, very little out of pocket cash cost. And you can also just take a regular family vacation that otherwise you may have to sacrifice, you know, some of your other financial priorities in order to do. And that to me is truly the benefit of points, is that I don't have to sacrifice my other financial priorities. And also I get to take my kids on trips we can travel during their School breaks. And it's not costing me 50, $100,000 a year to do that.

You know, it's awesome that you just went to South Africa, Leisha, because we just went to South Africa and you know, there we might have bought some of the kids flights or something on points. I don't know exactly. But I do know that I flew premium select, which is basically second class on Delta. This is not lay flat. It's a nice wide reclining seat and a little bit better meals. And, you know, it's second class on the flight, essentially. And my ticket was five grand. I didn't know this before I went on the trip. I found out after the trip my ticket was five grand. That's what it cost me. To go to South Africa. You got to fly. It sounds like one step up in class for $500, plus a couple hundred dollars in opportunity cost, which I think demonstrates the value here. So obviously there's a lot to be done here if done well, but it does take a little bit of time and effort. So let's talk about the time and effort. Right. Let's talk a little bit about the initial learning, time frame, how much time it takes to just understand all of this and then ongoing learning about new cards and new opportunities and new ways to do this. What kind of time commitment are people looking at if this is going to be one of their hobbies?

Yeah. So I think this is one of the areas where Devin and I differ a little bit. Right. Devin lives and breathes this stuff. Right. Her podcast is dedicated to travel. My podcast talks a little bit about travel, but is more about personal finance. Right. And so we kind of attack this a little bit different. Devin loves this. Right. It's amazing. You get a lot of value from it. I get value too, but it's not like my day job. So I'm saying this to say that I do not spend a lot of time on this hobby. I don't even consider it a hobby. To me, it is a cost savings thing. Right. On a day to day basis, I am not thinking about credit card hacking. Right. At this point in my life. I utilize credit cards that are going to earn me the most points based on what I am spending. And when I am ready to plan a trip, I book that trip with points. And so for me, it doesn't take much time in terms of, you know, how I got started in the initial learning curve and that sort of thing. You know, one of the things that I tell people is this hobby boils down to two things. Right. It boils down to earning points and redeeming points. And the initial learning curve is learning how can I earn the most points and then how can I best redeem those points. And so if you split it into those things, earning points, redeeming points, then it kind of helps you get started. When I, you know, start talking about the earning points part, it's like, okay, what are the different ways that I can earn points and what kind of points do I want to earn? Okay, so, you know, I can earn points from a sign up bonus. I can earn points from different bonus spend that I'm putting on credit cards. I can maybe earn points from a referral. Right. And then, you know, as we're talking about earning the different points, then later you're going to talk about redeeming those points. But for me, there's different ways to kind of earn those points. And then when we were talking about the kind of points that you want to earn, one of the first things that Devin and I usually like to make crystal clear is all points are not the same. You know, you need to be strategic about the kind of points that you're earning. And this is what I think that learning curve that you're talking about, Jim, this is where I think that kind of comes into play is most people listening to this probably already have a credit card. And they probably already have a credit card that earns them some sort of perks or rewards. And so one of the first things you have to learn is, do I have the kind of card that earns me the kind of rewards where I can get this outsized value, where I can take that trip like I did to South Africa or that trip like Devin did to the Maldives, right? What kind of points do I want to earn? And I think Devin really goes into this really well. So I kind of let her take over here. But I think that the best kind of points to earn are these what Devin and I call transferable points. Right. And so as you're getting started in this, you're thinking, how can I earn the most points? I'm going to earn points from a sign up bonus. I'm going to earn points by putting spend on a credit card. Okay, Leisha, that sounds simple, but then you said I have to earn a certain kind of points. Okay, what kind of points are those? Those are transferable points. And I'll kind of let Devin take it over from here.

Well, before we go to Devin, somebody that doesn't know anything about this, right. They're just listening to this podcast, how much time they got to spend in the next month to kind of learn how this game works.

So I did not spend a lot of time on this hobby, just being completely honest. I started delving into this hobby when Devin and I first met, which was in 2023. Right. We met through a mutual friend, and we actually were having this conversation. I had many of the same questions you did, Jim. I think I admitted this to you. I used to be against using credit cards. I was like, what? Credit cards make you spend more money? I'm a personal finance nerd. I don't want to spend more money. I. I got into credit card debt before. I don't want to get into credit card debt now. I took out one card. It was a Delta SkyMiles card, because my cousin told me I could get a free flight. And I was like, well, that sounds cool, right? And so I wasn't really into this hobby. I met Devin in 2023. We had these candid conversations. And after that initial conversation, I got a rewards credit card. And then the next month, I got another rewards credit card. And then I joined Devin's Facebook group. I started talking to people about it, but I just started earning points. I was like, that sounds simple. I'm going to get a credit card. I'm going to earn points. It didn't take a lot of time. And then once I earned the points, I said, okay, I'm going to take this family trip to South Africa. It was three months later that I was going to book this flight to South Africa. So my goal starting out was let me earn enough points to get this business class flight to South Africa. That was my goal and the time it took for me to book the flight. I will admit the redeeming part takes a little bit of finagling because it's not as simple as going on Google flights and, like, choosing the cheapest flight. There is a little bit of time involved. If I'm thinking back, I want to say in full transparency that I probably spent two or three hours searching for flights. Not all at one time, but just over the course of a few weeks as I was trying to search for flight deals. Part of the reason is I didn't have a ton of points at that time. Right? So I couldn't spend a lot of points on this flight. I needed to find a business class flight that, you know, was enough for me that I wasn't, you know, that I didn't need substantial amount of points for. So, you know, to answer your question, Jim, I Had a conversation, I got a rewards credit card. And Devin and I are happy to kind of talk about some initial cards that we think would be a good fit for most people. So I got those cards, I met the signup bonuses, I started using those cards for daily spend and then I booked my flights. Probably spent a couple of hours searching for flight deals and booking the flight. So for me, out, it makes me feel like I have a third job. I already have a million things to do. And so for me, the juice. I personally am not even willing to take on this as another hobby. For me, it is. I'm doing what I need to do to earn. I took out a credit card every month, or if I lived and breathed this stuff, I'm sure I could find even better deals. But for me, I don't want to do that. And I think that a lot of people listening to this might be might have a similar sentiment. Right. They don't want to spend hours learning about this hobby. They don't want this to feel like another job. They want to do something simple, earn some points and redeem some points for outsized value. And I think I'm an example of, oh, you can do this. This is not a huge learning curve. It doesn't have to take a substantial amount of time.

Okay, Devin, you are a confessed hobbyist.

I would not be much more than a hobbyist at this point.

Yes, a professional maybe is a better description, but not only I'm a little curious just what kind of time you spend on this, but I'm more curious your thoughts on how much time it takes for somebody to do this in a reasonable way.

Yeah, and I think that that actually is the more pertinent question. Again, I don't think a lot of people listening to this podcast all of a sudden have dreams of now becoming a full time professional points educator. Right. I'm probably like an end of maybe 4 of the entire like white coat investor podcast audience. And that's never my goal. It's to turn people into something they don't want to be. It's to help people very easily and very quickly start to tap into the opportunity that their expenses present to them by learning how to navigate this world of points and miles. And remember, you know, even though I do this again for fun and for my profession, really what I'm trying to do is walk people through the shortest, most advantageous, most efficacious path so that they can get what they want out of points, not so that they can become the way I am with points. And so I've taught thousands of people how to do this. And I think that of course everybody's a little bit different in terms of their learning style and what it's going to take. But I think especially, especially for this community that does not need to get deep in the weeds in terms of. Let me come up with 20 different ways to earn points. No, you need one or two streamlined ways to earn points and let your expenses do the heavy lifting. I think it takes a handful of hours to really just become proficient in understanding just what is this thing about, what are the basic concepts? I mean, you could do that in one or two hours. Reading stuff online, listening to some podcasts, you know that you find, joining a points Facebook group, there are millions of them out there. So I really think that initial learning curve is actually not that big. And I don't think that it is that prohibitive for people to get into. What I do want to acknowledge and say is that depending on what you want to get out of your points, you probably are going to have to spend more time depending on what your outcome is. It is easier to find and book really good flight deals for one person traveling solo who has a little bit of time flexibility versus what I tend to do most of the time, which is I'm booking for a family of four. And when we fly internationally, I'm looking for business class flights around my kids school breaks.

Right.

Like the constraints of that type of trip planning is very different than another type of trip planning. And so I think it depends on, you know, how much are you looking to get out of this. That learning curve of once you feel really comfortable, how do I earn points in a way that's not going to take me a ton of time? Isn't super confusing, isn't super complex. People tend to get that done very, very quickly. I would say within like three months of initially kind of learning how to do things, spending an hour a week, you know, in some area of learning that's interesting to them. And then kind of the next learning curve is how do I take these points I've earned and how do I learn how to really effectively redeem them, meaning trade them in for the travel I want. And again, depending on what are you looking for, you know, are you looking for kind of one local trip for one person? Are you looking for a more ambitious international trip for a family? The more ambitious trips are going to require that you learn a few more skills. But again, this can all be titrated and calibrated to your personal level. Of interest. And so again, I spend hours doing this because it's fun for me and interesting for me. But you can get so much value out of points without having to dedicate 5, 10 hours a week on an ongoing basis. I tell people this is not like med school and residency, right? You don't have to spend four to eight years, 80 hours a week in order to see the payoff from this hobby. But I do think, like with any skill acquisition, you should expect there is going to be an investment of some time and energy. And then you get to make that decision of is the potential payoff of what these points can do for me, is that worth the investment for me? And the answer may be yes, and the answer may be no.

Yeah, I think that will differ a lot for a lot of people. For example, there's a lot of people out there that frankly haven't taken care of their personal finance yet. You know, they don't have any sort of written investing plan. And I don't know that spending even five hours learning credit card hacking is the best thing for that person's finances. Maybe those five hours ought to be spent on writing their financial plan. So I do worry a little bit about that, the opportunity cost of that time. But I think the big concern is as people look into this a little bit, they realize the big bonuses are the sign up bonus bonuses, right? You get the card, you put some minimum level of spend on it. It's no big deal for a physician, usually within three months and you get 100,000 miles or whatever. But then after that the card's not as good as it was for the sign up bonus. And so people are like, well, I guess I got to cancel the card and get it again in a year or I got to go get another card. And they fear this spreadsheet, which if you have 25 credit cards, you probably ought to have a spreadsheet to keep track of how many cards do people have. You know, if we polled your group, point me to first class. What would be the average number of cards you think that the people in that group actually have had at some point in the last couple of years?

I love that you asked this question. I actually did poll the group, so I did not get 27,000 responses. So, you know, take this for what you will, but I have to believe this is probably one of the more accurate numbers. I just don't know if anyone's pulled any number of people before, you know, of the physician community to ask this. And, but here is my. I think One of my philosophies about this and how the way that I look at points, especially points for physicians and high earners is very different than if you were just to kind of go to any kind of general points blog is that most of the other points education that's out there really the advice is whenever you have spend, you should always have a new card open so that you can always divert any spend you have to a new card so that you can constantly be opening or excuse me, earning these welcome bonuses. And that makes a lot of sense for folks whose monthly overall expenses may be, you know, 2,000, 3,000, $4,000. That makes sense. Maybe they're opening a new card every three or four months. All of their spend is going to a welcome bonus. That breaks down when you start looking at folks who have higher expenses again, especially people who have business and personal spend. My husband and I would have to open like 73 cards a month if we were always trying to put all of our expenses on a new card. It's not practical, it's not sustainable. And I don't think that that is required for a lot of folks in this hobby. Now it's this kind of two sided coin. One side of the coin is yes, dollar for dollar, you are always going to earn the highest number of points from a welcome bonus. It's an incentive. That's how the banks get you to want to sign up for these cards. The flip side of that is I go many, many, many months in between applying for new cards. And so it's not that, oh, I'm either earning or a really high rate of points because I'm earning a welcome bonus or I'm earning nothing. No, there. This is where picking the right cards for you really comes into play because there are credit cards again, you don't need 10, 15, 20. I think an average physician could do very well with two to four credit cards. And that may sound like a lot to a ton of people, but I guarantee you it is nothing near 20 to manage and handle is that you can make sure that you are deliberately getting credit cards. They're not going to give you 20 points for every dollar you spend like a welcome bonus to but they're going to give you 2, 3, 4, 5 points for every single dollar you spend. And over the course of a year that is going to add up. And so in terms of how many cards is it typical for people to have the best number that I can get from the questions I've asked in the surveys I've run is that about 24% of my audience is carrying one to three credit cards total in their name. So their partner may also have their own credit cards, but the primary person has one to three credit cards. 46% of the people who responded to my survey carry four to eight credit cards. So just between that, that's what, 60, no, 70% of people polled carry between one and eight. And again, this could be someone who's been in this hobby for years and years and years. Maybe they've been in this hobby for a month. You know, about 25% of the people I polled carry nine to 15 cards. So there is certainly a segment of the population, again, because they actually find it fun, they find it interesting. They consider themselves to be maximizers. You know, like they want to take advantage of all of the opportunities that are going to be very high yielding for them. They are comfortable holding more cards. But I do think that it's a fallacy that in order to get something out of points that you need to always hold 15 or 20 cards, you don't need to do that. And I actually do not think that's average for the physician community because I think what's more common for us is, yes, signing up for some cards to earn the welcome bonus, but even beyond that, really understanding where are the other opportunities to easily and sustainably earn points for the expenses that you have and letting those expenses do most of the heavy lifting.

All right, let's talk about the mechanics of travel. I think a big fear people have and they've gone and tried to redeem, you know, Delta or United points or whatever. They worry about being able to book whatever flight they want or having to fly at undesirable times or having a million connections. Talk for a little bit about the travel and flexibility you can have, where you go, where you stay, and whether, you know, the deals out there actually determine where you travel to. Let's talk a little bit about, you know, the redemption side of this.

Yeah. So, you know, Jim, I think it runs the spectrum. One of the things that you will quickly learn when you enter this hobby is that the people who have the most flexibility tend to be able to take advantage of the best deals more often. Right. So if you have a job where you can kind of take off at different times. I don't have children. Devin has children. Right. So I don't have to travel around school breaks because I don't have children that are in school. Right. But Devin does travel around school breaks, and so she's a little bit more limited in her options than maybe I might be. And so there are certain people that might inherently have a little bit more flexibility and inherently be able to take advantage of more deals more often than others. Right. So that's number one. But when it comes to really, like, being able to book what you want, I find that the earlier you plan, the better deal you get. Right. And so when you enter this hobby, you will learn that flight calendars for a lot of these, you know, airplanes kind of open up around a year in advance. And so if you already know what vacation you want to take, whether it is by yourself, with your friend, or with your family, if you are able to book it really early, like a year in advance, you can oftentimes find a lot of these great deals. And Devin will tell you she often does does that. She's a planner. She's going to plan her trips a year in advance because she knows she's got to find four business class seats. Right. She's got to find the best deals because she's got four people traveling with her a lot of the times. Right. But for me, I consider myself a planner, but I am not booking my vacation a year in advance. I'm sorry, My life just does not go that way. Oftentimes, I'm traveling with a friend. Maybe it's, you know, with my boyfriend, maybe it's with, you know, my girlfriends. And although I am a planner, they sometimes are not. So oftentimes it's a few months in advance that we are finding and booking a flight. And so that means that sometimes the deals that I find are not the best deals, but they're still good deals. So I want to, you know, eliminate this fear that in order to take advantage of this, you have to travel at obscene times or just spend an exorbitant amount of points. That's not true. If you plan in advance, could you.

Get a better deal?

Sure. But that doesn't mean that if you are like me and you book your travel maybe a few months out, that you can't take advantage of it. And so I want to kind of eliminate that fear, you know, and say that, hey, if you want to take advantage of this, define what your goal is. Do you want to travel by yourself? Do you want to travel with a family? Do you want to go somewhere domestically? Do you want to go somewhere internationally? Do you want to take one trip a year? Do you want to take multiple trips per year? All right, once you figure out your goals, let's say, all right, how much flexibility do you have? Right. And that may depend on your family structure, your family size, where you're trying to go, all right, cool. And then we can kind of work from there. And so, yes, being more flexible gives you better deals, but it's not like if you're not as flexible, you can't find any deals.

Yeah, I've had that experience as well. Sometimes when you're booking last minute travel, you're going to a funeral or something, sometimes that's exactly the time to use points, you know, and you're like, wow, this is going to be $1,800 to fly three states away if I pay cash. But. But it's still only 50,000 points, so I guess I'll use points for it. And so I've experienced that as well. Any comments on travel? You're not as flexible as Leisha is. It doesn't sound like it.

No, I'm not.

Should people doing this, are they going to get crappy flights? Are they going to have to travel at crappy times? How big of a concern is that?

I think that this is so valid, right? Because I think again, looking at our kind of community, our population, by the time we actually get time off, you know, a lot of us want to have some say in where we're going, right? Like, I love travel. I could probably be happy traveling anywhere. And also, you know, I want to be able to say, I would love to take my kids to this place during this time. One of my preferences is that especially if I'm traveling with my little kids, I want to have as few connections as possible. We're lucky. Our home airport is o', Hare, so we have access to a ton of direct flights. And also, you know, I don't want to take a three connection flight just because it happens to be an amazing deal. And what I tell people is that when it comes to booking flights with points and the availability of points flights, they are inherently going to be less options than if you're just going to book outright in cash. And that's simply because airlines make fewer seats available to book using points than they release to be booked in cash. So it's just the inventory is different. So you just need to understand that piece up front. And oftentimes I tell people like, you can get a lot of what you want, you may not get everything of what you want. And here's what I mean is that again, my personal preferences, I want to fly if I can, somewhere direct, especially if I'm flying with my kids. If I'm going to be flying internationally over Six hours. I want to fly lie flat business class seats. Again, I may have some constraints around my travel dates where I can't just fly out on a random Wednesday and come home, you know, 19 days later because that's the cheapest flight. And oftentimes I can get two of my main three things. I may not get every single thing I want, but here's an example. For this upcoming spring break in March that my kids have off, we are taking our family to Paris. We're flying direct from Chicago to Paris on Air France. We got an amazing points deal. It's basically the lowest amount of points you can pay for a nonstop business class flight. And we're flying again on my kids spring break. So ideal travel day. So what is the thing that I had to give up because you oftentimes can't get every single thing you want? Well, we're flying from a Thursday to a Thursday instead of a Saturday to Saturday. My kids happen to have off the Thursday and Friday before their entire spring break, so they're not missing any school. But ideally I would have loved to fly Saturday to Saturday. That deal was not available, but I think again, it's not that, oh my gosh, you have no say in where you're going to travel. If you want a deal, basically you have to go at some random time. You don't get to pick where you go. You don't get to pick how you get there. It's not that. But in full transparency, you are always going to have more options, more flexibility, paying cash. But the vast majority of the travel I'm booking with points, I wouldn't book using cash. So for me, that kind of sacrifice, if you want to call it that, of giving up some element of my 100% priority travel list, that is worth it to me. I think it becomes harder for folks who are not based around a large hub airport. You know, if you're one of the millions of people whose local airport is a smaller regional airport, you're probably going to have less options of points flights because you have less options of cash flights anyway. Right. There are large portions of this country that are not serviced directly by international flights. So you're going to have to factor that in no matter what. So I don't think that that's specific to points, but I think if you are willing to accept, hey, I might get 80% of what I want and it's going to mean I can use points and offset the cost of travel. That may be worth it to a lot of folks. It may not be worth it for everyone. So what I tell people is, hey, you know yourself best, right? If your travel constraints are such that you only ever want to fly direct, you only ever want to be able to say, I want to fly this specific day or even this specific time of day and I want to get, you know, the exact flight that I want, then I say, hey, you're going to have more options with cash. That's probably a better option for you.

Now, Megan, our podcast producer, says I got to get into the math as best we can on this. Have either of you ever tried to actually quantify? And I'm not talking the cocktail party trip, right. I'm talking the average one you get from playing the credit card hacking game, but actually subtracted out the value of your time as a physician, the cost of your annual fee, your booking fees, the 2% opportunity cost you would have got just from a boring old cash back credit card and actually come up with what you think the actual savings is on an average, you know, experience that you're buying through credit card hacking.

Yeah. So I will kind of introduce this because Devin does a lot of this math because we established she's an enthusiast. She's an enthusiast when it comes to this hobby. But I will say, Jim, I appreciate that question because that was one of the main barriers to me getting started. I knew that I could earn points from using a credit card that was not new to me. The reason why I didn't before was because I said, hey, it's going to take me a long time to earn enough points to make this worth my time. Because as we stated earlier, most credit card companies value your point at $0.01 per point. I don't think you need to be a math whiz to figure out that if you want to be able to purchase a $7,500 flight to South Africa and your points are $0.01 per point, it's going to take you a lot of points in order to be able to redeem that. And so my question was, is it worth it? Right. Like, this takes too much time. It would take me a year to accumulate enough points to get maybe one free economy flight. So is this worth it for me as a physician, when I could just work more shifts and make more money and just pay cash for this stuff. And so for me, I think one of the things to really understand before we break down the math is that not only can you earn a lot of points much quicker than you might assume is that you can get much more value from each individual point than what you may think. You know, it's not just $0.01 per point that is often the value if you cash out your points. So if you have 100,000 points and each point is $0.01 per point, that's $1,000 in value. And you could take that thousand dollars and you could decrease the amount of money that you owe on your credit card statement. You could also redeem that thousand dollars for travel directly through your credit car portal. But that is not the way to get the most value out of your points. The way to get the most value out of your points is to actually transfer your points from your credit card account into the airline loyalty account or the hotel loyalty account. Because when you transfer those points out of your credit card portal and into an airline account or into a hotel account, you get substantially more value. How do you get more value? Well, oftentimes when you transfer those points, there are these things called transfer bonuses, and they're often 25% or 30%. So by virtue of literally moving your points from your credit card portal and into an airline account, you get 30% more points sometimes or 25% more points sometimes. So that's one way to get more value. And secondly, when you transfer those points and you try to book your flight directly from the airline account, you are able to pay substantially fewer points for that flight. And so I want to make that clear is you're not just getting $0.01 per point, you're getting $0.03 per point, $0.05 per point, $0.07 per point, as I did when I booked my flight to South Africa. So I think that's really important to.

Understand now, although there is a downside to having it in the airline program or whatever it feels like, particularly now that the pandemic's over, it feels like the companies are becoming less generous with what you can buy with those, those airline points, for lack of a better term. And so, you know, when you move it out of that credit card to the airline account, you do have that risk that the airline will make them worth less. As you go along quantifying. I know you've run some numbers before, Devin. I'm sure you've run numbers. What do you think? An average trip, you know, not the best one you ever lined up, but an average trip. And you count the value of your time and, and opportunity cost and all that, what are you really getting?

Yeah, and I think that obviously this is gonna be different for every person, and I don't know how to actually account for the value of my time because again, I Think a lot of people who do this is because they actually enjoy it, right? And it's not that if they weren't doing this, they would be equally enjoying picking up extra shifts. And as we all know, physicians are all compensated at different rates. So I don't honestly know how to add in a calculation about value of time. But what I know how to do is look at what value did I get out of my points, right? I used X amount of points again, averaged over the course of a year. Because I could tell you all of the extreme examples, right? Again, like I got some crazy value flying solo, first class to Tokyo. Okay, that's not probably an average redemption. But the vast majority of my travel is what I consider to be average family travel. So I look at how many points do I use over the course of an entire year, all my travel, what is my out of pocket cash spend? Because you still have to pay cash for taxes and fees even on a flight that you book using points. And then I look at it and say, okay, if I was to book the same exact stuff, points didn't exist, what would just the cash value of all of those things be? And I make the comparison that way so that I am looking at least over the course of a year, I'm factoring in five to seven trips between my family travel, my solo travel, my professional travel that I'm using points for. And so for me personally, the best thing I can do is say, this is the value I'm getting. What would I have to spend again on a card that's getting 2% cash back to get the same value? And for me, that is enormously, enormously outsized. I mean, I already mentioned before, I'd have to spend on the order of, you know, 7 to 9 million dollars a year to get the same value from a 2% cash back card as I would from my points. And also I think what's more important for people to be able to hear, because there is no actual formula, there's no formula that any of us can give you that says, says plug in how much you spend total on credit cards over a year. Plug in this one value, it's going to spit out and guarantee you that this is what you're going to get from points and compare it to cash back. But as Leisha already talked about, there's really two main parts of this equation in terms of points. It's at what rate are you earning points for the amount of money that you're already spending? And that rate is variable. It can be Very low, and it can go up higher. And how much value are you getting out of those points when you cash them in, redeem them, trade them in for flights or for hotel stays, specifically, travel is, you know, what we're focusing on here. And that can range from, again, very little. If all you've ever been taught how to do is cash them in at the rate that your credit card company is going to give you, and it can also go up very, very high. So what I think is actually better to look at is if you are someone who only ever is going to earn at a very low rate, meaning you're going to have one credit card that only earns you one point for every dollar you spend. If you're going to turn those points in also at a low rate, just by booking travel straight through your credit card account? I would argue that you would do much better off with a cashback credit card. Like, if you can already identify that you're a person who only wants one card, you don't want to learn the different ways that you could sustainably earn more points. You really don't want to learn how to turn those points in. Wonderful. Don't get into this hobby or don't even learn this. I think it would be a waste of your time. If you are someone who's willing to learn one of the two sides of this equation, you can commit to one of the two. I'm going to learn how to earn accelerated amounts of points. Again, not doing anything crazy, but I'm going to learn how to earn accelerated points for the spend I'm doing with credit cards. Or I'm still going to just use my one credit card, but I'm going to get really good at learning how to redeem them. I think that you can more than easily overcome what you would get as 2% cash back. And if you want to learn how to do well at both, this is where you can start seeing. I mean, just you get exponentially, exponentially more value out of your points than you do cash back. But I think a lot of that has to do with, again, what is your level of interest in learning this? And I don't ever want to pretend that points are exactly the same as cash. I said this at the beginning of the episode, and I will reiterate it here. I don't think you're going to find anybody who's going to say, you know, apples to apples, I would just rather have points versus cash back. Right. With cash back, you can do anything. You can save it, you can Invest it. You can put that in an emergency fund. It is liquid. Points are not liquid. So I don't really think that you can also say, you know, as long as I'm getting the equivalent of value from my points as I would from a cash back card, those are the same. No, no. I think you should be getting exponentially more value from your points than you would from a cash back card to really truly make this worth it.

Yeah. Now let's, let's kind of encapsulate this, you know, credit card hacking hobby, whatever you want to call it it and talk about how it relates to the rest of your financial life. I mean my sense is that people don't take the difference and save it and invest it for the future. They're just buying more. Essentially they're able to buy more without having to spend more. They're saving the same amount of money. What do you think are people accelerating their wealth building process by doing this or is this just a fun hobby that makes life a little more enjoyable for those who like the process?

I think it's in between. I do not think and nor have I ever taught, nor do I think would I ever teach that points are equivalent to other wealth building activities. I do not think this is the same as putting money in a triple tax advantaged saa. I do not think this is the same as putting your money into a low cost index fund and letting it compound and grow for 30 years. But here's how I think it fits into the overall picture. I think for people who are interested in personal finance who feel comfortable have having set up kind of their personal finance life in terms of like you mentioned, this is my plan. These are the different accounts I'm going to set up. I have a reasonable kind of projection of what this is going to give me 20, 30, 40 years from now. To me, points is all about expanding your travel budget. So the way that it works in our life is that we have our financial priorities. We meet all of those and then based on our disposable income, we say how much disposable income do we want to allocate to travel this year? Year. Okay, so it's not that, you know, I'm saving all this money on travel and then putting it into my kids. 529. No, 529 gets priority. Then we look at our disposable travel budget and for me what points does is dramatically increase that travel budget. I am not spending 150,000, $180,000 of cash and travel a Year, even if the quote unquote equivalent of what I'm booking with my points could potentially be that. But what I am doing is taking my travel budget and saying, hey, let's say I'm going to spend $25,000 on my travel for the entire year. The way that's going to look is very, very different if I'm spending $25,000 worth of cash or if I'm spending $25,000 Worth of cash and I have access to my points and I can use all of those to then book the equivalent of $150,000 worth of travel. So to me, this is not a replacement for any sort of traditional personal finance wealth building activity. This is once you have all of your other blocks in place place, this can be a really wonderful and frankly fun way to expand your travel budget. It's not a replacement. And so this is not something that I tell people, oh, get, get your credit card set up first and then think about your tax advantage savings. I think that that's completely backwards.

Yeah.

And you're not gonna borrow. You're not gonna borrow your way to wealth.

No, you're not. This is extra. Right. Like nobody needs to do points and miles.

Right.

Like we do. At least I believe we do need to set ourselves up for financial security in the future. So to me, the whole thing about points and miles is it is fun. I think it's incredible. I think it's amazing. But it happens after. It happens after the really foundational, fundamental personal finance stuff.

Alicia, how does this fit into the rest of your picture?

I was thinking about Devin's answer and I agree with it. But if I'm being honest, I will say that I think it allows me to do those other parts of personal finance more sustainably. I talked about this at the beginning. I feel like I'm constantly choosing between YOLO and delayed gratification. And this hobby prevents me from having to make that decision so often. You know, I don't have to choose between putting money towards my student loans and going on this vacation that I really want to go on. I can do both. I can put my cash towards, you know, student loans or building an emergency fund. And I can use my points for this other fun part of my life. And so I think it makes it more sustainable. Because, Jim, if I'm being honest, I think that that's the reason why so many doctors are not as financially well off as you and I believe that they could be is because it's hard to sustain that delayed gratification. Some people are better at it than others, and the people who are better at it tends tend to have higher net worths over time. But if you could give yourself some rewards along the way, if you could allow yourself to really enjoy your life in a way that doesn't jeopardize your financial priorities, I think it makes it more sustainable over time. Time. And then, you know, I will add, you know, along with what Devin said, it. It expands your travel budget. But as I mentioned earlier, for me, it allows me to take more trips. You know what I mean? Like, when I went to Cabo, I didn't pay anything. I probably wouldn't have gone to Cabo if I had to pay something. And so because I got essentially a free trip, I was able to take more travel. I was able to give my family or my friends more experiences. And so. So I think that this fits in really well. You know, one of the things that Devin and I talk about is turning your expenses into assets. And I think that this hobby of credit card hacking allows you to do that. All of a sudden, it's not, oh, I'm spending money or I'm saving money. It's okay, I already have to spend money, but now I can get some money or some currency back in return, and then I can use that money or that currency or those credit card points or those miles for a trip down the line.

So.

So it's not a sunk cost. It allows you to really benefit from it.

All right, well, our time is short. What have we not said about credit card and travel hacking that the audience really needs to hear?

Yeah. You know, I think that one of the. I tried to mention earlier about transferable points. Right. Not all points are created equal. And that one of the ways to really get this outsized value from your points is to transfer your points from your credit card card account into the airline or the hotel account you mentioned, Jim. Yeah. When you do that, sometimes the airline or the. Or the hotel can devalue those points. That is true. But it. It is also true that oftentimes when you transfer those points, you still end up getting substantially more value out of those points than you would have otherwise. And the reason I bring this up is because if you are somebody who is hearing what I am saying or hearing what Devin is saying, and you're intrigued. Intrigued. You're like, okay, sign me up. This sounds great. I want to go to the Maldives. I want to go to South Africa. We're like, great. How do you get started? Is probably the next question. And one of the things that I would say is maybe you should look into getting a credit card that earns you these transferable points so that you can put yourself in position to earn this outsized value. And so when we talk about earning these transferable points and earning these points that you can redeem for outside value, not every credit card, not every credit card company allows you to do that, right? You have to get certain kinds of credit cards. And yes, there are lots of options, but when I boil it down, when Devin boils it down, there are a few different companies that really allow you to take advantage of this hobby. The best, right? That's American Express, that is Capital One, that's Citi, that's Chase bank, and that's Builds. Those are those five kind of core companies that allow you to take advantage of this hobby. So it's understanding that. And then the next thing I think is really taking a look at your expenses and asking yourself, where do I spend the most money already? And then let me find a credit card that allows me to earn high points for that spend. So for some people who live in a high expensive, you know, area, maybe you live in San Francisco or Los Angeles and you spend a lot of money on rent, there is a credit card called the Built Card that allows you to earn credit card points for paying your rent. So maybe you might want to start off with that credit card. If you are like me and you spend an exorbitant amount of money on food because you either eat out way more than you want to admit on a public podcast or you are buying groceries from expensive grocery stores because you're trying to convince yourself that you're eating organic and being healthy. If you are like me, me, then maybe you should consider the American Express personal Gold card, right? It allows you to earn four times points on grocery spend and four times points when you eat out. If you are someone like Devin, who loves to travel all of the time, or like me, who loves to travel all the time, maybe you should consider credit card that allows you to earn bonus points on travel. And so those are, I think the two main things that I would add is try to look into getting a card that allows you to earn transferable points. Point number one and point number two, identify where you already spent a lot of money and get a credit card that allows you to earn bonus points on that spend.

Yeah, I need the one that gives me like 5% cash back on taxes. Is there one out there that's got a bonus for paying taxes? That's the one I really need. All right, Devin, last words. What have we not talked about that we should have.

You know, we have talked about this, but I really think it's an important point to reiterate. And I think that Leisha just gave some amazing advice, amazing tips, you know, got into some of the details a little bit more. And I really want to bring this back to the fundamental basics, which is that so many of us, and I think especially those of us, Jim, who have loved learning from you and everything that you've done with White Coat Investor is that I think conventionally, a lot of us in the personal finance community, we're on board with this idea that our money can be leveraged to grow and to support us in the future. Right? I think all of us are like, yes, this is why if we have disposable income, we're probably not leaving it in bags of cash in the house, right? We're probably not, not putting all of all of our money into just a savings account. We are very comfortable with this idea of leveraging our incomes, leveraging our money and putting them in vehicles where they are going to do work for us. And what I want to invite everybody listening to this to think about is our expenses can also be leveraged. Again, I do not think they're the same thing as saving money in a tax advantaged retirement account, but I do firmly believe that your expenses can be leveraged to get you more than just the thing that you are spending money on. That can be straight cash back. It can be rewards and travel, as you've heard on this podcast. But more than anything, I want people to start feeling like they are looking at their expenses as something that they can turn into more value for them, not just looking at their assets and their money and their investments that way. And I think once you make that fundamental shift in the way that you start conceptualizing your expenses, then you start seeing so many more opportunities to truly benefit from them. And that is ultimately what I want for everybody listening to this podcast.

All right, Devin and Leisha, thank you so much for your time being on the podcast, doing another Friends of WCI episode, and helping us to learn more about credit card and travel hacking. We appreciate your time.

Thank you so much for opening up this conversation. It has been so much fun and I'm so excited for your audience to hear this.

This same.

Okay. I hope you enjoyed that interview as much as I did. You know, my wife, Katie, she loves to travel. We're really blessed in that we've had the opportunity to travel More than we want to travel. And I've discovered how often I actually want to travel. You know, for me, a couple of international trips a year is good. That's really all I want. When I'm doing 3, 4, 5 or I'm doing a bunch of business travel, I don't like it. I don't like sitting on planes, I don't like going to airports, I don't like ubering around new cities and staying in hotels. That's not fun for me. But I like, you know, when I get where I'm going, that's a lot of fun. I like experiencing new things and seeing new places. But the actual process of traveling I'm not a big fan of. Katie actually likes traveling, you know, sitting on the plane, she thinks that's cool. You know, kind of like Devin does. And if you are the type of person that, that loves to travel, this is a fantastic little side gig for you, right? To be able to take, you know, instead of $20,000 that you spend on travel in a year, maybe now you can get travel worth $100,000 a year. I think it's great for people that love to do that, those who don't want to put in that sort of effort of figuring out how to redeem that stuff or put in the effort to, you know, make sure you're on the best card or getting good sign up bonuses, that sort of a thing. Well, maybe you're going to operate at the one on one level like I, I do. You know, if I counted up all the credit cards in my wallet, it's probably six or seven and I'm making sure I'm buying the right things on the right cards, but I'm not getting too involved in it. But we're also at that point, we've been financially independent and still working now for like seven years. We don't have to do this. We can just buy the travel we want to do, we can get the flights we want with minimal hassle, et cetera, but we still do occasionally buy flights with points. So it's not unusual to have some sort of a mixed approach to this. And that's perfectly fine. What I want to caution you about is don't think that you can borrow your way to wealth. You cannot somehow master the travel hacking game and have that make up for the fact that you're not doing the other stuff. You still gotta save 20% of your gross for retirement. You still need to take advantage of your tax protected accounts. You still need to stay the course with some sort of a reasonable investing plan. You still need to have adequate insurance, right? Your travel hacking is not going to help if you get disabled. You need to have disability insurance. So get all that other stuff in place. And then if you want to spend your additional time and effort and money on something else, this is perfectly reasonable to do. Other people delve into entrepreneurship. Maybe they build a portfolio of short term rentals and that's where they put in their extra effort on their finances. And that's okay. Okay, Figure out your thing and do that. All right. As I mentioned at the top of the podcast, SoFi is helping medical professionals like US bank borrow and invest to achieve financial wellness. Whether you're a resident or close to retirement, SOFI offers medical professionals exclusive rates and services to help you get your money right. Visit their dedicated page to see all that SoFi has to offer at whitecoatinvestor.com SoFi one more time. That's whitecoatinvestor.com Sofia SoFi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth LLC. The brokerage product is offered by SoFi Securities LLC member Finra Sipc. Vesting comes with risk, including risk of loss. Additional terms and conditions may apply. Don't Forget about the Champions Program. Okay? Whitecoatinvestor.com Champion all we need is one volunteer from every medical, dental and other professional first year class in the country. And we'll get a copy of the White Coat Investors Guide for students into their hands. Thanks. For those of you leaving 5 star reviews for the podcast, a recent one came in Said Great podcast from SN Chowdhury Said. Very informative. Every person who wants to have a decent retirement should follow this podcast. Five stars. We appreciate that review. Keep your head up and shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast.

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