The David (as I fondly call the entertainer Dave Ramsey) is known for his hyperbole. And his “my way or the highway” view on all things financial. One of his more memorable quotes is “No one ever says they got rich off of credit card points.” It seems to me that if I say so, and offer some supporting evidence, then he’s wrong. If he ever repeats himself, you can reply and tell him you know a guy that did. Let’s start here.
Above is a snapshot of my 529 account funded solely with the 2% cash back from my credit card. We use a credit card that offers 2% cash back on all purchases, and have had the card for nearly 16 years. It’s invested in an S&P index, so the number above includes the growth of the market. We have 2 years till my daughter goes off to college. Or 6 until her senior year. I’m hoping this account can grow to $40K and cover a full semester’s cost. That will make another topic for an article here.
In 2012, I wrote a guest post How I Made $4,000+ on a Cash Back Credit Card Offer. The exact number was $4550. That was a one time opportunity, for me, a way to take advantage of the institution we all hate, the bank that pays you .01% on you money, but charges you 5% on your mortgage, and a fee for every little thing. You can read all about it at the linked article.
Last, I’ve also had an Amex card that averaged over $500/yr in rebates for Costco and gas purchases, so another $10K on top of this. This all totals $40K, give or take.
There’s a site Global Rich List that puts wealth and income into perspective. I put in $40,000 and found
If instead of wealth, we look at income, how about I look at the $1600/yr I can withdraw from the $40,000, and add $2000/yr, the amount I’ve been getting back in rewards, so $3600/yr.
I offer this a bit tongue in cheek, as I know that $40,000 isn’t really rich, nor is $3600/yr living the dream. But $40,000 is still a chunk of change. If you look at how much we’ve saved for retirement in the US –
That $40,000 is more than 40% of those nearing retirement have saved. Did I really get rich on credit card points? We can debate that. But first, ask the 31% of 55 year olds who have less than $10,000 saved if an extra $40,000 would make them feel rich, and then decide.