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Conrad Maldives Restaurant

Overwater Restaurant on our trip to Conrad Maldives in January 2016

There is no Reason to use Cash when you can use Credit Cards!

Below is my opinion of how I think you should be paying for your goods and services. Note that I am not a financial advisor of any kind – but this is my experience with how I deal with my own (and my family’s) finances

The question I pose to most people paying for anything is why are you using cold hard cash which provides you with absolutely no return – when you could be using a (correct) credit card to earn you between 15%-60% back on your dollar in terms of business/first class redemption value pretty much every time?

Why would you use Cash when you could use Points and Improve your Financial Position at the same time?

Let me explain.

I’ve met many people in my life who are older then me with better paying jobs, drive expensive cars, pay for their kids hefty private school fees, use tens of thousands of dollars on luxury holidays and then at the end having nothing to show for it. They are more concerned about their social status as a Professional, Doctor, etc. There are people who are the same age as me who have not one ounce of financial intuition – they spend more than they earn. They have no investments (they might just own their own house with a mortgage), then buy their meals for breakfast, lunch and dinner every day at work – and they complain saying that they are trying to make ends meet every month – living pay check to pay check.

The first part of the equation I would suggest is to get some financial advise from a qualified professional on how you could increase your wealth either through property, shares or creating a business. The end goal is a passive income not just for yourself – but for your family so you do not have to rely on government handouts (this is the same both in the US and Australia). This means building wealth during your working years through careful and calculated risk management.

The issue here is people do not devote time to be educated financially – this includes both investments (assets) and even creating businesses should the wish. I would say at least 95% of people I have spoken to and know these days are financially illiterate to a point where just thinking of their financial future is just a burden or hassle. It’s too bad schools, organizations, churches etc don’t teach these financial concepts to our children – or even to adults really.

My belief is that if you could improve your financial knowledge – then you will have a brighter financial future (or a better chance of it). Don’t do this just for yourself – but do it for your children’s future so when you leave this planet – you can leave them assets that produce money for life – but also an ability to create wealth and pass it on to future generations as well.

If you can set yourself up for the above – then you can start enjoying how to play the “points” game more effectively. You can still accumulate points even if you don’t have assets of course (which 95% of us don’t) – but I believe it is less effective if you haven’t sorted out your financial future.

My personal technique is incorporating our financial assets to accumulate points for a lot of our expenses.

Let us take property for example. Say I own my own house – but I still have to pay bills (electricity, gas, water etc). I can use my credit cards to pay for this instead of using a direct transfer to their account from my account. Many credit cards give you up to 55 days interest free. So by paying your bills on credit card and waiting till the last day to pay your bill from your savings account – you are saving money by leaving money in your own account first. The mandatory criteria here is that you MUST pay it off in full – otherwise you will have to pay a huge interest fee. If you do not pay off your credit card in full every month – seriously – cut up your credit cards and cancel it. Seek financial help.

Now imagine the number of points you would receive from this property? Just by using your credit card to pay the bills. So in this way – you are using an arbitrage technique – to get a return of points instead of receiving nothing at all.

Now what if you had an investment property? You could pay the bills with your credit card as well. If your property is cash-flow positive – then you would be making money not just from your investment – but also by earning points! So effectively you have just doubled the amount of points.

OK – so now what happens if you have two, three or even five properties? Or perhaps 10 properties? Then the points you are earning are increasing two-fold, three-fold etc. as your investments increase.

So in this scenario – I see earning points as a result of owning more assets (in this case investment properties).  But of course owning investments should always be the focal point for your financial future – not just for earning more points.

Now – as you are working in your daily job – you may want to go on an overseas trip every year with your family. But you are tired of slogging it out in cattle class, flying budget airlines for expensive prices during peak periods (such as school holidays) and staying in underwhelming hotels which provide absolutely no perks. Again 99% of all people travel like this.

There is a better way and as explained above – you could be using your points instead of using cash to take your travelling experiences further and much more luxuriously! How about travelling business class instead with Airport lounge access, priority queues, fine dining eating and being able to sleep HORIZONTALLY!!! What about 5 Star Hotel Chains which provide you Large suites, Executive Lounge access, Incredible Buffets and impeccable personal service?

Therefore personally I am mostly paying just taxes for my family’s travelling experiences – but using the points I have accumulated instead during the year to provide us with experiences that could actually cost us $20,000 - $50,000 (this is not an exaggeration) instead. I have saved this money instead and used it with my financial knowledge to increase our wealth either with stocks, property or self-education to provide a better life for our family.

Assets play a huge part in my family’s life in regards to securing our financial future – while also enjoying life with points/miles through experiences that would have cost us a small fortune.

There are of course other ways to accumulate points (shopping portals, credit card sign-up churning, restaurant bookings, gift card technique etc) which can accelerate your points – but as a basis you can use your investments to provide you with points as well.

I hope this provides you an insight on why I think financially educated people with an understanding of points can produce a better financial future while at the same time experience family holidays on a yearly basis travelling to places (think Maldives, Tokyo, London, San Francisco etc) on Business/First Class (Singapore Airlines, Cathay Pacific, Japan Airlines etc) – staying in Hotel Suites (Hilton, Hyatt, Sheraton etc).

Conrad Maldvies Overwater Bungalow

Overwater Bungalows at the Conrad Maldives we stayed at in January 2016

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