rocket finance

Our Story Part II: the Solution

This is the story of how my family reached the proverbial “end of our financial rope” and how I became a personal finance blogger. Today’s post is the second in a series that will continue over the course of the next week.

Earlier this year, I shared how were were slowly turning our financial situation around after spending without caution for the first two or three years of our marriage. In early 2007, we were doing a good job at sticking to our budget, but despite our best efforts, we were facing a situation could not be solved without an influx of cash. The turning point came in mid-March when I happened upon Hustlermoneyblog. I had never heard of personal finance blogging and this was the first place that I found that offered me a source of real cash with no strings. Hustler’s blog focuses on credit card bonuses, bank bonuses and credit card arbitrage.

I opened my first bank account simply to collect the bonus – Virtual Bank gave me a $20 bonus, I quickly referred my wife to make a quick $60 out of the transaction: my $20, her $20 and the $20 referral bonus. (Contact me if you would like to make $20 from Virtual Bank) I then successfully referred two more people for a total of $100 from VB. Then we plunged into bank bonuses – $165 from ING, $200 from Chase, $150 from M and I, $300 from Sharebuilder, $300 from NetBank, $50 from Citibank, $200 from Bank of America, $20 from Emigrant Direct, $150 from HSBC, for a total of $1,615 in bank bonuses.

I also began to realize that the only thing that I owned that had real resale value was my credit score. Sarah and I boasted a sterling FICO of 748 at the beginning of this saga. So I began to apply for credit cards that offered bonuses. I didn’t apply for a whole bunch at once, I was not doing an App-o-Rama. In essence, we sold our credit score.

We certainly benefited from good timing. During 2007, Chase, Citi and Amex all ran credit card promotions with bonuses that were worth around $250 apiece. My wife and I both applied for and were approved for the Chase Freedom $250 bonus and the Citi Premier Pass Elite 25,000 point bonus and I also picked up the 25,000 point bonus from the Amex Business Gold Card. We also each qualified for the $100 Sony Card bonus. Discover Miles brought us another $100 and two Bank of America cards threw another $150 onto the pile. We also earned a free flight from our Southwest Visa card that was valued at approximately $250 for a total of $1,950 just in credit card bonuses.*

The final part of my plan posed the greatest risk: credit card arbitrage. I don’t necessarily endorse this particular alternate stream of income, it is not for everyone. However, we tried it and so far it has worked well for us. Using a number of different techniques, we successfully borrowed close to $60,000 at 0% APR and put the money in high-yield savings accounts. This total fluctuated quite a bit since balance transfers come in at different times, payoffs vary and savings account interest rates fluctuate, but we earned close to $1,300 in balance transfer interest last year and will probably clear a similar total in 2008, although I do not plan to continue this strategy beyond July of this year. Some great 0% balance transfer cards include Blue from American Express,(now 2.99% for 12 months) Miles by Discover and the Chase Platinum Visa.

We also started shopping through Ebates (which is offering a $10 bonus again) and Fatwallet to take advantage of their and cash back. Every time a credit card company sent us a $15 or $20 check for enrolling in Credit Protector or some other gimmicky service, we deposited the money and then canceled the service within the free 30 days. We probably generated another $100 to $150 this way.

At the end of the year, we had successfully “hustled” over $5,000 of extra income. Unfortunately, we could not put the money in an IRA or even ING. Some went toward debt retirement, some went toward everyday expenses, some helped to pay the bills after our son was born, but we balanced our yearly budget for the first time since our first year of marriage when we had two full-time incomes and no kids.

So, what is the moral of the story? Well, there might not be one, but I have a number of observations to share by way of a wrap-up post tomorrow, including how far our credit score dropped in a three month period.

Read other posts in this series:

Part I: the Perfect Storm

Part III: the Moral

*Many of these bonuses have since expired.

Photo by Rich Seattle.