Manufactured spend IS a get rich slowly scheme

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Introduction

I’ve been thinking about this lately over the past 2 months when I’ve been in a miles and points lull.  After April’s massive miles and points haul and then the subsequent shutdowns from retailers, thus prompting my reselling to grind to a screeching halt, I’ve been pondering what else I could be doing with my time.  Look, you can stop kidding yourself, outside of the credit card signup game and redeeming miles for premium international travel, manufactured spend is a part time job, a money maker, a get rich slowly scheme.  Let me tell you how I got to this point.  I know some of you are new to this ‘hobby’ and have only a low 6 figure mileage balance.  Eventually, you will get to a point where you have more points than time to travel and so you move to the ‘cash back game’ aka manufactured spend.  Here’s how you know you’ve reached that point:

  • When you’ve applied for the Barclays Arrival card (almost all of you have done this)
  • When you’ve applied for the Citi Double Cash card or FIA AMEX card
  • When you’ve decided to shop through the Discover Cash Back portal instead of an airline’s portal
  • When you’ve bought an American Express gift card
  • When you’ve foolishly redeemed Chase UR points for cash

So if you’ve done any of those items, then you’ve turned this hobby into a money-making side job.  Let’s take #1 for instance.  I know people will tell you, “Oooh you’ll get 2 miles per $ spent good towards travel.”  But let’s face it; you are essentially getting a 2.22% rebate on all purchases.  Forget the travel part.  You aren’t going to charge a $10,000 plane ticket on the Arrival card!  You are more likely going to charge a $500 plane ticket on the Arrival card and using 50,000 Arrival points that you’ve manufactured by loading US Buxx, NW Buxx, or buying AGC (remember, we’re removing the signup bonus points from this discussion.)  Well, what if you didn’t have any travel plans?  You could have done those 3 things using an FIA AMEX card to get you 2% instead, and you could have put that money into your bank account.  And when that happens, you have essentially turned this ‘hobby’ into a job.  I’m even hesitant to say ‘job’ since a job would imply a) a steady income and b) that you hate what you’re doing.  So it’s not really a “job” since you can quit any time.  It also doesn’t require a college degree to be doing this.  What does this sound like?  Like a small business you’ve set up?  Or possibly a get rich slowly scheme perhaps.

Look at it this way.  Most people would put an hourly wage on manufactured spend at $80/hour.  How did they come up with that number?  Easy.  If it takes you 1 hour to drive to a grocery store to buy $2,000 of gift cards, to drive to Walmart to convert those gift cards to money orders, and then to deposit those money orders back into your bank account, all at a 4% profit on the $2,000 spend, then you just made $80 in profit not counting gas.  Thus, you’ve made $80/hour.  Sure, some of you are more efficient and can do $4,000 per hour, thus boosting that number to $160/hour.  But there are inherent limits.  You can’t run through a $100,000 a day or something ludicrous with this method, so there is a ceiling to how much money you can make doing manufactured spend.  I think a reasonable high number to MS per month is $100,000.  I think if you go more than that, then you live in a very friendly MS area (MO printing Kate perhaps) or you are doing this full time.  At $100K a month, that’s when the stress/addiction level gets to be too much.  Thus, if you are generating a 4% net, that means you are “making” $4,000 a month due to manufactured spend.  If you then divide the $100,000 by $4,000 of manufactured spend per hour, that means it is also taking you 25 hours per month to generate this $4K profit.

Opportunity Cost of your Time

So let’s say your baseline is $4K profit a month doing MS based on 25 hours of effort.  The reason I bring this up is because I was chatting with my 2 MS buddies the other week, and I told them a guy I read went into Target and bought $2K worth of stuff and will sell it for $5K through Amazon FBA for a $3K profit.  Of course they asked the time the guy spent in store, and I told them 5 hours.  If you divide $3,000 / 5 hours = $600/hour.  That $600/hr is a lot higher than our $160/hour doing MS.  Then they scoffed and said, “Well, I wouldn’t want to spend 5 hours in Target scanning items up and down the aisle.”  Well, is that really any different than us making 25 trips to the same Target to load our Redbirds?  If you ask that RA (Retail Arbitrage) person this argument, I’m pretty sure he’d say he’d rather walk up and down the aisle for $600/hr vs driving back and forth for $160/hr.  The MS’er will say, “Well, MS’ing is easier than RA’ing…?”  I’m not sure if that’s a valid counterargument.  I think just because we all know how to do MS and we’ve fine-tuned it doesn’t necessarily mean it’s what we SHOULD be doing.  Maybe we should think bigger.  Do you think MMS and TPG are doing MS?  I’m pretty sure they don’t.  With the income that they are bringing in from their sites, they don’t need to be making runs to Walmart.  They decided to think bigger a long time ago and started their blog, and now we’re all jealous of them because they are doing what we all wish we were doing – making lots of money doing what they love with little effort.  Isn’t that just “financial freedom?”

I bring this up because the $10M conversation came up again last week.  I told my coworker that I’d flip houses with that money.  He came up with a bigger grandiose business idea that I never would have thought of (which I won’t share here.)  He then told me, “Look Vinh, you can either take the money and flip houses or you can think BIG with my idea.  One day, you’ll look back and regret you chose your decision.  You need to think BIGGER than that.”  And he is right.  Because we are only comfortable with what we know, we sometimes can’t think outside of our box.  Do you think Elon Musk is thinking about MS’ing for $4K a month?  Do you think Zuckerburg is thinking about making runs to Walmart?  I realize we’re all not billionaires or even millionaires here, but the point I’m trying to make is – is there something better that you could be doing with your time?  Here are some possible ideas you could be doing instead of spending 25 hours a month doing MS that may pay off bigger in the long run:

  • Work harder at your real job so you can get promoted and a raise
  • Read a programming book and teach yourself SQL
  • Start learning and doing retail arbitrage instead
  • Study for your GMAT and go back to business school
  • Start a blog, gain thousands of followers, then sell said blog to Metabank
  • Sell iTunes gift cards
  • Start to learn about flipping houses and actually flip a house (my coworker challenged me to do this)
  • Read about rocket engines and start SpaceX (okay, maybe not)

Conclusion

The point I’m trying to make with this post is – should you really be devoting your time doing MS when you could be doing other possibly more fruitful and scalable things?  Don’t fool yourself into thinking MS’ing is about collecting miles and points and flying first class; it’s a get rich slow scheme!

37 comments on “Manufactured spend IS a get rich slowly scheme

  1. Im confused how is 4% achieved, the highest cashback card out right now is from USAA with 2.5%. There is a 3% from Alliant but it lowers after the annualversary.

    With that if you say buy 4 cards at $500 each to equal $2k.
    You would get $50 -$5.95/$4.95 VGC =$30.2/$26.2 – $1.40 MO = $28.6/24.6 for all that driving around and risking a credit card shut down.

      1. I understand that, however it seems people still do a lot of manufactured spending
        Is it primarily just to get miles and points at a low dollar cost value and not to make profit?

        1. Well you can either MS to get miles and points for a low cost or you can use a cashback card to make money. Each person has a different reason.

  2. New to your blog (nice job!), and newish to the hobby. For me, the tax-free value of the miles/points (in addition to my (all of our) hoarding tendencies) makes this hobby worth the time I spend on AGC’s, VGC’s and RB loading / MO’s. I’m salaried and can’t make much more money through my daytime job. Any return on additional investment of $$ is kept by my state and federal governments at a marginal rate of nearing 50%. Plus, it’s fun to impress neighbors and colleagues with mileage balances they’ve never seen before (although we all know that said balances are very easy to spend down with business class travel). Vinh, I’d be interested to find out whether the headaches of reselling are worth it compared to the usual gift card / signup bonus aspects of the hobby…

    1. Andy, thanks for the comment. I can tell you that I don’t MS on my AA, AS, United, etc credit cards because a) I have too many miles as it is now and b) I can generate more points reselling by going a shopping portal. Thus, I MS on cashback cards and resell for points. Maybe I’ll write a pitfalls for reselling post, but I can tell you that when I was heavily doing it, it wasn’t that bad. It’s a time suck to find the items, but once you’ve found that item, milk it to death before everyone else finds out about it. I sold on Ebay, so I could do NO RETURNS. I’d get stressed out once a month because of idiot buyers who make false claims, but I also get stressed out once a quarter when my Kroger USBank gift card is hacked, so the stress is almost even to me (others may see it differently.) My only advice – dive in and see for yourself.

  3. Have you done ever done $100k ms per month? Over how many months? I believe you would get shut down by the second month at the latest. either your credit cards will shut you down or your bank. Ppl have been shut down for less.

    I am curious about retail arbitrage though. But more risk

    1. Sure, I did it over 6 months but got burnt out (not shut down). If you have a high CL over say 5 cards, 100K is mathematically possible. Heck, I know guys who do more than that per month.

      1. Interesting! I have 100k cl and lots of cards. But only 3 RB and go bank. I’d have to get a lot more cards

  4. Quick question guys. I’m MSing max of around 20K via 2 old old Amex Blue via 4 BB. I know there are limited WF 5% offer. But how else are you guys able to do 100K a mo? I’m bottlenecked at the CC that offers 5% side. Also, there are periodic reports of Amex closing out the old blue on FT.

    1. You move to the AGC route and get close to 5%. So an Arrival 2.2% + TCB 2.25% gets you to 4.25%. Ebates Visa will get you 3% on card and 2% on portal (once a month) = 5%.

      1. I have always seen lots of people on AGC. But how can you exit easily without PIN via BB or WM MOs? Cant exactly use 100K on regular spend.

        1. I think you need to do more research, or ask someone else with a better method. If you plan to do AGC to VGC to BB/MOs (100k a month)….it’s going to be a lot of work..stress, etc. Not to mention accounts will start getting closed down, etc.

      2. Be careful though. I have read people getting their Barclay cc account closed, and losing all their points.

        Also AGC, you have to convert to VGC, 1. more step/headache to deal with. and 2. fees for the VGC.

        Also with the WF card, you will encounter alot of fraud checks, and if you over do it, you may get your account closed also. I have not signed up for the WF card yet, no rush.

        1. Ah. So AGC to VGC for another $4.95-5.96 per $500, then exit via BB/MOs to hit that 5% over 100K/mo. Does that sound right?

  5. This is exactly why I keep MS to only high return opportunities. The low rate of return MS`ing is more work and less gain and frankly is a headache.

  6. As an unemployed student, I disagree a bit. I do have a regular class schedule, but doing assignments and studying doesn’t follow any particular order. Sure, some people allot a specific time to study, but a lot don’t work that way. MS provides me with a VERY flexible means of generating income when I have such an irregular schedule, and that’s why I find it the most valuable use of my time. I’m sure that there are other people who appreciate the fact that so many MS locations are open 24/7, allowing them to spend otherwise unusable time on something productive.

    1. Well everyone’s situation is different. If your other use of time is watching TV or playing video games, then MS can provide you with additional money for little effort. That’s what I did in the beginning. I tell people my other option is watching TV, which provides no long time value. Eventually, instead of comparing MS to those types of activities, you then compare MS time vs time to study for your GMAT vs time to learn a new life skill vs time to learn a new programming language. Once you get to that point, then you realize MS time isn’t more productive than any of those other activities.

      1. You’re making assumptions that don’t hold up. No, it’s not just watching TV or playing video games to which I’m comparing MS time. It’s the 30 minutes here or the lone hour there, in between classes, that I’m filling with MS. That time would otherwise be filled by what? With what else could you fill such brief periods of time punctuated between other activities? You could potentially say learning a new skill such so coding, but that assumes that everyone would be able to profit from such. Coding, as with retail arbitrage, isn’t this guaranteed money maker. In the case of a student, they either have some other career goal or are already learning to code.

        Why do you think so many people write stories about MS during a brief lunch break or stopping by a store on their way home or to work? Those are periods of time that are nestled in between busier activities.

        My main point is that MS has a place as arguably one of THE MOST profitable uses of punctuated break time. You can do very little else in a 30 minute break, but you could potentially liquidate thousands of dollars from MS (assuming that you already had gift cards or such, potentially purchased from online, so the additional time is less than five minutes in placing the order and unwrapping the packaging when it arrives). Besides learning another skill (which is also very difficult to do in such punctuated times as well as not a definite source of income), there’s nothing from your suggestions that could be done in punctuated time.

        Yes, I do agree that everyone’s situation is different. MS probably isn’t the best use of time for people who have large stretches of empty time.

        But you’re still painting with fairly large brushstrokes. You start your response with a reservation, but then you end it by saying MS isn’t as productive as “any” of the other activities. That’s not a statement that you’re applying to some people in some situations. That’s a statement you apply to “any” activity.

        1. You know what’s great about America? It’s that you can do whatever you want. So if you think MS is a great use of your 30 minute break, that’s fine. If you want to write a blog telling people MS is great, that’s fine too. I’m just telling people who are doing heavy volumes of MS to take a step back and see if this is the best use of their time long-term. Read the other comments; other people agree with me too. But who cares? It’s YOUR TIME and you do whatever you want with it.

          1. It’s not about the volume of MS. It’s about the time commitment.

            You toss out a line about being able to do whatever you want in the United States, but you clearly aren’t subscribing to your own words. You wrote the above article because you had an opinion you wanted to express and to convince other people to adopt the same opinion. There’s nothing wrong with that, and you clearly do a pretty good job most of the time. I’m also expressing an opinion, just one more reserved than yours.

            Just because other people agree with you doesn’t mean everyone agrees with you. As I said above, you were trying to make a universal claim, that MS is less profitable than ANY of the activities you listed. I’ve shown my disagreement and explained how MS actually is the most profitable use of time for a lot of people, namely people who have short breaks that can’t really be filled with house flipping or retail arbitrage, which take a lot of unbroken time.

            All I’m saying is that you don’t leave yourself room for exceptions. You tossed out a blanket recommendation, but that gives you no ability to respond when clear, common exceptions come up.

          2. When did I make a blanked recommendation? Quoted:

            “Here are some possible ideas you could be doing instead of spending 25 hours a month doing MS that may pay off bigger in the long run:”

            I said POSSIBLE and MAY in that sentence. That doesn’t mean those items WILL. And the last sentence:

            “The point I’m trying to make with this post is – should you really be devoting your time doing MS when you could be doing other possibly more fruitful and scalable things?”

            Once again, the word “POSSIBLY”. I don’t tell anyone they should STOP MS’ING and go do those other items. I’m just telling them they should ask themselves if it’s what they should be doing long-term.

            The point of all this – You don’t have to listen to me! You can do whatever you want! If you don’t like my writing, you can easily stop reading it. It’s as simple as that. We’ve spent too much time arguing with each other when we could have done a more productive thing like MS’ing or flipping houses.

  7. I’ve redeemed $48,000 of free travel in 2.5 years and have 1.6M point balance. I quit a year or so ago. It is fun and I enjoyed it. I will still do some CC apps here & there. But I do flip real estate & make lots more money per hour than I ever did MS’ing. Totally worth it. Learn a business you like and you will make more money.

    1. Great advice Jim. I do want to move into flipping real estate too and cut back on my MS (and just stick to cc apps.) I think I want to be in your situation in a year from now.

    2. I am how you are for the 2.5yrs. I started cc sign up bonuses and ms about 2 yrs ago for a $40k+ europe trip. Well the trip is over. I have about 1.6m points and miles now also. But I don’t feel like traveling anymore because of my recent breakup. I travel because I want to take the the gf places. Maybe when I find another travel partner…no point of accumulating all these travel points. I’ll probably cut down on MSING so I can have time to go on a date or dates.

      Flipping houses sound interesting, but I think I’ll start with something like blogging:)

  8. This was a good read. Thanks. I have a regular 9-5 job, and spend about 3hrs sat. to pick up simon gcs. 3hrs sun. to get mo, bb, serve. Sometimes i have to spend a few hours during the weekday to finish up the mo/bb/serve. Not to mention I drop by my local supermarket almost every morning on the way to work to pick about 1500. worth of gcs.

    Most of the ms are for hotel, UR, MR. And airline. Cashback, I only make about 300-600.00 a month.

    I just started in ms about 1 yr ago. I believe ms was one of the reason I have no life and recently became single. I was enjoying this hobby. Not for the cashback, but the points for future vacations.

    As I writing this, it is sat. I will skip msing this week. It’s getting tiring. And not to mention I already got one bank account closed because of mo activities.

    Maybe I’ll try to learn something new to make some decent money on the side. I am not going to quit my day job, but it would be nice to make some extra money on the side.

    1. Son, I’m sorry to hear what MS and this hobby has become to you. It is an addiction to try to gain as many miles and points as you can, but like I wrote in my post and what you’re doing now – maybe it’s time to rethink what the best use of your time is. Maybe cut down on your MS and focus on work and family and friends. When I had the WF 5% card, it stressed me out a lot. I am so much happier now that I no longer have the card and the reduced MS I do.

      1. I have that card now and am about half way through the 5x period. Not doing nearly the volume others have but still a pretty stressful time frame. Still worth it for this one though.

    1. Thanks. I don’t think there was any courage in my part; I was just wondering if MS is the most productive use of my time.

  9. There are certain “grey area” ways to make revenue an order of magnitude greater than the CPM on miles/points, but that takes connections, time and a lot of chutzpah/trust… not easy to find all of these elements for sure, so like you said, most MSers invariably revert back to the cash back game.
    Think that by nature, all businesses that depend on our the individual’s labor/work are constrained by the ceiling of human limitations, especially if it’s a one person shop. Think it’s sort of like the reason why not everyone is an entrepreneur/small business owner: lots of people just want that stability of knowing they’re going to have an allocated paycheck/benefits/etc. Sure, many salaried employees can potentially make more in the open market doing their own business, but that unsure murkiness is a big deterrent.

    1. I think once you expand past sign-up bonuses, then it’s no longer a ‘hobby’ and more of a ‘job’ or whatever else you want to call it. At that point, you have to ask yourself if this is the best use of your time.

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