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Chase Sapphire Reserve or Chase Sapphire Preferred

Okay let’s talk about the Chase Sapphire Reserve card (aka the most talked about credit card of the year). There are a lot informative posts giving an overview of this card so in this post I will focus on answering these two questions:

  1. Should you get the Chase Sapphire Reserve (referenced as “CSR”) or Chase Sapphire Preferred (“CSP”)? Quick Answer: CSR.
  2. If you have the Chase Sapphire Preferred, should you switch to Chase Sapphire Reserve? Quick Answer: yes, the sign-on bonus should be enough to convince you

2a. The real question is which card should you keep? Chase Sapphire Reserve or Chase Sapphire Preferred? Answer: Depends on how much you spend and what % is on travel and dinning (see more details in post).

Please read on for more detailed answers to these questions. Here is a snapshot of the two card comparisons:1a-chase-sapphire-reserve-or-chase-sapphire-preferred

1.  Should You Get Chase Sapphire Reserve (“CSR”) or Chase Sapphire Preferred (“CSP”)?

If you don’t have either cards and you are contemplating opening one, then you should definitely apply for the CSR simply due to the higher sign-on bonus. Both cards require the same $4K spending in 3 months to receive the sign-on bonus but you get twice amount of points with the CSR compared to the CSP (100,000 points vs 50,000 points).

In the sample calculation below, you can see if you spend $10K a year of which 30% is on travel and dinning then your CSR points will be worth $1,590 and your CSP points will be worth $788. The dollar equivalents are net of fees ($150 for CSR and $0 for CSP for the first year); they also assume you use the points to book travel through Chase Ultimate Rewards which will make your CSR points worth 50% more and your CSP points worth 25% more. (If you don’t book through Chase Ultimate Rewards, CSR will give you $1,160 and CSP will give you $630.)2a-chase-sapphire-reserve-or-chase-sapphire-preferred

Chase Sapphire Reserve is the clear winner out of the two cards; if you spend $10K and 30% is on travel & dinning then CSR will give you $803 more than CSP. In fact, based on the table below, the only time when CSP wins over CSR is if you can’t meet the $4K spending requirement within 3 months and don’t get the sign-on bonus. In that case, you are better off with CSP. 2c-chase-sapphire-reserve-or-chase-sapphire-preferredSee how to read a data table above here.

2 & 2a.  If You have Chase Sapphire Preferred, Should You Switch to Chase Sapphire Reserve?

Question 1 was not hard to answer and neither is question 2. If you currently have CSP, you should definitely get the CSR just to get the sign-on bonus. The real question is should you eventually keep Chase Sapphire Reserve or Chase Sapphire Preferred? The answer for this question depends on how much you spend annually and what % is on travel and dinning.

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Home, Personal Finance

3 Ultra Easy Ways to Stay Financially Organized

Staying organized financially is the first step to achieve financial independence. I want to share three ultra easy ways I personally use to stay financially organized. These methods may seem intuitive but are underutilized! Hopefully you will find this post helpful!

1. Have Different Credit Cards for Different Purchases

1 – Have Different Credit Cards for Different Purchases
The easiest way to stay financially organized is to use different credit cards for different categories of purchases. That way you can instantly know how much you have spent on each type in a given month.

For example, I have three credit cards. One is for corporate and recurring expenses, one is for all food related expenses and the last one is for all other discretionary spending.

  • Corporate Expenses – Keeping corporate expenses apart will help you keep track of these expenses and make sure you get reimbursed for all charges.
  • Recurring Expenses – These are expenses that are automatically charged every month; this can include any subscription services, memberships, donations, etc. Although these recurring expenses may seem low monthly, they can add up to a substantial amount annually. It is important to keep an eye on your recurring expenses and try to minimize them!
  • Food Expenses – Food is generally a big cost category for most people and having a card that is designated for food spending can help you stay on top of your budget! For example, if your food budget is $300 a month and you have charged $250 on your card with 10 days left, resist the urge to eat out!
  • Discretionary Spending – This bucket is for all other spending. Discretionary spending can really get out of hand so it is important to create a monthly budget for this expense category and stick to it! For me, shopping is the largest component of my discretionary spending so once I see that I have spent up to my discretionary budget for the month, I cut myself off from any purchases.

Once you get the routine going and charge specific types of expenses to different cards, you can easily check individual credit card balances and make sure you stay within your monthly budget!

2. Create a Virtual Divide_Checking vs. Saving Accounts

2 – Create a Virtual Divide: Checking vs. Saving Accounts
Simply having separate checking and savings accounts will help you stay financially organized. Although this method is intuitive, people don’t utilize this enough! In fact, many people think savings accounts are old fashion and unnecessary. However, by having this simple virtual divide, it will help you cut down spending and increase savings!

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Receive Additional 5% – 20% Cash Back With Your Credit Cards!

Holiday shopping will be in full swing soon and I want to share a quick post on how you can save additional money by using your credit cards this holiday season!

1. Cash Back Steps

I recently discovered you can receive additional 5% – 20% cash back by shopping through your credit cards! All you need to do is log in to your credit card account, click on the affiliate links to these merchants and complete your purchase within the allotted time! See below for a list of select merchant discounts, more merchants can be found on the specific credit card’s site.

1. Additional Cash Back 2. Additional Cash Back 3. Additional Cash Back

Discover Cash Back
There are 6 Dinning, 17 Electronics, 77 Fashion & Accessories, 28 Home & Garden and 41 Travel merchants on Discover’s affiliate program.

Once you sign into your Discover account, click on “Rewards” on the top menu then “Discover Deals”, it will bring you to page of all participating merchants. Once you find the retailer you are looking for, click on the square and you will see a “Shop Now” button. This button is an affiliate link that brings you to the actual merchant’s website. Discover’s terms state you need to pay with your Discover card within 3 hours and you will receive your cash back within 10 weeks. The terms also state that you cannot use in combination with other promotional codes and offers.

I used the Discover affiliate link for Sephora, which gave me 10% cash back! I was still able to use Sephora’s 20% discount code. Please note, I also had to enable cookies on my browser to make sure the affiliate link works!

Chase Freedom Cash Back Boost (And Chase Sapphire Preferred Point Boost)
Chase’s Cash Back Boost also has 156 participating merchants.

Once you sign into your Chase account, click on “Ultimate Rewards” then “Earn Point” on the top menu and then “Shop Through Chase”. Then hover over the merchant you are looking for and a “Shop Now” button will appear, this will bring you to a page with the specific merchant’s terms and conditions and a “Shop at Merchant Name which is the affiliate link.

Chase states you need to complete the purchase during the same session at the retailer site with your Chase card. Points will appear in 3-5 days but may take up to 2 billing cycles depending on merchant. It also states that you can’t combine Chase offers with coupons or discount codes and the additional cash back does not apply on purchases of gift cards, gift certificates or any other cash equivalents.

For Chase Sapphire, the program is the same; you just receive additional points instead of cards.

 

 

If you don’t have the three cards above, still check your credit cards, I am sure most cards have this additional reward program now! Also it is worthwhile to check specific merchant discounts across your cards. From the select merchant discounts in the chart above, it seems Discover offers the highest cash back. However, for some merchants Chase offers a higher discount. For example, Discover offers 5% cash back for Nordstrom but Chase offers 6% (1% normally + 5% extra = 6% cash back!).

Hopefully this post is helpful and will get you additional cash back when you shop this holiday season! Please help me share this post with your friends and family so they can also learn about the affiliate programs and save!

 

As always thank you so much for reading!

Home, Personal Finance

What is Federal Flexible Spending Accounts (FSA)?

Flexible Spending Account (FSA) open season is coming up from Nov 9, 2015 to Dec 14, 2015. You might have received an email from your employer and are wondering what exactly is an FSA?

FSA is a federal program that allows you to pay for out-of-pocket, qualified medical and dependent care expenses using pre-tax dollars. That means you don’t need to pay taxes on the money used to pay for medical and childcare expenses! If you have children or have an upcoming out-of-pocket medical expense next year, make sure you read on to see how you can save up to ~$765 – $2,000 by using Flexible Savings Accounts! Chances are you will be able to save money through an FSA so be sure to take 10 minutes this post!

What is an FSA?
FSA is a benefit plan that employers sponsor to allow employees to put money into the account on a pre-tax basis. Your contribution is directly deducted from your paycheck and you can use the money in the account to pay for qualified healthcare or dependent care costs (see select list of qualified expenses below).

For example, if you earn $50,000 per year and you have $2,550 of medical expenses in the next year, you have two options:

  • Option A – Without FAS: Your $50,000 will be taxed, assuming 30% tax rate, so your post tax savings is $35,000. Then after your medical expenses you have $32,450 left
  • Option B – With FAS: Your $50,000 will be adjusted for the $2,550 of FSA so you get taxed on the remaining $47,500, assuming 30% tax rate, your take home pay will be $33,215 (and you will have $2,550 to spend on medical expenses during the year)
  • Between these two options, you will save $765

If we use the same case with $5,000 of dependent care then Option A will give you $30,000 and Option B will give you $31,500, saving you $1,500!

1. FSA Saving - Healthcare2. FAS Saving - Dependent Care

If you don’t need to contribute the maximum amount, the simplified way to calculate your savings is $ contribution times your tax rate!
3. Simplified Savings Calculation

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