Using Mint to track travel hacking expenses and returns

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The single most important thing you can do to succeed in travel hacking is stay organized. That's true of every single aspect of the game:

  • If you're booking your hotel stays through a portal like Rocketmiles or Pointshound, you have to make sure the correct number of miles post for each and every reservation: miles posting incorrectly or not at all means foregoing hotel loyalty points in vain;
    • If you're chasing elite status, you have to make sure you know the number of elite-qualifying miles you need each year and game out each and every flight you plan to take: falling short by a few hundred — or even just a few — elite-qualifying miles is in most cases a catastrophic failure;
  • If you're manufacturing spend across a number of credit cards, you need to keep track of the statement closing and payment due dates of each and every one of your cards: a single missed payment will result in interest and penalties that can wipe out the returns on months of manufactured spend.

I use a variety of methods to track my manufactured spend, but just one to track my actual income and expenses: Mint.com.

Mint can download most transactions from most banks most of the time

Most major banks and many reloadable prepaid card accounts can be added to your Mint master account. When you do so, each time you refresh your Mint account your balances and transactions are downloaded from each bank's server.

The system's not perfect, and I find that Mint's servers are unable to download transactions from some banks most of the time. US Bank is a particular offender — don't bother using Mint to track business credit card accounts with US Bank.

Tracking transactions is nice in and of itself, but the real genius of Mint is allowing you to recategorize transactions, which is to say reassign them from the category Mint guesses they belong, to the category where you know they really belong.

Recategorizing transactions gives you a concrete sense of your actual income and expenses

Here's a deposit to my primary local credit union checking account. Mint originally categorized it as "Income," but I knew better and recategorized it as "Transfer:"

That keeps Mint from adding that amount to my monthly income statistics.

In addition to recategorizing transactions, Mint also allows you to "split" them. Here's a recent purchase I made at one popular merchant:

Mint, naturally enough, originally categorized the $504.94 transaction as an expense. But, knowing better, I categorized just $5.64 of it as "Fees & Charges," while the remaining $499.30 has no effect on how Mint reports my income and expenses since I recategorized it as a "Transfer."

As a final example, for tax reasons it's necessary for me to track my self-employment income. But I also want to treat things like credit card retention bonuses, statement credits, and cash back as positive income flow. To do that, I use Mint's "bonus" category (you can create your own categories to help refine transaction reporting even further):

Don't worry, I'll be paying self-employment tax on Andy's subscription come April.

Do you need to keep track of your manufactured spend expenses?

This practice gives me an instant grasp each month of every penny I spend on fees while manufacturing spend, and also lets me see at a glance how much of a cash return I get on those fees.

It's also a pain in the ass.

Don't get me wrong: I do all this coding while in bed each morning sipping a cup of coffee or three. But you don't get to sleep in every day, sipping coffee. You have a job. Hell, you may have two jobs!

So should you keep track of your manufactured spend expenses as closely as I do? There are strong arguments on both sides.

On the one hand, as I hopefully made clear, Mint can only keep track of dollar-denominated expenses and returns. It won't tell you how valuable your Hilton HHonors points or United Mileage Plus miles are; it will only tell you how much you paid for them. Since you aren't recording income each time you redeem your miles and points, why should you record your costs each time you earn them?

On the other hand, you really are spending cash money when you manufacture spend. That's money you can't put towards a down payment, towards tuition, or towards retirement. It's gone, and if you use Mint to track your expenses, logic demands that those expenditures be recorded somehow as well.

Conclusion

Ultimately, I come down on the side of meticulously tracking manufactured spend expenses, not because they make a huge impact on my net worth, but because I find it risky to dispense with absolutely rigorous honesty when so much is potentially at stake. I can't help but think that if someone doesn't face the concrete costs they pay when manufacturing spend, they'll be more likely to ignore similar expenses elsewhere in their financial life.

That being the case, I'm happy erring on the side of scrupulous honesty when it comes to my own income and expenses.

How do you react to a shock to your travel budget? How should you?

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Yesterday my scheduled flight out from my ancestral homeland was overbooked — very overbooked. They asked for 6 volunteers, and ended up taking 5 of them, each of whom received $1,300 in Delta voluntary denied boarding compensation. I was one of the lucky inconvenienced (my partner was volunteer #6, and had to actually fly home, the poor thing), and the proud owner of $1,300 in Delta travel.

Then I realized that I had a problem. I already manufacture enough miles and points to pay for my planned hotels and air travel. In fact, once my next statement closes and my HHonors points post, I'll have all 5 of my remaining planned vacations this calendar year fully booked.

Moreover, Delta transportation vouchers are non-transferrable: the recipient has to be one of the passengers on the reservation — although excess funds can be used to pay for additional passengers on the same reservation.

Air transportation vouchers are worth (much) less than cash

This is a corollary of my argument that statement credits are worth (much) less than cash: for me, $1,300 in airfare is worth a maximum of $700, since that's the cash value of the 70,000 US Bank Flexpoints I would otherwise redeem for a reservation costing between $1,200 and $1,400, and as little as $350 or so, which is roughly what I paid out of pocket for those Flexpoints.

But does that mean I should take my $1,300 in bump compensation by redeeming 70,000 Flexpoints for $700 in cash?

Thinking about travel budget shocks

With a nod to economics, we can describe what happened yesterday as a positive "shock" to my travel budget. If my miles and points balances, travel needs, and manufactured spend strategy were previously in equilibrium, they are now by definition out of equilibrium: I've now accidentally purchased more (deeply-discounted) travel than I have a current plan for using. Since I try to never earn miles and points speculatively, this disequilibrium requires action.

But what action? Here are four ways I could respond to this travel budget shock.

Monetization

No, I don't mean selling the transportation voucher — it can only be used for reservations where I'm one of the passengers. I have in mind the following logic:

  • I just received $1,300 in airfare.
  • I planned to redeem 70,000 Flexpoints for my next $1,300 in airfare.
  • Instead I'll use the transportation voucher and redeem my Flexpoints for $700 in cash.

It's true that my Flexpoints are worth more than $700 when redeemed for airfare, but that's begging the question: the whole point is that $1,300 in airfare is worth less than $1,300.

Why do you think the airlines are so eager to give it away?

Travel more

I have a strategy for earning all the miles and points I need for the travel I already have planned, but now that I have $1,300 in Delta funny money, I can travel more than I expected. There's always somewhere to go, after all!

The simplest way to do this is to not alter my planned earning and redemption at all: if all my trips are already optimized between revenue fares (paid for with cheap Ultimate Rewards points and Flexpoints) and award trips, then I can convert my Delta transportation voucher directly into airfare for new trips.

A more nuanced (read: time-consuming) approach would be to re-optimize all my refundable and not-yet-booked air reservations. For example, a $450 ticket that I might have planned to reluctantly redeem 30,000 Flexpoints against can now be paid for with my transportation voucher, while I can redeem those Flexpoints for a new trip costing up to $600.

Likewise, a $250 flight against which I might have redeemed 20,000 Ultimate Rewards points can now be paid for with Delta funny money, and I can start looking around for a high-value Hyatt redemption where I can stretch those same Ultimate Rewards points.

Convert to leisure

My current manufactured spend strategy met my current needs before the travel budget shock, but now it exceeds those needs by $1,300. Sounds like it's time for a vacation! For the next 70,000 Flexpoints I had planned to earn, now I get to hit the alarm clock and go back to sleep.

Just kidding. I don't have an alarm clock.

But for those of you who do, if your goal is to earn the miles and points you need to meet your travel needs, a large positive travel budget shock like this is a godsend. Spend the time you would have spent at the grocery store, gas station, or hunting down promising Kiva loans with your kids. They probably won't appreciate it, but you will.

Switch to cash

Everyone has their "best" cash back option. Maybe it's 5% cash back with a US Bank Cash+ Visa card or a "new" "old" Blue Cash card. Maybe it's 2.625% cash back with a Bank of America Travel Rewards card. Maybe it's 2.105% cash back with a Barclaycard Arrival+ MasterCard. Maybe it's 2%+ with a Fidelity Investment Rewards American Express (or Visa, or MasterCard). Maybe it's a Citi Double Cash (although that's a stretch).

If you don't want to slow down your manufactured spend, and you don't want to monetize the points you've already earned, this is your hybrid option: start earning the most cash back possible with the cards you already have, instead of earning the points you had intended to redeem for your travel.

After all, everyone wants money. That's why they call it money.

What about negative travel budget shocks?

The impetus for this post was a huge positive travel budget shock. But there are other kinds of shocks: you could lose access to a merchant that previously allowed you to manufacture spend; you could suddenly learn of an unanticipated trip you have to take; Delta could stop publishing award charts and your miles could suddenly be worthless for the trips you planned to take.

You don't need to plan for every eventuality, but you should plan for some eventualities.

Conclusion

Don't for a second think that this post is meant to say that you need to treat every "win" as an excuse to lose sleep worrying over how to deal with it. The first thing you need to do is celebrate (I know I did).

But when you're done celebrating, you may want to spend a minute or two figuring out how you're going to work your win, big or small, into your overall miles and points strategy.

Quick hit: my annual fees and retention offers

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I wrote yesterday that I don't chase signup bonuses as one of my principle methods of earning miles and points. But I also consider recurring annual benefits to be worth almost nothing.

I've written before that companion tickets are scams, with the exception of the very generous version offered by Bank of America's Alaska Airlines — if you happen to live in a city served by Alaska — since it can be paid for with any credit card.

I've written before that annual free hotel nights are scams, although the Citi Hilton Reserve and Chase Hyatt free nights are slightly better than the rest — if you otherwise manufacture Hilton HHonors points or transfer your Ultimate Rewards points to Hyatt.

And of course, I'm the leading proponent of the argument that airline statement credits are worth (much) less than cash.

Five annual fees I'm willing to pay

As a result, I carry only five cards with annual fees, and I pay those annual fees solely because I believe manufacturing spend on the cards makes them worth keeping for my own miles and points strategy:

  • Chase Ink+. Bonus earning at office supply stores and gas stations, and turns my non-flexible Chase Freedom Ultimate Rewards points into flexible Ultimate Rewards points. $95 annual fee.
  • US Bank Flexperks Travel Rewards. Makes flying on paid airfares very cheap. $49 annual fee.
  • Barclaycard Arrival+. Makes hotels, Uber, and taxes and fees on award tickets cheap. $89 annual fee.
  • American Express Hilton HHonors Surpass. Makes hotels cheap. $75 annual fee.
  • American Express Delta Business Platinum. Makes Delta elite status cheap. $195 annual fee.

Even I'm willing to admit the Delta Business Platinum card is a marginal play, but I do really like checking bags, so the elite status is something I'm — for now — willing to pay for, as long as I'm also earning 1.4 SkyMiles per dollar spent with the card.

Don't pay annual fees you don't have to

Those are the annual fees I'm willing to pay. But I mostly don't.

  • On Wednesday I called the number on the back of my Ink+ card and explained I was trying to decide whether to keep the card. The frontline representative (no transfer required) offered me a $95 bonus statement credit to keep the card. $0 annual fee.
  • Every year I spend $24,000 on my Flexperks Travel Rewards card I receive 3,500 bonus Flexpoints, which I redeem against my annual fee. While the Flexpoints themselves are worth up to $70 when redeemed for airfare, this allows me to treat this card as a no-annual-fee card, which is my preference. $0 annual fee.
  • Each year I call Barclaycard and ask them to waive my annual fee. They have been happy to oblige for the last two years. $0 annual fee.
  • Also on Wednesday, I called American Express, told the computer I wanted to close my account, and was immediately directed to a representative who offered me a $50 statement credit to keep the card. $25 annual fee.
  • I haven't yet called American Express about my Delta Business Platinum card, whose annual fee I paid back in May. Hopefully they'll offer me something, although gunning for low-level Delta elite status is such a marginal play that I'll probably cancel the card anyway once I've secured status for the 2016 program year. $195 annual fee, minus a prorated refund.

Conclusion: your miles will vary

I assume one reason I have had luck so far with retention offers is that I spend hundreds of thousands of dollars per year on these cards.

If you spend less — or more — you'll find that the credit card companies have different offers for you, or possibly no offers at all, which is why it's important to know what annual fees you are willing to pay if you can't get them waived.

Only once you know how much you value a card, whether for its recurring annual bonuses or earning rate on manufactured spend, will you be able to decide whether the offers you receive from your credit card companies make it worth paying to keep your accounts open.

The only way I know how to value miles and points

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Yesterday I saw Trevor at Tagging Miles musing about how he values his miles and points, but in listing the different methods he's seen people use, he doesn't mention the only one that makes any sense to me. Since he framed his post as a rhetorical question, I'll take this lazy Friday opportunity to answer it.

Points are worthless until you redeem them

Feel free to carve out a small exception for points that can be redeemed directly for cash, like Ultimate Rewards points and US Bank Flexpoints, but the essential fact is that banked miles and points are the worst possible form of savings, outside of a large investment with Bernie Madoff:

  • Unlike money, they don't belong to you;
  • Unlike money, they can lose some or all of their redemption value overnight, whether through mergers, devaluations, or bankruptcies;
  • Unlike money, they don't earn interest.

That's why I keep my points balances as low as possible, and will almost always privilege redeeming miles and points over paying cash for reservations. Obviously I'll maximize the value of my miles and points over all my anticipated future reservations, but I don't store up miles and points for speculative, possible future reservations, when I need plane tickets and hotel rooms in the here and now.

When redeeming points, decide whether to earn more

The other reason to redeem miles and points, rather than cash, as aggressively as possible is that it affords a unique opportunity: the ability to see how much your miles and points are actually worth.

Like anyone else, in the process of planning each trip I search simultaneously for paid and award flights, and paid and award hotel nights – not because I'm interested in paying cash for a flight or hotel room, but because it gives an instant, accurate picture of how much my miles and points are worth: just look at the flight reservations you would make and hotel rooms you would book if you were paying cash, and look at the flights and hotels you would reserve if paying with miles and points.

For example, I earn 1.4 Delta SkyMiles per dollar spent on my Platinum Delta SkyMiles American Express card when I spend exactly $25,000 and $50,000 per calendar year (which, it follows, are the only amounts it makes sense to spend on the card). Since my next best card for unbonused spend is a 2.22% cash back Barclaycard Arrival+ card, I know I need to redeem my SkyMiles for "a bit more" than 1.59 cents each to justify manufacturing additional SkyMiles. I'll typically compare American, Delta, and Alaska fares, since those are the three airlines whose flights I can credit to the Alaska Airlines Mileage Plan.

If I find myself consistently redeeming my SkyMiles for less than 1.59 cents each, I know I need to shift my earning either to cash back or to another, more valuable rewards currency.

But note that this has no effect on my willingness to redeem my SkyMiles. With the ongoing devaluation disaster taking place at Delta, it would be madness itself to hoard SkyMiles for a speculative, future redemption if I already have enough SkyMiles in my account to book an award ticket (of course if I have another, higher-value redemption coming up, I'll redeem my SkyMiles first against that reservation before redeeming them against the less-valuable one).

Conclusion

That is the entirety of my methodology for valuing miles and points: I rely on the actual value I receive from the miles and points I manufacture, and use that value to decide which miles and points to manufacture on an ongoing basis. If, due to devaluations, movement of hotel properties between categories, or restrictions on award space, I find that I'm not getting enough value to continue manufacturing the miles and points I have in my accounts, I respond accordingly.

But I'll always privilege miles and points redemptions over paying for my travel with cash.

Ben Schlappig's hobby has nothing to do with mine

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I don't know Ben Schlappig, although I've been in the same, large room with him a few times. But Ben has been the subject of a recent media blitz (Rolling Stone, Nightline, the Economist) which has upset a number of people I do know for the attention it has drawn to travel hacking.

PFDigest, for example, describes the Rolling Stone article as putting "another nail in the coffin," while TravelBloggerBuzz asserts about the Economist article and Nightline segment that "each one of these PR stunts hurts the hobby."

Ben Schlappig's hobby is buying remaindered premium-cabin seats at deep discounts

Ben Schlappig is a rich weirdo.

And God bless him! Many immigrant families take multiple generations to attain the middle class, and here he is: the son of immigrants, buying Florida condos, living out of luxury hotels, and subjected to the affection of fans and flight attendants all over the world.

But needless to say, virtually no actual travel hackers are the proprietors of popular blogs where they're able to earn hundreds of thousands of dollars selling credit cards to unsuspecting newbies while farming out their award booking business to independent contractors.

It's certainly an interesting fact that wealthy people with knowledge of loyalty programs can buy premium-cabin seats at a deep discount compared to their unknowledgeable peers.

But it has nothing to do with me.

My hobby is travel hacking

While buying discounted premium-cabin seats is a hobby, it isn't my hobby. My hobby is traveling, and figuring out how to pay as little as possible for my trips.

Before the site was rebranded, Travel Codex was called "Hack My Trip," which I always liked the sound of. A trip to me is more than a seat in a premium cabin: it's hotels, museums, restaurants, churches, universities, people, and more.

So I plan dozens of trips per year, often to visit friends and family, sometimes to visit new cities, sometimes just to take advantage of Bank of America's underrated "Museums on Us" program.

And since I'm the opposite of a rich weirdo (a poor weirdo?), my goal is to spend as little money as possible paying for the trips I want to take. Furthermore, those trips are often inflexible! I know when my brother's graduation is going to be, so if I want to be there, I need to be there on time. I know when my partner's work conferences are, so if I want to go, I need to be on flights that get me there while they're taking place.

And that's the experience of almost everyone I talk to in the travel hacking community. With limited vacation time or fixed school schedules, most people need to get where they actually want to go, and they hope to use travel hacking techniques to get there as cheaply as possible.

There is no reason for people like me to care when Lufthansa opens their premium cabin seats for partner award redemptions — unless I actually want to fly somewhere on Lufthansa!

And that's the difference between Ben Schlappig's hobby and mine: he cares even when he has nowhere to be and no reason to be there.

I'll worry when the mainstream media pays attention to real travel hacking

A photogenic, tortured protagonist. A whiff of scandal. Shots of first class cabins and luxury hotel rooms. That's the kind of story anyone can understand, and it's the kind of story the mainstream media eats up.

Merchant coding? Adverse action? ChexSystems? Maybe you'll read about them in trade publications, but what would Rolling Stone, Nightline, or the Economist have to say about them? And how many of their readers would care?

The fact is, most of what actual travel hackers do simply puts us out on the long tail of loyalty programs; we may be unprofitable, but we don't cost more than the profit generated by the vast bulk of customers who behave according to expectations. For every $7.90 in profit a travel hacker makes buying $2.10 Ticketmaster tickets, how many people buy $50 tickets instead? $100 tickets? Of course they're saving money on tickets they would buy anyway, but they're also generating a profit for American Express that, ultimately, more than offsets ours.

Conclusion

Naturally, any individual travel hacking technique is subject to more pressure the more people who take advantage of it, and consequently there are techniques which travel hackers prefer to receive as little publicity as possible. But travel hacking as a whole is too diverse a spectrum of behavior for the banks, airlines, hotels, and merchants to decide to bring it to an end simply because of "too much exposure."

So as long as Ben Schlappig is "revealing" to the media that he books last-minute premium-cabin seats with his Ultimate Rewards points, I'm not going to lose any sleep over it.

How to glamp right. Hint: don't be me

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I'm still recovering from a 3-night glamping adventure, so no serious miles-and-points analysis today. Instead, here are my thoughts on what you should keep in mind when going glamping for the first time.

Introduction

I grew up in Western Montana, which means I grew up camping. Camping meant driving (as kids) or hiking (as adults) as far as you could before sundown, leaving just enough time to throw up tents and start a fire before having a quick dinner, telling some jokes, and turning in for the night. Space and carrying capacity being limited, you packed exactly what you planned to eat for each meal, each day in the wilderness — plus maybe a few protein bars.

So when my friends invited me camping, that's more or less what I expected. It turns out Madeline Island is a fully-developed resort community that happens to have a state park where camping is permitted.

Things I did wrong

Here's a quick rundown of the things I did wrong on this glamping adventure:

  • Pillows. When you're hiking into camp, you bring a sleeping bag with a padded top — a pillow would take up an impossible amount of space. When you're glamping, you drive right into the campsite, and can fill the whole car with pillows if you like. After the first night, I ended up sleeping in the car since it was more comfortable than lying flat on my back on the gravel ground of the campsite.
  • Sports equipment. When you go glamping in a resort community, there are community amenities like tennis courts and softball fields. Since I've been teaching my partner tennis this summer, the trip would have been a lot more fun if we'd brought some rackets and balls. Check ahead of time what amenities are available near your glampsite.
  • Bathing gear. Needless to say, when camping in Western Montana your only chance at a bath is a very quick dip in the nearest (ice-cold, glacier-fed) river. Our glampsite had running water and showers, but it didn't occur to me to bring towels. Or shampoo. Or soap. Remember: I thought we were going camping!
  • Firestarters. On the night my partner and I got the campfire going, it took us hours to carefully coax the wood up until it was finally hot enough to cook on. When our friends started the fire, they put some prefabricated fuel cubes in the fire and lit them, which only took a few minutes. Do that instead.

Things I did right

Having said that, I got a few things right:

  • Way too much food. Rather than planning each meal in advance, we went on a shopping spree beforehand buying both the stuff we wanted to cook over the campfire and a variety of snacks that we knew we'd eat eventually. This was a great move, since when glamping the urgency of coordinating meals is much lower, and you may end up needing more snacks between meals.
  • Camping uniform. Since I wasn't planning to shower, I picked a pretty simple camping uniform: long underwear, a pair of shorts, and a long-sleeved, lightweight shirt. It kept me mostly bite-free from disease-carrying insects, and worry-free from getting dirt and grass stains, since they were basically my workout clothes.
  • Reading material. Just like when camping, the days in camp are long and boring. Bring everything you can think of to read. Stock up on podcasts. Download movies. You may think you're there to enjoy nature's beauty, but when the sun rises at 5 AM and sets at 9 PM, it's unlikely you're going to spend every daylight hour communing with woodland creatures.

Conclusion

This trip was not exactly like anything I'd done before. I've stayed at relatively luxurious guesthouses in the national parks of California and Alaska, and I've gone camping in the wilderness areas of Western Montana. But the idea of combining showers and flush toilets with tents and sleeping bags on the ground positively baffled me.

Still, while I probably wouldn't drive 6 hours in each direction to do it again, I'll say I'm glad I gave it a shot.

Triggering high-interest savings accounts

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Last month I wrote about two high-interest savings accounts linked to the Mango and Union Plus prepaid debit card products. At that time, Mango was no longer available for new signups, and I speculated that Union Plus would soon be closed to new cardholders as well.

Doctor of Credit reported yesterday that, sure enough, that day has come, and it's no longer possible to open new Union Plus prepaid accounts.

If you were lucky enough to open accounts in time, however, you still have access to those accounts, including their linked high-interest savings accounts, and you may be wondering how to trigger those high rates.

Rêv gives detailed information on deposits

When you make a deposit to a Mango or Union Plus account, it appears in your transaction history with a fair amount of detail. Here are four different transaction types I tried in order to trigger my second Mango card's high-interest savings account (I did two of each):

An Amazon Payments transfer:

A transfer from the Stripe account where my monthly blog subscriptions are deposited:

A TopCashBack redemption:

And a Chase Ultimate Rewards cash redemption:

And sure enough, in June I earned 6.02% APY on my savings account.

The problem is, Mango doesn't tell you which transactions triggered the higher interest rate!

Narrowing it down to 2

That's where the process of elimination comes in, since I opened both a second Mango account and a Union Plus prepaid account. But I haven't made a TopCashBack or Amazon Payments deposit to my Union Plus account: I've only made Stripe transfers and Chase Ultimate Rewards cash redemptions.

But in June, I earned $0.27 on an average daily balance of $66.66 in the savings account linked to my Union Plus prepaid card. Since these savings accounts compound daily, that puts me right in the ballpark of the promised 5.10% APY. In other words, one or both of Chase Ultimate Rewards redemptions or Stripe transfers qualified as direct deposits for the purposes of triggering the high-interest savings account.

If I had an additional account, I would see if Chase Ultimate Rewards cash redemptions alone are enough to trigger the higher interest rate, as I suspect they are.

I'll be maxing out these accounts as quickly as possible

Now that new applications are closed for both products, it's unclear how long existing cardholders will be allowed to keep their accounts. With that in mind, I'll be maxing out these accounts as quickly as possible in order to earn the full interest rate for as long as possible before existing accounts are closed.

"The $100 Startup" is not a very good book

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This is a review of "The $100 Startup," by Chris Guillebeau. For a previous book review, see "Pound Foolish" is a pretty good book.

Chris Guillebeau has a lot of interesting friends and acquaintances

The conceit of "The $100 Startup" is that entrepreneur extraordinaire Chris Guillebeau had a flash of inspiration: everywhere he went, he met people who shared their stories of achieving "freedom" (a concept we'll return to in a moment) through low-startup-cost enterprises: at its most basic, just a website, an e-mail address, and a PayPal account.

So Guillebeau, being an entrepreneur extraordinaire, decided to survey, compile, and analyze the experiences of those entrepreneurs to see if he could identify the general principles which led to the success of their micro-enterprises, and share them with the world.

Unsurprisingly, Guillebeau's profiles of entrepreneurs are the highlight of the book. It is genuinely interesting to read about a variety of ways people are getting by in an era where anyone can be paid by anyone for anything they feel like paying for.

Guillebeau is not a particularly effective storyteller

If that sounds familiar, it's because for the last 15 to 20 years, anyone with access to the internet has access to thousands of stories of entrepreneurs starting with virtually no capital developing successful online products. Many of those articles are well-written and informative for people considering starting their own online businesses.

This is a fascinating topic that has been treated extensively by the news media, which knows a good story when it sees one. But Guillebeau brings no particular expertise to this storytelling project. Rather, he roots around in his survey data until he finds a piece of Talmudic wisdom, like, "Offer an incredible guarantee, or don't."

Well, yes, Chris, those are the options.

For someone supposedly concerned with "freedom," Guillebeau is oddly obsessed with financial success

Guillebeau frames his book as a series of stories, including his own, of entrepreneurs who, often accidentally or via unexpected misfortune, find themselves forced to support their families through small businesses of their own design.

But the more you read, the more you find that he's talking about businesses that are so profitable they replace the income the entrepreneur was earning through traditional employment. In other words, this is a world much closer to traditional entrepreneurship than he lets on: it's ambitious, money-oriented, self-motivated people making middle-class incomes through sole proprietorship.

Here's one of his informants talking about her business philosophy: "Remember that the goal of business is profit. It's not being liked, or having a huge social media presence, or having amazing products that nobody buys...Business is not a popularity contest...There's nothing wrong with having a hobby, but if you want to call it a business, you have to make money" [165].

Needless to say, that philosophy is deeply ingrained in American society — yet Guillebeau appears to believe he can claim to have discovered the profit motive by cloaking it in the language of "freedom."

Of course anyone would be excited to discover that they can make as much money from a small business as they do from formal employment; it's no doubt an incredibly exciting thing to discover. But Guillebeau never gives a coherent explanation for why formal employment is "less free" than self-employment; why making wedding dresses at home is "more free" than making wedding dresses in a factory; why making award bookings for strangers (yes, Gary Leff is one of the case studies) is "more free" than running a North Carolina research center. More profitable, maybe, but that's a much less interesting claim than the one Guillebeau seems to think he is making.

"The $100 Startup" misses the trees for the forest

Guillebeau repeats variations on the following mantra throughout the book: "You can open a PayPal account in five minutes and receive funds from buyers in more than 180 countries" [xvi].

But astonishingly, his only anecdote from an actual entrepreneur using PayPal is devastating: "The problem was access to money. Because Naomi is Canadian but has lived in the United States, the United Kingdom, and elsewhere, she often has issues with her PayPal account being closed as she travels the world, leaving her with plenty of funds in the account but no way to access them" [181, emphasis in original].

Instead of turning this into a teachable moment about the vagaries of using PayPal for your online payments processing (which I'd be happy to tell Chris all about), he describes her borrowing money from a stranger to pay conference registration fees. I'm glad Naomi worked something out, but for your typical entrepreneur who foolishly depended on PayPal for worldwide payments processing, this situation would be simply devastating.

And indeed, the entire book is full of inspirational aphorisms rather than concrete advice on the mechanics of running a small business.

Guillebeau is either gullible or naive about the 1099 economy

Repeatedly through "The $100 Startup," Guillebeau refers to people "deciding" whether to work or employ workers as employees or independent contractors.

Regarding a designer who returned to work after leaving her job to start a small business, he writes, "Also, Tsilli now worked as a contractor instead of an employee, and that gave her an unexpected but important sense of still earning all her income 'on her own,' with roughly half coming from the studio and half from her business" [230].

Regarding a transcription service: "Then she made another key decision: not to hire employees but only hire contractors. By building the team on a contract-only basis, she had more flexibility to increase or downsize the numbers, depending on market needs...(The contractors all understand that the work is cyclical and future projects aren't guaranteed)" [222].

Let me be clear: a wide swath of the American workforce is improperly classified as independent contractors in order to reduce the payroll tax burden on their employers. Employee and independent contractor status is not properly a "decision" made by either the employee or the employer: it's a legal determination based on the facts and circumstances of their employment. And the default, absent a raft of mitigating circumstances, is for employee status.

Guillebeau's studied ignorance of this problem treats the classification as a "business decision." It's not, and he invites abuse by suggesting it is.

I run a $205 startup, and I'm glad I didn't read this book before I started

Over two years into this project, I've made a lot of mistakes, many of which I recognize in the stories in this book (can you say affiliate links?). But if I had in mind the mechanistic, profit-oriented vision this book proselytizes when I started, I don't think I would have made it to my one-year anniversary, let alone still be blogging over two years later.

Guillebeau's vision of entrepreneurship is deadening, profit-oriented, and capitalistic, red in tooth and claw. That's fine: American culture is deadening, profit-oriented, and capitalistic. But his attempt to reimagine that culture and the role of the entrepreneur within it as a lone voice crying out in the wilderness for freedom does a disservice to those who truly reject the relentless pursuit of wealth as the principle goal of life.

Use Amazon Allowance to meet monthly transaction requirements

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[edit June 28, 2015: this post originally said Bank of America BBR cards pay $20 and $25 per quarter; in fact they pay $25 and $30 for non-BoA and BoA customers, respectively, as correctly indicated on the second mention. We regret the error.] 

Via Doctor of Credit, earlier this month Amazon introduced a service called "Amazon Allowance." With Amazon Allowance, you can configure recurring purchases of Amazon gift credit in denominations as low as $0.50, which are automatically deposited into the gift card balance of the recipient.

And yes, you can set yourself up as both the sender and recipient of an Amazon Allowance.

4 ways to use Amazon Allowance

Amazon Allowance simplifies and automates an aggravating problem: how to meet monthly transaction requirements while using the least possible cognitive bandwidth. Here are four use cases for Amazon Allowance:

  • American Express Amex EveryDay and EveryDay Preferred. These two cards give a 20% and 50% bonus on all points earned each statement cycle you make 20 or 30 purchases, respectively. By setting up 15-25 recurring monthly Amazon Allowance transactions, you can automate those monthly transaction requirements and get back to manufacturing spend.
  • Bank of America BankAmericard Better Balance Rewards. This card gives a $25 ($30 for Bank of America deposit account customers) quarterly cash reward for customers who both make a purchase that posts to each statement during the quarter and who make at least the minimum payment on each statement during the quarter. By automating a $5 monthly Amazon Allowance and payment of your balance each month, you can earn $120 each year without a second thought.
  • Waiving monthly fees and triggering high interest rates. I recently opened a Wells Fargo checking account that carries a stiff $10 monthly fee each month I don't make at least 10 purchases with the linked debit card. By setting up ten $0.50 Amazon Allowance transactions, I'll never have to worry about that monthly fee being charged. Likewise, the high-interest checking account offered by Consumers Credit Union requires 12 debit and 12 credit card transactions each month to earn 4.09% APY on up to $20,000 [edit: see the comments for an additional, excellent idea].
  • Microhacking! The only purchases I ever make with my Barclaycard AAdvantage Aviator Red card are $0.99 Amazon gift card purchases each month, which are then forgiven each time a statement cuts. I used to make those purchases manually; now it's automated.

Thoughts towards best practices for Amazon Allowance

While it certainly seems possible to simply create all your allowances for the same date, three risks to doing so suggest themselves.

  • First, Amazon may have issues processing 50 small transactions on the same date.
  • Second, your credit cards and banks may have questions about a flood of identical transactions on the same date.
  • Finally, if any issues do arise, you may have trouble telling which same-day Amazon Allowance payments were processed and which were cancelled or otherwise affected.

That's why for now, I have each of my Amazon Allowance transactions set up to execute on different (sequential) dates each month.

Annual Twitter recommendations

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At a reader's request, last year I wrote up a list of Twitter feeds that I follow, and consider essential to keeping my miles and points game in top form. Since the game is always changing, I thought I would turn it into an annual tradition.

When I wrote this post last year, I included a few of the biggest affiliate bloggers, simply as a way to keep your finger on the pulse of the mainstream. In the intervening year, those blogs have degenerated further into corporate advertising engines, and I can no longer recommend following them even purely for informational purposes. It's reached the point where I think they'd receive a stern warning if they ever did write something worth reading.

What do you think: are there any other essential Twitter feeds that belong in this list?