How my thinking has "evolved" on the costs of manufactured spend

One principle I've always tried to adhere to on this site is transparency with my readers. That's why I periodically share my income from book sales, referrals to services like Uber, PayPal subscriptions, and so on, and why the comment sections are always open on my blog posts. When I'm wrong, my readers don't hesitate to tell me — and judging by the comments I get, I'm wrong a lot!

I was pondering all this today in the shower when I realized there's a key concept about which my thinking has really evolved in the almost-2-years I've been writing online. That concept is how to think about the cost of individual techniques for manufactured spend and the total cost of a manufactured spend strategy.

To show what I mean, it helps to look at an early post I wrote, in which I described buying PayPal My Cash cards with a rewards-earning credit card and then liquidating the funds using a PayPal Debit MasterCard that earns 1% cash back. It's a perfectly accurate post — but I was totally, utterly, and completely wrong.

What I described was a way to earn as much as possible from a single dollar of manufactured spend on a rewards-earning credit card. I described it as "driv[ing] down your cost per point." With the benefit of 21 more months experience manufacturing spend, that's the key point I've changed my mind about.

Make it up in volume

Rather than focusing on the cost of individual techniques, these days I prefer to think about the costs of my manufactured spend strategy holistically. To give a trivial example: my American Express Hilton HHonors Surpass and Blue Cash cards both bonus charges at gas stations and grocery stores. A quantum view of the two cards would lead me to insist on manufacturing spend at grocery stores (paying an extortionate $5.95 per $500 Visa prepaid debit card) exclusively with the Blue Cash card, netting $19 per card, and at gas stations with the HHonors Surpass card, earning around 3000 HHonors points for $3.95, or about 0.13 cents each.

But that's nonsense. At the end of the day, the amount and cost of my grocery store and gas station manufactured spend is determined by my ability to liquidate the spend, not by the cards I use at each store.

These days, I use what might be called a "lump of MS" strategy. I generally know at the beginning of each month what my goals are in terms of both bonused and unbonused spend: I'm going to spend a certain amount of money at grocery stores, gas stations, drug stores, office supply stores, etc., and put a certain amount of bonused spend on certain cards. As long as I'm sure to hit my targets for each card, I'm totally agnostic about which cards I put "cheap" spend on and which cards I put "expensive" spend on.

Unbonused spend is even simpler, since by definition is has to be much cheaper than bonused spend to be worth engaging in. If I'm due to load a Visa Buxx card, for example, but discover that my Barclaycard Arrival+ card is already maxed out, I'll instead make the charge to a card like Ink Plus. While I'm earning less per dollar, I think of my non-bonused spend, like my bonused spend, as having a fixed monthly cost. All I need to do is make sure at the end of the month I've hit all my spend targets, and I can sleep well at night.


I don't expect this post to revolutionize any reader's strategy. But in the interest of the transparency I prize here, I wanted to explain to anyone who stumbled across my post from last February that I was doing it wrong, and hopefully keep others from making the same mistake!