We’re not even at the end of February yet, but 2016 has already been a very tough year for Manufactured Spending. My favorite tool to MS was Bluebird, but that’s not worthwhile anymore after account closures. We’ve heard of Citi credit card accounts being shut down, Chase becoming more restrictive for those who apply for credit cards regularly, Simon Mall gift cards being coded as cash advances, and Tahsir even got a visit from an IRS Agent at a Walmart for the large volume of money orders he was buying.
To me, this highlights how fragile our current/prior state of manufactured spending is/was. We were so reliant on a small amount of tools and techniques that as soon as those went away, it left people paralyzed and many with thousands in gift cards that they couldn’t easily liquidate. If you ever heard Tahsir speak at a TravelCon or FTU event, you’ll know that one of his topics was something to the effect of “Think Beyond Walmart” because one avenue simply isn’t enough.
But…the past is in the past. We’re here, and we need to figure out how to move forward. So, what’s the best way to manufacture spend today? Undoubtedly many of you assumed that my answer would be money orders. After all, Walmart still accepts certain gift cards and money orders are sold at a myriad of other stores as well. Money orders are definitely the most discussed way and the path of least resistance as of today. But is it sustainable? Nope, no more than Bluebird was. Or even Vanilla Visas at Walmart. With a simple software update from Walmart, all registers can easily be coded to not accept gift cards. Then we’ll be back here having the same conversation.
I think the most sustainable, and indeed the best way, to manufacture spend today and in the future is more along the lines of reselling. Raise your hand if you just said “Ugh, too much work. Too complicated. Not worth it.” How many of you said that the first time a friend told you about buying/liquidating gift cards and how to search for award space?
I said “along the lines of reselling” because there’s much more to consider. There are many people who just buy iPads or whatever when they come on sale, then sell them immediately for a small loss so they can take the points, and hopefully at the end of the transaction they come out on top. Great, that’s wonderful. If you can make that work, that’s fantastic. But again, remember that to do this most people still spend some money (the loss on the sale of their product), and more importantly time, in many cases. This method can be useful to get a big prize like the Southwest Companion Pass for a discount, but how much money and time are you willing to lose over those points?
I suggest that a better strategy is to start your own business. Many of you will stop reading here, and that’s fine. You can go ahead and keep doing your money orders for however long that lasts and continue searching for more prepaid cards or the next Vanilla Reload-like item. But if you want to be in this for the long-haul, earn points consistently, and NOT lose money, you’d be doing yourself a favor by spending more time to make a proper business.
I think the best resellers, or at least the ones that have the most experience, will tell you that you shouldn’t just be in it for the points; they’ll say you should be in it for points AND profit. It’s simply not worth it to spend your time and tie up your money for a month or more just to come up with 10,000 points and be down $75, even if that is a good price for those points.
It’s much more reasonable, sustainable, and just plain better for you if you can create a business where you buy and sell to make money…and then get points as a bonus. And you’re all probably thinking “Well duh, that’s OBVIOUS. Tell me how!” If it were that easy, everyone would have a business (and if you have a Chase Ink account, you already should).
Many of you dove head first into the world of miles and points, then quickly learned about manufactured spending. How much time did you spend reading blogs, FlyerTalk, other forums, and maybe even Reddit? How many hours did you spend with trial and error at CVS, Office Depot, Staples, Walmart? Take all those hours and instead imagine if you spent all that time on learning how to buy and sell items for profit. Just Googling the phrase “how to buy and sell items for profit” returns results that will point you in the right direction.
Just as there are blogs like this on how to use miles/points to travel better and cheaper, there are tons devoted to buying and selling products for profit. And your main goal should absolutely be PROFIT, as in actually money, as opposed to the miles/points. Why? Because cash is king. Sure, you pay for that Emirates First Class flight in cash because it costs $30K, but use the money you made from your business to buy Alaska Airlines miles on the “black market” (yes, points/miles brokers exist) or even directly from Alaska Airlines at 2 cents each.
And don’t get fixated on buying and selling itself – I’m using it as an example since it’s the easiest to visualize. One person I know decided to use his knowledge of travel to sell himself as a sort of travel agent to a small business owner that has several employees that travel regularly. Without being on that company’s payroll, he became their unofficial travel agent to book all their flights (which happened to be in business class). He charges between 5%-10% above the retail price of those flights (yes, the same ones you can find by searching on Orbitz or Kayak), and buys them on his own credit card to be reimbursed later. What person/company is stupid enough to do that? There are SO MANY people out there that have more money than time and are willing to pay for that service. Find those people!
My point is this: if you find yourself shut out right now because of recent account closures and are cautious or unsure about money orders, then it’s time to refocus. Your new goal should be to make money, ideally by purchasing products with your credit card and selling them for profit, and doing it in the least amount of time and with the highest volume possible. Start learning everything Amazon, eBay, and Alibaba. Start researching the best products to buy on sale and which items sell the fastest. Start looking into how you can buy things at wholesale prices and how you can ship them with minimal effort. Start talking to business owners and ask about their travel arrangements, or how they get their products/materials, then find a way to insert yourself with a benefit to their company (usually a time savings).
There’s a lot to learn, but I’d say it will take no more time than learning how to earn and use miles/points and physically going out to manufacture spend. At least with this method, you’ll be safe from shut downs or having to physically visit a Walmart.
I agree with this approach a lot. I really like buying/selling to make points. It is the most sustainable way to be alive in this game in my opinion. And also I do not expect a whole lot of people entering the arena. Even if they do, there will be some stiff competition in the online market. While the competition might not kick off immediately it may happen in the long term.
Buying and selling is great until your State comes after you for not paying sales/income taxes on your ‘business’.
So treat it like a real business and pay your taxes. If you are making a profit, you still come out ahead. It you don’t make a profit, you don’t pay taxes.
The idea is to make this completely legitimate, and that would include paying the appropriate taxes.
Reselling is much more risky, it involves storing inventory of crap that I have no need for. Being sensitive to price fluctuations of the open market, having to pay income tax on the profits, etc.. And don’t tell me any of you can resell $100k+ worth a month with under 10hrs of work per week, because that’s what large MO volume at WM allows me. I’d rather get stuck with $10k of GCs then $10k worth of merchandise.
I agree, it involves a different type of risk. And while you can do $100K at Walmart easily, that avenue can very well be shut down. What’s the next best alternative? I’m thinking two steps down the road to the day when Walmart is no longer feasible, should that day ever come.
But reselling venues could dry up as well. I’ve followed it for the past few years and people who do it in volume often complain of sudden price swings on products due to unpredictable influxes of other resellers dropping same products.
I can do small scale MOs at local grocery stores. The ones that swore they’d ban GCs only taught cashiers to catch large amounts but they’re lazy overlook small ones. Not enough to make serious money but good enough for minimum spend with minimal effort.
Ah for years my preferred method of MS has always been in reselling. One thing I noticed though is if you resell with the smallest profit possible, your item gets sold a lot faster. So don’t be greedy or else you’ll be stuck with a ton of crap.
Agreed, pricing lower is usually the best bet for a quick sale.
With all due respect, reselling is MS only in the most roundabout definition of the word and to say otherwise is mildly irresponsible on your part. Instead of sinking hours upon hours in a loser business (which most people will not report on their US, state, county, or city tax return (yup, county and city!) and may even end up costing them real money) for the miles/points, your readers might as well spend that time getting better at their current job or profession, getting an education or higher degree, or starting a real side business, and then turning that time investment into a more comfortable income so that they can then use CASH for their vacations. It is one thing to spend your time churning cards or wasting otherwise non-productive hours at Walmart, but it is an entirely different thing to propose starting a business as a means to an ends.
By this post, are we to understand that MS is pretty much dead or does it mean that the bloggers won’t share it anymore?
And not to mention sales tax! Not sure if Amazon and ebay automate this, but at least in California, sales tax audits will make you want to kill yourself.
Finally, a sensible comment! Yes, if you can spend more time at your current profession (assuming you like it and there is an opportunity to advance), then I am certain that would be more valuable than starting a business simply to get points and miles (or even cash, if it’s a side business). Hopefully, people will realize that the cost of spending time on such an endeavor must outweigh any gains you could have had by spending that time more productively on your actual profession, education, etc.
Why aren’t you already killing yourself from California taxes and weird laws?
I like the business idea. It doesn’t just need to be a reselling business. Ben at OMAAT has said several times that he earns a large number of points through his award booking service. Many of his customers are willing to let him use his credit card (e.g., Amex PRG) to pay the taxes and fees for an award ticket and then reimburse him. Of course, Ben gets the Membership Rewards points for those transactions.
Yes. I started my own business six years ago. I now get 15k MR points, 5k UR points, and 5k SPG points every month for my business’s regular spending. That isn’t a ton, but when you add it to points for signups and my use of money orders, it turns into a lot. It’s also nice being my own boss, because it lets me schedule vacations when I want. In May, I’m taking my nephew to London, Iceland, and Rome for 17 days, all on miles and points, and it was great to be able to just tell my employees that they will have to take care of things while I’m gone.
1. No place in Dallas, Texas area will let you use gift/debit cards with PINs to buy money orders.
2. My only way to MS now is to prepay utilities,cable, etc. and that has practical limits.
So Tashir killed it for good? Last he yapped on here he was doing $20k while standing on one leg.
This statement is literally the biggest lie ever. If you step out of your house in Dallas, you can buy money orders with debits.
tahsir21- I tried every drugstore chain, every grocery chain, Walmart, Target, Sam’s Club, oriental grocery stores, you name it. Please tell me where in Dallas area I can buy money orders with loaded cards with PINs.
Lol, the second and third ones you named.
good news is that if you keep talking about it. It’ll die there as well. I know you are smarter than you lead on. Bet you eventually figure it out.
Jerry, stop spreading BS. You do the same on Ariana’s blog as well. It is well known that WMs in DFW are MO friendly.
I challenge anyone to exactly identify any Walmart in Dallas, TX area that lets you buy money orders with loaded gift/debit cards with PINs. So far, Tahsir has not exactly identified any Walmart or any other place. I read nothing but generalities.
I’m pretty sure Tahsir just did another $30K yesterday in Dallas.
Why would anyone go into reselling with the POV that they would NOT treat it as a legitimate business? I still MS. But I have to tell you, that the time I spend, mostly online, searching for items I can sell at a high enough profit to make money AND cover for returns is a lot more pleasant that standing in line to load Serves at FD (I’m still alive with them), or wandering the despicable WM to use up time so I can go back and have Kate announce to the world what I’m loading.
Especially more pleasant that standing in line to buy MOs.
Yes, the record keeping is a chore. And, yes, it’s a steep and high learning curve, especially if you’ve never had a business before. But people: YOU CAN DO IT IN YOUR PAJAMAS. Once a week, pile the boxes into the car and head to UPS. FBA sends out the products. And sends YOU money.
Just don’t be dumb. Treat it as real money, keep track of your expenses, because Amazon WILL report the income to Uncle Sam. And price well, but not so low that a handful of returns will throw you into serious negative income land.
We need a likely looking lass or lad to start-up a concern focused on selling and subsequently liquidating fixed-value cash-equivalent instruments profitably while charging about $8 per thousand for the service. These instruments would be single-purpose, issued by a private bank, not valid for purchase at point-of-sale, and operating outside the usual fee-levying credit card networks AmEx/Visa/MC. Sort of like electronic bearer bonds you buy with points-payings credit, but gussied up as much as necessary to neuter cash advance triggers when purchased. That would be nice, and with the right legal footwork, maybe it could even be done legally.
Nube
I an VERY sorry but encouraging people to get into a business with VERY bad cash on cash just to convert money to non-money and poorly regulated instruments. Is just really bad advice. Interesting blog but really, really bad advice here.
Better advice is to make money and then use that money to buy budget travel. This is the way we use to do it. The points programs are closing the loopholes, they are on top of the game now and so the opportunities are now over or ending. Please encourage your readers to start good businesses that allow them to make profits and plan for retirement and as a side pay for travel because cash will always be king and with cash you can just buy what you want.
I think that’s what the author argues for, creating a successful and profitable business. If miles are earned as a side effect of paying business expenses, then that’s a nice perk.
“It’s much more reasonable, sustainable, and just plain better for you if you can create a business where you buy and sell to make money…and then get points as a bonus.”
not making a good point of it though. Kind of a juvenile post. Not very good.
I don’t recall the part where I encouraged people to create a bad business. I suggested to create a money-making business which, in my book, is a GOOD business. I even used the same phrase as you: cash is king.
I am going to miss BB/Serve/Redcard, since that is 120K miles per year that we won’t have anymore — not really into the MO thing. Most likely going to use Plastiq to make minimum spends during an app-o-rama or if a big bonus come up again. Or maybe to meet my 25K minimum yearly spend on my United card to bypass the PQD requirement for status.
Interesting! I just linked to this post via your post today and we agree that making money is the way forward (as obvious as it sounds) but I’m not going down the reseller route. I call it ‘End of MS Means Get Your Life Together” http://thepointsoflife.boardingarea.com/end-of-ms-means-get-your-life-together/
Ugh…I did not come here for a lecture. I’m just trying to break even/get ahead just enough to cover the annual costs. Sorry, not sorry.