049 - How To Fund Your Investing Account If You Don't Have Enough Money

Regardless of whether you legit spend all your wages on essentials or because you really just don’t want to cut back on those discretionary expenses, if you're having trouble finding money to invest, we've got 2 ways to solve this.

The first is to use credit cards responsibly to take advantage of cash back. Credit cards aren't bad if you pay them off every month. There are no fees or interest when you don't carry a balance, and you earn money for spending in different categories. 

The other way is to invest your tax refund instead of using it as bonus spending money. 

If you combine these two things (based on the average American's spending and earnings), you can turn that money into over $600k in 30 years. The other option is to cut back on $300 worth of spending each month. 

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Transcript

Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions.
For those of you having trouble coughing up money to invest, this episode's for you. Regardless of whether you legit spend all your wages on essentials or because you really just don't want to cut back on those discretionary expenses. We've got two ways to seed your investment account with extra money outside your normal paycheck.
All right, guys, welcome back. OK, just this one's going to be quite light on the tickers. Yeah, this isn't about tickers, but this is about finding extra money to invest, because the one major concern that people have or the major issue that people have when it comes to investing is finding money to invest.
Yeah, I hear that. I hear it probably nine times out of ten people like, how do I invest if I don't like it? The budget's tight. So I set out in my evil genius way to come up with a couple of ways to generate money without actually changing much.
Yeah, without having to change your lifestyle, really, because that's one of the things people kick back about is cutting back their budgets, cutting back their spending categories. And I found three. We're going to discuss two today and then one next week.
Yeah, so the two today. Evil genius. Tim is quite the evil genius.
So this is something that everybody probably knows, but nobody's actually connected the dots or leveraged it in this way. So this is going to be really, really fun. Yes, it is.
To start out, I had to go through basic numbers. The average American family spends $5,300 on grocery shopping each year. Again, these are average numbers.
They don't necessarily fit you, but I'm just saying it on average. And when we say family, it's a family of four. Family of four.
The average American drives about 14,000 miles, which equates to a little under $2,000 a year spent on fuel. I think that's a little low, but. Yeah, that comes to be about $166 a month.
I think our budget is $200 a month. This one blew my mind socks off. But then again, we live in Pennsylvania where we have ridiculously high gas tax.
The average American spends about $1,000 on streaming services each year. Yeah, that one blew my mind socks off. Because we don't spend anything in actual subscriptions, like nothing.
OK, the average American spends about $3,650 dining out each year, which I think, again, that's a little low. Especially with Uber. And the average American spends about $2,500 on travel each year.
So the five categories I just mentioned equate to $14,450 on average that Americans are spending per year. So then I looked at the average wages, and it's anywhere between $38,000 and $58,000. So that means that those five categories, people are spending 25% to 38% of their average income per year on just those categories.
That doesn't include mortgage and all that happy. Like, that's not even entertainment. That's not some of the other stuff.
So I could see why people always lead with, well, how do I find money if they're spending damn near 40% of their take-home pay on that? So I was like, OK, I see what you guys are saying now. So then I came up with, how am I going to combat that? Where you can actually still invest money without changing your lifestyle. And the one that I found too, the first one that I came across was credit card cash rewards.
Yeah. And this one's actually bigger than you think. And they add up over time.
But caveat, if you have debt, you're probably not going to leverage this one because you want to actually get your credit card debt paid off as soon as possible. You don't want to be taking on, clearly, if you have credit card debt, you don't actually have responsible credit card usage. So do not employ this method.
Wait till the second one. The second one's a doozy. And a caveat from Tim is I could give a rat's furry ass about credit cards.
So I did all this research for the audience. Yeah, basically, Tim doesn't have. Actually, he just cut up his only credit card.
He canceled it because it actually had a yearly fee that he doesn't use. $39 per year. And I was like, F this nonsense.
I got rid of it. I cut it up last week and I have seven credit cards, which is above the average American. So like what the first thing you have to do.
You listen to the caveats. If you have credit card debt, then you probably shouldn't employ this strategy. Yeah, do not take on.
But if you actually can use credit cards responsibly by responsibly, I'm actually referring to instead of using your debit card at the grocery store, you use your credit card. And then you pay that full balance off. When you get your invoice or your bill, whatever it is, at the end of the billing cycle, you pay the full balance off. That's what I mean by responsible credit card usage.
So what I do is I just set up automatic payments to automatically pay whatever the heck my balance is. That way that I'm not actually paying attention to anything and I don't really spend more than I would normally spend anyway. And the only time I would do that, like Tim just bought a $3,000 bike that we put on a credit card and got cash back for it.
But he already had the money sitting. So we're allowing the bullet shares to give us one more payout. It's giving us a 30-day window to take that extra interest.
It's going to be probably about another $25 or $26 by waiting for the dividends to actually process. At the end of the month, I can then liquidate the bullet shares, pay off the bike. Yeah, off the credit card.
And we're making like $30 cash back, which unfortunately, just the way that that whole thing worked, we were really only getting the 1%. But you can do better in a lot of these other categories. Okay, so like the reason I say responsible because I was digging into the credit card debt.
And at the end of 2023, the average credit card debt was $5,733 per person. Not per family, per person. And at the average credit card interest rate of 23%, I think it's actually higher right now because interest rates are up.
But if you do that math and you're carrying that balance, that's $108 extra a month that you're paying in interest. Let that sink in. Then the average number of credit cards each person has also blew my mind socks off.
4.3? It's 3.84. So the average person has four credit cards. I have seven. I was like, I have one and it's too much.
So it is quite a nuisance to juggle them. But I'll explain why later on why I have so many. But I don't think people actually have the right ones for what I'm recommending what to employ here.
That's exactly why I have so many. So by what I mean by the right one is I don't, we don't use streaming services like at all. So having a credit card that gives us 6% cash back on streaming services and like 1% on everything else makes literally no sense for us to have that one.
So we probably wouldn't apply to have that one. We'd probably apply to one that say gives us 5% at the grocery store. So the key here is to go back to the episode that we talked about with budgeting where you literally go through what you're spending every month and you put them into categories.
If you're only using debit card and cash right now, you have to do this manually. But if you have credit cards, most of the statements will actually have a category of everything you're spending in. And that's like, they've done that to help us.
What you can do is then tally up what you're spending every month in those categories and figure out what your highest categories are. Look for your top two, top three. And then you go and you credit card hunt.
You figure out which ones are giving you the best perks so that you can get the most cash back for money you're already spending. Spend responsibly with your credit cards. Pay them off every month.
You will never actually have to pay interest. You'll increase your credit. My credit's like 834, I think, some crazy number.
And I don't even pay attention to it at all. I don't even try. And it's just ridiculous.
We have to reiterate that. Don't spend more at the grocery store because you're trying to get more cash back. Yeah, no, don't do that.
Spend what you normally would spend with your debit card at the grocery store with your credit card. Now, this is literally just a way to leverage money you're already spending to get free money to invest. Duh.
Because you're not trying to cut back on your expenses to find money to invest. This is literally free money to invest. Duh.
Well, it's not really free money. You're screwing the credit card companies, which is if you've ever paid interest or late fees, I would like to screw them, too. Like 23% interest.
I just looked at my one statement the other day. They're up to 29% on some of them. That's crazy.
Crazy. The one I'm- So screw them. I'll take the points.
I can't plan on getting used to the tractor supply card, but we're still in discussions about that. I don't want an extra card. It's just more crafting it.
I know, I know. But it makes the more practical sense for our situation is because we put like $100 a month on cat food. Our biggest problem is the fact that we're on the cusp of a major lifestyle change.
So until that happens and I can reevaluate everything, I don't really want to take on another card until I have the numbers to back that up. Yeah. Roll your eyes at me.
Go ahead. Go ahead. So if we just- If we just use those average numbers that we have for the average American, we looked at two credit card- I found- A two credit card combo.
There's a few. For the purposes of the email that I sent out, I used two credit cards. I found two additional ones after I sent the email out.
So say it'll be- Well, but that's on a different thing because there's one that might have some caveats. But basically for the thing that we just approached, there's a two credit card combo that would give you the best bang for your buck for your already spending habits. So the Blue Cash preferred credit card from American Express- Pays.
It pays 6% cash back on groceries. Using the average grocery bill would be $318 a year cash back. And it pays you 6% cash back on streaming services, which would then be $60 a year cash back using the average that we mentioned earlier.
Now that credit card also gets 3% cash back on gas stations. And never mind, it doesn't have that extra thing that the other one has. You can do better than 3% cash back on gas.
But just for the purposes of math, I just put the 3% cash back equals $60 a year when you use the Blue Cash. Okay. Card two.
Card two is the City Custom Cash Card. And that offers you 5% cash back on dining out, which would equal $183 a year. And it gives you 5% cash back on travel, which would equal $125 a year.
Well, it's not that they actually give those 5% back on that. What the City Custom Card actually does is it takes your top highest spending category and it automatically allocates that 5% to it. So since eating out would be the highest thing for all these options available for this two-card combo, you'd automatically apply it to that.
They actually have a thing right now where they're also doing- It's actually 4%, not 5%. They changed it between when we did that. But 4% back on travel expenses is an extra rider.
Everything else, I think, is at the 1%. Yeah, whatever. So using those two cards for the five categories I listed previously, you can get $746 per year cash back.
Now, the American Express one does have a $95 a year, whatever fee they waive that for the first year. So you actually have to knock that off. If you're spending that amount, you actually make more money than that costs you.
I'll explain later why we don't have that card because I don't spend enough to justify that. I have their free one, which is a 3% gas and grocery and a 1% everything else, which I actually like the 1% everything else thing. But continuing with the example, so if you took those numbers, that's $746 per year in cash back.
And instead of just saying, hey, I have free money, I'm going to go to the casino and blow it on slot machines like Tim would. Slot machines are investing to some people. Okay, okay.
Basically, so at the end of the year, when you get your cash back, it would go from your credit card company to your bank account, from your bank account to your brokerage account, and then you'd have $750. That's a good chunk of change. That you literally don't have to cut out spending.
You wouldn't cut anything out of your current diet. So that's a good chunk of change. A lot of people are excited about $100 here, $100 there.
$746 at the end of the year. Okay, so now we'll discuss the exit. Option number two to save money or to find money to invest.
Okay, then at the end of 2022, so this is data for 2023 from the IRS, the average tax refund will be $2,850. In 2022, it was $2,750. And what I see people do in this, I know we touched on this previously, it pisses me off to no avail, where they actually use that $2,850 as an extra paycheck rather than just use it for investing.
And I'll explain to you why it's important to put it in an investing account. When you're doing your budget and you're allocating your spending throughout the year, you're automatically looking at your income and then you spend based on that income. So when you do get that income for tax return, it technically is extra money, but instead of using it to, again, splurge and do ridiculous stuff with it, unless you're paying off debt, if you invest it instead, that's a really big chunk of change.
That's how many times more than the actual credit card thing? Mm, four? Four times more. So if you add together the credit card rewards, and you add that with the average person's tax refund at $2,850, that gives you $3,596. So $3,600 a year that you can find for investing that doesn't change your lifestyle at all.
Okay, guys, so if you actually took that money and instead of taking it from those sources, if you were decreasing your spending and this and that to try to actually allocate, that would come out to be about $300 a month that you'd be throwing into an investment account. And if you listen to those other episodes where we did the $100 would be compounding over the 10, 20, 30-year mark, the $200, that's a $300 a month potential way to find income or find extra money without actually changing your month-to-month normal spending. That's ginormous.
Go to the bath, Tim. What am I? Aren't you gonna do it for the 10-year, 20-year? Oh, yeah, so if you take the $3,600 a year and you just put it into the basic S&P fund that generally averages like 10.2.6 per year, at the end of 10 years, that would be $66,712. And after 20 years, that would be $230,409.
And then at the end of 30 years, it would be $654,996. Just using your cash rewards and your tax refunds through 30 years, you'd have a portfolio of almost $655,000. Yeah, more than half a million.
So for those of you who think you can't find money to invest, are you shitting yourselves? Because look at those numbers. So that's... It's a mindset thing. You can find money if you want to.
That's how I came up to combat the people when they say they can't find money to invest. I'm like, I found ways that you can get a... $300 a month equivalent. A pretty good portfolio after 30 years, not changing your lifestyle at all and not really taking out $100 a week for investing.
You can actually... Exponentially increase it. Just fire the shit out of this by actually just putting $200 or $300 in every month. On top of all this.
And you have like 1.5, 1.7 million. Yep. Or you'd be able to retire super early.
Next week's episode, we'll actually discuss another way that you can jumpstart your portfolio to the point where you're going to have millions of dollars. And something that you didn't think about. All right.
So for those of you who are interested in the whole credit card approach thing, we're going to dig a little bit into that because it gets a little into the weeds. So caveat, credit cards change constantly. The offers change constantly.
I mean, I was looking at one today that said something expires in like a month and yada, yada, yada. So you definitely have to do your own research at the time. So as of right now, we were just looking again.
Well, I would think you do your own research. Like it shouldn't be that much more research than you normally because you're going to be paying off your credit card every month anyways. You should be in theory in your credit card account every month anyways.
Okay. So I don't do that because I have bandwidth issues. I just set mine up to auto pay.
And until we just talked about this, like I wasn't paying attention. So auto pay is not an option. But I know, I know.
But we're not actually getting the most out of our credit card points based on the situation I have. One, because the cards have changed since I've taken on my seven credit cards. And I'm thinking about actually reallocating, closing some and opening some different ones because of that.
Now, back before when we talked about that American Express one that was the preferred, I believe it was called, that one does have the $95 a year fee. It's the blue cash preferred. Okay.
Blue cash, whatever. The reason I really like American Express is because if you ever do a rental car, I don't know if you know this, this is a little loophole to save you some money. If you ever do a rental car, American Express automatically covers your car insurance when you do a rental.
So you never actually have to pay for the extra car rental insurance. That's one of the reasons I have that. If you read the like fine print in their contract, Google it.
It's amazing. So you can basically be like, screw you on that. The problem I have with American Express and why it can't be the only credit card you have.
It's not accepted. It's not accepted at a lot of places. And one of the reasons we're not maximizing our grocery cash back is because the place that we love to shop, that's a discount grocery store, does not take American Express.
So I have to default to one of my other credit cards. Losers. I know, right? It's only got like 1%.
Now, I have a Discover It card. I like the fact that Discover has a different credit card option every three months. Like right now it's gas, EV charging stations, public transit, and something else that's in line with like transportation stuff.
But you get 5% cash back. So basically instead of putting it on my American Express from April, May, and June this year, I'm putting it on my Discover card to get a 5% cash back. The problem that I have with Discover is that every three months you have to activate to be able to even be eligible for the 5% on whatever it is.
But I do like that they have weird categories. Like sometimes they have home improvement stores. Sometimes they have restaurants.
So like I try to keep up with that, but I'm really bad with time. I want to get better at this. Probably doesn't help that I have so many.
Just put an alert on your phone. I know. I have to create a better system.
But basically I love my Discover card for that reason. And the only reason I have a Capital One card is because they really give you good perks if you do the travel type thing. They're the ones that do that per miles.
I was looking at the cash back that I have right now, and it comes out to be about 1% if you do a cash exchange. But if you use your points and put them towards like travel or flight or this and that, you actually get more for what you spent. That's actually how I paid for my Greece ticket back in February.
I had a whole bunch of points I completely forgot about because I don't pay attention until I have a whole bunch. And then I was like, oh. So I was like, what are they giving me? And I ended up getting a $500 ticket for $150, I believe.
So had I done that more responsibly with the math that we were just talking about, I would have taken that $350 I saved and rolled that into my investment account. Now we do that anyway, so it kind of comes out in the wash. But you're starting to see the point of all this.
So even the 1% add up. I just looked at two of my cards and I have like 161 cash back on one and I have like 103 on the other. I'm sure I have a bunch on a couple of the other ones I have, but it really does add up through the year.
I know Amazon's a big one. If you sign up for their credit card, you get 5% on everything that's on there. And like I get free stuff on there all the time on things I'm already going to be spending.
So that would be a big one. Yeah, the Amazon. And that's through Chase.
Chase has one. What was the one you were just talking about? But we were looking at our expenses and the reason I don't have the preferred American Express one is because if you do the math of what we're spending, it isn't actually worth having the 6% once you subtract that $95 a year fee. We're not spending enough.
We basically come out break even, but I don't have the streaming services to account for that extra 6% to get the extra bonus. And the preferred card doesn't have the 1% back on everything else. Only the non-fee one does.
So that's why we selectively have the one that doesn't actually have the preferred $95 fee for the American Express one. I do really like the one we were talking about that has the automatic, it automatically allocates your highest category. The fact that that's a set it, forget it, is like my jam because I don't want to have to be up in my stuff and I would rather automate most of my expenses.
So that one, I really, really, I'm probably going to look into. Okay, the one, okay, I got. So I found two additional credit cards I think could be pertinent to this conversation.
The first one is the Capital One, Save Your One Cash Rewards credit card. And that's pertinent to, I guess, people that use Capital One for entertainment purposes. So yeah, Capital One's really big on entertainment and Capital One's really, really big on travel.
That's the one that I have. And I actually opened my Capital One card the first time we went to Greece six years ago because they do not have any foreign transaction costs or fees. I don't know if that's changed since then, but that was why I opened it.
I'm assuming most of the other credit cards might have caught up to that, but don't take my word for it. You'll have to check it out for yourself. This one gives you 8% cash back on Capital One entertainment purchases, whatever the actual hell that is.
That's probably sporting events, music. Unlimited 5% cash back on hotels and rental cars. And then the reason why I have this is because I know more people are actually using Uber, Uber Eats.
Yeah. And you get 10% cash back on Uber Eats with this credit card. So that in itself would be enough reason to have this.
If you use Uber Eats would be to get this credit card. If you find out, if you do the math and you go through all your expenses and you find out Uber Eats is a huge category, like that would be a card that I would actually consider getting if that's... And then the second one that I found is the U.S. Bank Cash Plus Visa Signature Card. Say that three times.
Right. This one is for just awesome stuff. Like basically you choose the two categories of 12 that you want to use each quarter.
Like the categories are fast food, home utilities, internet, blah, blah, blah. So if you put your home utilities on your credit card, you can get 5% on your utilities, which you're already paying anyways. The average utility bill in America is $4,975 per year.
So that's $416-ish, $416, $417 a month for utilities. So if you use this credit card, you'd be getting 5% on your utilities. And that's $20 a month you can get in cash back on utilities.
Now the caveat with that, we were just discussing before here, some of your utility companies might not allow you to put it on a credit card. Like I know my mortgage can't. I think my sewer bill, they upcharge you for using a credit card.
So it kind of negates that point. But I know you can for your trash. Your phone bill can definitely be put on a credit card.
And I know you can for your heat, your electric and your gas. Anyway, in Pennsylvania you can. I don't know if it... Obviously it might differ from... Yeah.
So that might be one of something you want to check out before you get this card if you're specifically getting it to apply the utilities component. There's other categories for the 5%. You get the internet and streaming.
You can get 5% back on like your Verizon bios or whatever. And then you can do your cell phone provider. So you literally can just use your 5% on your cell phone and your internet, which I am assuming is the hundreds of dollars.
I didn't actually look that up because I just, like I said, found this after I did all this other research. Yeah, I'm sure people are paying a lot more than we're paying. So I was going to use it for the utilities if I had a house and then probably the internet and streaming at 5%.
You can go up to $2,000 per quarter, which would be $8,000 for the year. And I think that if you do the average cost, it would be just under $8,000. Is restaurants on here? It's only 3% for restaurants.
Okay, so 3% for restaurants. Fast foods is 5%, but who the hell spends that much on fast food? Uber Eats is a lot of fast food, isn't it? But that's 10%. Okay.
I'd rather use the Uber Eats 10% than get 5%. So those are the two credit cards that I found in addition to what I was... Oh, sporting goods stores. That's big if you're into like the REI or any of the Dick's and the Bash Pro stuff.
I understand that, but I'm just saying, but like... Department stores is another one. But like the problem I have with this one in particular for these one-off purchases, you have to know three months ahead of time that, hey, I'm going to go to Dick's. Whereas if you do utilities and cell phone, you know every month you have a utility bill and you know every month you have a cell phone bill.
So you can just click on that, be done with it because it's 5% on those. You totally can do that. And this actually makes you lock in per quarter, which that's kind of why I like the Discover's already has like preset categories, but you could kind of set up a similar situation with this where it's like, okay, I'm going to table all my department store shopping or all of my recreational whatever and tap into those for a quarter or whatever you're going to do.
But I'm hoping you see the mindset like how my logical mind approaches. Like I know what my monthly bills are going to be every month. So if I find a credit card that, okay, I'm going to have to pay gas and water and electric every month.
I'm going to have to pay Verizon for my cell phone every month. I'm going to have to pay Verizon for my internet every month. So why would I not have a cash back credit card that I can get cash back every month for something that I'm already using? Especially if utilities is your biggest expenditure per year.
It should be pretty close just looking at the average numbers. Yeah, it really should. 416 is pretty big.
Yeah, 4,000 was bigger than if you look back at the categories, it's the second highest below eating out. So I'm just saying like that's like what I would do if I was, you know, trying to find, trying to wiggle out as much money as I could to invest without changing my lifestyle or actually changing my expenditures is I would look at my budget and say, okay, every month I have this, this, this. I'm going to find a credit card where I get cash back every month for this, this, this.
And then like gas, you're going to have gas every month. You're going to have utilities every month. You're going to have cell phone every month.
You're going to have internet every month. You're going to have, I'm assuming dining out every month. You're going to have groceries definitely every month.
So if you find the categories and then relate them to the credit cards that you have every month where you can get the highest percent of cash back, that 746 actually I think is pretty low looking at these cards I found. Well, and one of the other things I noticed too when I was poking around in my credit cards, like Capital One, I think American Express and the same thing with my One Visa card, they all offer additional random places. They're like, I think they do sponsor offers where they'll tell you that they have like a 6% cash back on, I think I saw a 6% cash back on Walmart purchases if you do an online purchase through using your credit card, if you click on the link through the thing.
So if you do a lot of online shopping and one of those places on those cards has like a 10%, I saw a couple that were 10% cash back. I saw one that was 25% cash back, but it was some random thing. Manscaping was one I saw.
So if you use that company, a lot of those though are entertainment and more of the beauty stuff, which isn't things that Tim and I spend money on. So we don't really care. Well, actually a caveat there.
I was like, what the hell are they talking about entertainment? So I would actually went on to the web and I was looking at how much people are paying for like concerts and sporting goods. I'm like, oh, it makes sense now. Yeah, it does.
It's like hundreds of dollars just for one ticket. It's like, holy crap. Yeah.
So if you actually, so if you really don't, if you really want to maximize your investment, stop going to fucking concerts and sporting events. That'll save you. That'll save you thousands of dollars a year.
But you are maybe just give one up and put that into your thing to save if you really need to save. But I really don't advocate cutting the things out of your life that you love. You should be doing more of those things.
But if they're not actually fulfilling to you, like that could be a very easy way to find. If I'm paying for cable, I'm going to watch the sporting event on my TV and save like hundreds of dollars. I don't disagree with you.
I wouldn't even do that. I would just stream it off YouTube or something. And I'm pretty sure like if you like, say Taylor Swift or well, I don't know who's popular anymore.
I just know Taylor Swift. If you want to watch it, if you want to, if you want to see a Taylor Swift concert, just go onto YouTube, type in Taylor Swift live 2024 concert and you'll actually get a live concert. So you don't have to spend $516 on a ticket.
Well, you know, it's going to be crazy. I imagine VR is going to come up with stuff at some point where instead of you going to the concerts, you might be able to save money. Well, it basically boils down to is you have the people that just want to do what they want to do right now, regardless of the consequences.
And you have the other people that want to like 10 years from now, 20 years from now, I want to be able to do what they want to do without any restrictions. And there's like, that's the two different camps. Yeah.
I'd rather do some extra legwork. Sometimes you can actually find a happy balance. And this is a really interesting way.
I've never, I've never seen this. And I would recommend if you are interested in looking at the best possible credit cards for your situation, to go on NerdWallet. NerdWallet has a really good.
Yeah, we'll have a link in the show notes for you. It takes you and they go through and they do a lot of the analysis. They have a really, they have a really good listing of like the best credit cards with the best rewards.
And they do a great job. And these are all just cash rewards. I don't even do the point rewards.
I could care less about the points. I just wanted the cash. I want cold, hard cash in my bank account in the year that I can invest like the points.
I'm sure you could probably find point things that you can get. Again, the point thing with Capital One, if you do a lot of travel, you have to pay for tickets or reserve tickets through the actual Capital One site. It does get a little stupid.
And like I said before, the only reason I had that was because of the foreign transaction thing. I'm going to reconsider that when I reevaluate our credit cards. We'll probably update you guys when we actually do that in a few months.
So if you're an average person using this thing with the tax return or tax refund and the credit cards, you literally could have $4,000 a year to invest without changing your lifestyle, like period. And in 20 years, you could have $230,000, I think you said, which comes out to be... In 30 years, it's like $660,000. You're banging some high numbers at that point.
So in 20 years, if you would invest that at that 10%, you would actually be getting $23,000 a year if you were investing in the dividend approach that we do, which would come out to be about $1,900 a month. That's, again, more than a Social Security check. And this is not even including the fact that the 10.26 is low.
You can probably do 14% to 16% returns by doing the investment strategy that we've brought up ad nauseum through the episodes. This is literally just taking your cash reward and your tax refund and putting it into an S&P fund and just let them set it and forget it. But again, cannot stress enough responsible credit card usage, responsible credit card usage.
And the easiest way to do that is to set up automatic payments for full balance so that you don't have to worry about late fees. So when I did this topic, I went into it with credit cards, blah. When I got done with it, I was so excited for all of you because, dude, you guys can make so much money off the stuff that you already spend money on.
I was like, oh my goodness, these people should love me. And it's the greatest thing in the world when you go in there, you see your cash back at a couple hundred bucks. You're like, wow, yes, this is amazing.
I can, you know, I don't have to spend this on this now or I don't have to spend this on this. But you have to change that mindset to I'm going to take that cash. I'm going to take that and invest it.
Put it into my bank account and I'm going to take it from my bank account, put it in my brokerage and just invest it. Oh man. And then if you put it in something like Worthy that does that daily compounding and you see that there's literally those daily interest payments, like this is where you start to get addicted to this stuff.
I'm just saying if you look at, but even like I didn't even put this in the email. I just thought of this. If you look at the average take home pay, it's about $40,000.
$4,000 a year, give or take, is 10% of that. That literally, if you take that cash after year one, you'd have your emergency fund. And that's that 10% they tell you to invest without actually pinching any pennies.
So you have your emergency fund after year one and starting in year two, then you could be taking the $4,000 and put it into investments and you literally would not take any money from your paycheck. You would have your emergency fund set up with cash reward and tax refund and then you can start investing in year two and shabow. Shabow, shabow.
Yeah, I'm done. I dropped the mic. Tim found out he can hit the mic with a pencil.
Yeah, isn't this great? Listen. All right, guys. Next week, we're going to talk about a huge, huge way to find even more money.
Yeah, this was a two-part thing. This is the first part. The second part, if you combine the cash rewards with the tax refund, with what we talk about next week, you're going to be like, and you just do that for 20, I think it's 13 years.
And then you just do 17 years, letting it sit. You're looking at almost $5 million in your portfolio. Yeah, huge, huge, huge, huge.
And next week's topic is actually going to be something that we've all been brainwashed to think. Yeah, doing this thing is actually the better investment. But in actuality, when you run the numbers long run, it's not even close, not even close.
And I did the numbers just using average numbers. And it's like, it's not even the same ballpark, not even the same ballpark. So stay tuned for next week.
Next week's going to be a banger. Yep. So take what we just told you during this episode and go home, crunch your numbers.
This way, you're not looking for ways to cut money. You're actually looking for ways that you can leverage the cash back and might make figuring out what you're spending more exciting, as opposed to like feeling shameful about it. That's what I would do.
That's your takeaway. Go run your numbers, figure out your top spending categories. Yeah, something.
See you guys next week.