🫧 I really enjoyed the style in which this (terrifying) Harper’s Magazine report was written, and while it mostly contained arguments against passive investing I’d heard before, the high-level, holistic approach—how and why index investing has gotten so big through both innovation and regulation, a summary of the reasons some quants are nervous it might be a bubble—was a pretty satisfying container for a not-so-satisfying message. TL;DR: It cannot be overstated the extent to which the success of “passive investing” relies on the existence and participation of active managers.

I’m deep in the editing phase of my manuscript for Rich Girl Nation (how is it possible I’m a year into writing it, and there’s still a year to go?). Before I started editorial surgery on Chapter 4, a deep dive on everything nobody tells you about marital finances, my publishing partner sent me this personal essay, with a subtitle that sums it up well: “Divorce was a shock that led me to a new vow: financial independence.” (Semi-related: Did you know you’re about as likely to become a billionaire as make a living as an author? Ha ha! Fantastic!)

¹must be willing to jump through a litany of loopholes and degrade oneself before the transfer portal gods.

In the last week, I’ve seen a slew of headlines on the tails of American Express’s first-quarter earnings report, revealing that Gen Z and millennial users are accumulating their pricey, premium cards like student loans are in retrograde. This was interesting timing, as just a few weeks ago, I was interviewed for a piece in the Washington Post about travel rewards.

The article examined the “humblebrag” travel content that cites—with somewhat mysterious origins—how an individual was able to fly Business Class “for free” or travel the globe “without paying a dime.” Predictably, there’s a bit of pyramid-shaped smoke and mirrors happening here: While the sign-up bonuses themselves can be worthwhile (many popular programs offer introductory rewards that eclipse $1,000 in value), the absurdly luxurious onboard suites with queen-size beds and champagne fountains depicted in these videos often require hundreds of thousands of points to redeem—an amount that’s really only possible to accumulate if you spend or travel a lot already, never use your points, churn cards, and/or rack up the maximum number of referrals each year.

The writer understood why travel creators were talking about these cards—but he was curious why so many personal finance writers covered them (enter: yours truly). Travel credit cards are about as close to “controversial” territory as we have in the tactical world of compound interest calculators and high-yield savings accounts, because credit cards (and debt in general) have long been associated with irresponsibility.

But as I told the Post, travel rewards were a semi-integral part of my financial awakening. In a time when I had little disposable income and a desire to experience my twenties in places other than my apartment complex’s courtyard, they enabled me to take weekend trips I wouldn’t have been able to easily afford without them.

More than that, they were fun.

There was so little in my financial life at the time that felt within my scope of control: I was quietly making responsible choices about what to do with my $1,600 bimonthly paychecks, living within my means, and notching up my 401(k) contributions like the good little aspiring retiree I was, but as every finance book I read at the time reminded me, there weren’t shortcuts on this path. Compounding took time, and time had to be spent somehow.

But the ability to research which cards had the best bonuses, and how to cobble those bonuses together for a free stay at the Cosmopolitan in Las Vegas (the absolute lap of hedonistic luxury as far as 25-year-old Katie was concerned)? The freedom to execute a strategy that would afford me a $75 breakfast credit every day of my trip? (This was more than I spent on weekly groceries at the time.) Titillating. An amusement park for the mind. In October 2021, I published a post about my love affair with travel rewards that included the well-adjusted and not-at-all concerning line, “Pay for my coffin with points and host my funeral in the Centurion Lounge.” I didn’t grow up traveling, and this mystical universe of points and miles is what enabled me to leave the US for the first time at the age of 23.

Forget a path with shortcuts—this was an entire world of shortcuts, loopholes, and free upgrades, readily retrofittable to my new personality of Fiscally Prudent Young Person. Credit card points were like extreme couponing for people with a superiority complex.

I never carried a balance on the cards (and therefore paid no interest) and my credit score was rapidly approaching 800 (leaving me unworried about long-term financial damage), so travel credit cards felt like a game I could play…and win. In retrospect, I think I derived more enjoyment from finding ways to get trips for as cheaply as possible than I did on the trips themselves.

Credit card points were my cheat meal in a world of rice and beans. In the grand scheme of my portfolio accumulation process, they didn’t play an outsized role, but they were a treat for all my other boring, sensible choices. Every time my Ultimate Rewards points transported me from the trappings of my normal life of meal prepping and working overtime to an all-inclusive resort in Mexico, I felt like I was taking a magic carpet ride into a rich person’s life, an experience I documented at the time with delirious wonderment.

Often the debate about whether travel rewards (and the plasticware you must obtain to participate) are “worth the hassle” focuses tangentially on the question of credit card debt more broadly, or attempts to dissect the trade-off of time spent. On the latter question, Nick Maggiulli suggests you’re wasting your time on maximizing rewards if you make more than $200,000 per year.

Because there’s a payoff in the form of fake tokens you can redeem for real travel, it’s assumed that the only gauge by which you can judge worthiness is whether the effort spent engineering the trip generates a commensurate amount of money saved. The idea that it’s “not worth your time” usually rests on the assumption that your time could be better spent doing something more valuable, like, I don’t know, negotiating a raise. But we don’t use the same language about leisure activities like Netflix (TV isn’t worth your time!), because we don’t expect things we do for fun to meet stringent ROI requirements. Some people find enjoyment—find pleasure—in pulling one over on the fine folks at American Express or scoring a really gratifying redemption.

I’m in a different phase of life now (and mostly pay for my travel with real money, as I can finally afford to), but I still get a secret thrill from swapping out my accumulated points from regular spending for $1,000 off an international round-trip ticket. I don’t spend hours scouring the internet for the best redemption value (...very often) anymore, but nothing compares to the illicit joy of falling asleep in a hotel room you didn’t actually “pay” for—and I stand by that.

The good news, though, is that if you don’t enjoy it, can’t be bothered, or, to Nick’s point, already “earn more than $200,000 per year,” you can get a simple cash-back card and ignore the influencers in their business class suites. Get a little somethin’-somethin’ for the money you’re going to spend anyway, but know that points and miles aren’t required for your journey.

Read the online version.

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