Manufactured Spending and Susan, the Milkmaid


I’m breaking my regular programming (which is pigging out on food, booze, sun and ocean waves here on the North Coast of the Dominican Republic) to bring you this. A few days ago, Matt from Saverocity wrote a brilliant post in response to another great post by Shawn from Miles to Memories. Here is a very short recap (and you will do yourself one hell of a favor if you read both of them).

Shawn had pointed out that the Chase Ultimate Rewards feature “pay yourself”, makes it possible to manufacture Ultimate Rewards points completely free. You just redeem everything you spend on the fees (like gift card fees and liquidating fees, if any) by reimbursing yourself and keep the excess of the points as profit.

So lets take a look at some of the basic math of buying $200 Visa or Mastercard gift cards at Staples with a Chase Ink Visa card.  After paying the $6.95 fee and receiving a 1% rebate with Visa Savings Edge, your out of pocket cost is $204.88 for a card that is worth $200. The purchase of this card will net you 1035 points.

In the end, you have 1035 points for $4.88. Essentially you just purchased Chase Ultimate Rewards points for a little less than 1/2 cent each ($.0047). Considering most people value these points at around 2 cents each, that is a really good deal if you have a good use for the points…

What if you didn’t want to spend $4.88 out of pocket? In that case you could use 488 of the points earned to pay yourself back at $.01 each. (Chase allows you to redeem UR points at $.01 each for a statement credit.) After bringing your cash out of pocket down to $0, you would still have 547 Ultimate Rewards. These points come at no monetary cost to you, but your time still has value.

So lets say you and a spouse both have Bluebird/Serve cards and can load $10,000 per month. After paying yourself back, you would net 27,350 points which are worth $547. Are those $547 in points worth it for the time it takes to buy and liquidate the gift cards?

Now, that’s an excellent question that has no definitive answer. To me, in NYC, the answer is no. Why? Google NYC and Walmart, and ye shall see.

But, let’s say, you have about a dozen of different Walmarts along your daily commute. What’s next?

Next, Matt rebuked Shawn’s idea, and it’s not like he doesn’t have a point.

In Shawn’s post he values Ultimate rewards at 2 cents each, then goes on to trade them in at 1 cent each in order to create a ‘pretty system’. This desire for neatness and compartmentalization in your process makes illogical decisions to seem logical. Additionally, the (overly high) valuation of the URs in their transferable form does make for a more effective case when considering the hourly rate.

And then he proceeds with a beautiful allegory likening your average spend manufacturer to a nice medieval (I presume) milkmaid Susan.

Susan takes a pail of milk from the cow to the market, each pail contains 5000ml of milk, for which she would receive receives 25,875 URs (the currency of this town) for her troubles [bolding mine]. Each ml of her milk is worth about 5 URs…

Total earned = 27,350.

27,350 value (I’ll give you a penny fifty at a stretch) $410.25

Hourly Rate $82.05

Again, read his post. It’s very entertaining and very enlightening. I began commenting on his blog, but before I knew it, my comment had already become too long. So I decided to make a post out of it, especially since I believe this debate is important, and perhaps, even crucial for some folks to understand.

Now, here is the problem, right there, at the beginning of Matt’s tale. See, it just so happens that I’m well familiar with Susan’s village, and I have it on good authority that the currency of her village is not Ultimate Rewards points. It’s  green doubloon (which is a funny-sounding name, I know).

All goods and services in Susan’s village are traded for that currency. The rent for a pitiful shack Susan calls home; the pails for the milk she carries to the market, and the ride in a dray, too. Add some living expenses like bread, tomatoes, and simple sparkly thingies no pretty gal should be devoid of—and there is this feeling sometimes that doubloons are just slipping through her fingers.

Her village shylock won’t accept her student loan payments in UR points either (I bet you didn’t know that milking a cow requires a college degree and licensing in Susan’s village), and neither will the village’s witch doctor—later about that.

Susan’s village is a prosperous one, and like all prosperous villages, it is fairly competitive. Cow milking is a cutthroat business. Susan’s one pair of hands is no match to some milkmaid corporations that spend in bulk for hexing and ungodly machinery to increase production. Susan has to keep up or face extinction.

In addition, the shylock (who happens to be the same one that runs her Ultimate Rewards program) has convinced Susan to buy out her shack rather than keep renting. It was madness to keep paying rent with the interest rates as low as 20%. Susan agreed. It was madness indeed, and Susan is a smart gal, as we already know.

What it means for Susan, however, is no more leeway. Her old landlord would occasionally feel sorry for a hardworking gal and give her a few days or weeks to come up with the rent. The shylock is not that understanding. She has to pay her mortgage by the date written in huge scarlet letters on her wall, or the shylock would cast an evil spell on her that would impede her ability to earn those fabulous Ultimate Rewards points (or other points for that matter).

it’s not like Susan doesn’t appreciate finer things in life. She loves to ride in the front of the wagon when she visits her family thirteen towns away. And since there are eight members of her family living in a single room, her loved ones truly appreciate when she uses her points to stay at the nearby Inn. And if she’s lucky, her stay might even include a cup of tea in the morning!

However, Susan’s aspirations have nothing to do with her real everyday life. If she pays for manufacturing her Ultimate Rewards points with green doubloons, she might realize one day that her lousy shack—pathetic as it might be–was not really that bad. And that her quest for manufactured spending has led her to spending her nights under the moon. Now, there are some villages in the world where sleeping under the moon is considered normal, but her village is different. Susan might lose much more than a roof over her head—she might lose her standing in the community. Her exclusive benefits that come from collecting Ultimate Rewards points won’t be able to fix that.

Susan is having it hard, and she wants something better. But lets Matt tell us that part of the story, as he does it better than I ever could.

Susan is getting grouchy with old age. She has been trumping these buckets of milk up and down to the market day in, day out, dodging cowpats left by the devils own satanic herd. She wants a raise, no she deserves it! She pops off to the local witch of the woods and asks her for some career advice.

The witch says ‘why are you carrying a full bucket of milk to the market, when you keep only half?’

Susan replied because if I give half of it away, the rest is free!!

The witch shakes her head, but since the hexing business is slow she tries to help Susan as best she can, and outlines a new, Better Than Free UR method:

Instead of taking two trips, take one. Take the 25,875 and put it in your pocket. Give none of that to Bob. Instead, take $122 out of your other pocket and pay him in cash for it.


Hourly rate = $155.25 (pay rise of 89.2%)

And a cost of $122 to deal with.

But this way I pay money! Yells Susan.

But you just told me your hourly rate was worth $82.05, I just gave you 2.5hrs of free time back for $122. At your old rate you would earn $205 in this time. At your new and improved rate you’re able to earn $388 in this time, both of which are greater than $122.

Now Susan is confused. She respects the witch doctor, she really does! But, she recons, wouldn’t paying green doubloons out of pocket for Ultimate Rewards points be akin to buying UR points at a penny each?

And if so, would she, Susan, be OK paying a penny (which is 1/100th doubloon in her village for those who are curious) for wonderful, beautiful, and fabulous Ultimate Rewards points, which, however, have very limited use in Susan’s living routine.


And that brings us to another point. Responding to one of the comments, Matt states the following:

If this is the ONLY way you can MS then sure, it is a profit, but then I might suggest exploring new ways to generate cash would be a better use of time.

This is a solid piece of advice. But, Susan, you see, wants to live now! She loves to be on the road. She loves to see other villages. Susan might be a dreamer, but she is a smart and down-to-earth gal who knows that her quest for financial independence doesn’t mean she has to put her life on a backburner.

In addition, she knows how to calculate the odds. She knows there are really wealthy people in her village—like the shylock, and the witch doctor, and some of the elders—but in her calculations, they add up to no more than 1% of the village’s population. While she believes in herself and hopes to get there one day, she doesn’t want to start traveling when she retires.

Susan can’t help but suspect that the witch doctor, wise and knowledgeable as she is, has been catering to 1-percenters for way too long. In the witch doctor’s world, people don’t think twice before spending $122 for fantasy points that can and will inevitably devalue in just a few months. Susan has come to a decision. She will continue accumulating UR points for free, but she will be a little smarter about it. She might try and sell twice as much milk at a time to avoid trotting to the market more often than necessary. Or she might even get in cahoots with another maid to help each other—but she will not pay real-life green doubloons to buy an aspirational currency.

If you are tired of allegories, it means no driving to Staples to buy $200 Visa gift cards—even if there is a $20 promo. Unless Staples is located right in your own backyard—order online and stop wasting your life.

The End


Now, I want to disclose one thing. A lot of folks in this hobby, including yours truly, would not normally redeem UR points at 1 penny. Does it mean that Matt is right and Shawn isn’t? No. You shouldn’t think that there is something fundamentally wrong about redeeming your points for cash when needed. it depends! There are very few things in life that are as “it depends” as this hobby. And there are more things inside this hobby that are even more “it depends”.

  • Don’t do things because a blogger told you to.
  • Don’t do things because a blogger told you not to.
  • Do things that make sense to you and your current situation and you will be fine!
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Miles to Memories

Good stuff! I’m glad my post brought forth such great story telling. Thanks for sharing!


How are you loading Bluebird/Serve if there is no walmart here in NYC? I need to spend 20k on an Amex Bus Plat to get 150k points and can’t seem to wrap my head around manufacturing spending here without a Walmart!

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