USAA Limitless Rewards Card - 2.5% Cash Back REVIEW!

Actual Review - Not a Paid Post

After running in a pilot program, the USAA Limitless Reward card is available to USAA members with direct deposit to a USAA account (of at least $1,000). I was able to sign up for the program in the pilot phase because Louisiana was one of the four test states. The states available keeps increasing, so call USAA and see if your state is available. The card has no annual fee and offers 2.5% cash back on all purchases. It's been 60 days and the card works as advertised.

Prior to this card, I had a MasterCard through the Air Force Morale, Welfare, and Recreation (MWR) fund. There was an $11 monthly fee, and 2% cash back on all purchases on a military installation and 1% on all other purchases. Personally, I believe the military (especially the Air Force) has lost its emphasis on MWR programs, so by switching credit cards, I saved the $11 monthly fee and I don’t feel too guilty. Additionally, we did very little shopping on base, so on average I was only getting 1.1% back on all purchases-- approx. $30 a month, less the $11 monthly fee; only $19 in monthly rewards total.

Since the USAA Limitless Reward card has no fee and offers 2.5% on all purchases, I've been able to increase my monthly rewards to approx. $80. I maximized it by placing all purchases and bills on my rewards card too.

Many cards offer a 5% cash back on different purchases like gas, restaurants, groceries and then rotating commodities, and then 1% on everything else. 5%/1% sounds better, but it typically doesn't offer the same return as a flat-rate on all purchases program. 2.5% is one of the highest rewards plan that I've seen and it's limitless. Also, many credit cards offer other rewards instead of cash back. I've never been a fan of using credit card rewards for anything other than cash back. Typically, you're paying 1-for-1 the cost of the commodity (airlines, Amazon gift cards, etc.) so it's technically the same as cash back. Also, it's encouraging you to spend money by pigeon holing you into one option.

Other-than cash-back rewards are great when the cost of the commodities are cheaper by using the rewards. For example, when you can buy $100 worth of airline rewards for only $75 worth of "cash value" rewards; or a $25 Amazon gift certificate for only $20 of "cash value" rewards. The disadvantage is typically that you can only use these types of cards for airline rewards or a specific company's gift cards.

Another thing I like about USAA accounts is when I pay off the credit card every payday from my checking’s account, it brings my balance to zero and the payment is taken out of my checking’s immediately. With previous credit cards outside of USAA, the payment would take one or two days before both transactions were displayed.

BL: 60 days in and I highly recommend the USAA Limitless Rewards card. I recommend you check your current credit card, calculate what your monthly reward rate is (less the annual fee if you have one), and see if it beats USAA's 2.5% cash back amount. If not, then I recommend you switch to the USAA Limitless Rewards card.

Started from the Bottom Now...Wait..I'm Still Here

 A lot of my readers really enjoyed one of my previous blog posts, "Started From the Bottom", where I quoted a famous hip hop song by Drake. The target audience was for young junior enlisted, but was general enough for anyone just starting out in the finance world. But some readers reached out to me and they were concerned about being over 30-years old and having very little flexibility to start improving their finances. They felt like they were at the bottom and couldn't go anywhere. Here are some steps to take if you're at the bottom and nearing the breaking point with your finances.

• Find flexibility. Most people feel like they have no flexibility with their finances. They've reached a point where there is no money left over between paychecks and they may even be adding more to their credit cards each paycheck just to get by. This is the standard negative snowball effect which will ultimately lead to bankruptcy. You must stop this process. A good way to find additional savings is to track everything you spend for 30 days. Inevitably, you will find some savings; whether it is: not going out to eat one night, reducing your cable or phone bill or finding a cheaper alternative to a routine expense. Use the flexibility you find to stop using your credit cards each paycheck.
• Finding this flexibility is the single most important step. A lot of people start to feel "suffocated" about their financial position and they ignore it making it worse. Track everything for 30 days and find the flexibility. I know it's there. Contact me at bjone6@gmail.com anytime and I'll help you find the flexibility (for free, I'm not selling anything, absolutely free). 
• Pay down your credit cards. Some people find themselves having no money after they pay their normal bills and their credit cards. You must pay down your credit card debt quickly, even if it's only adding $5 to your minimum payment. This extra $5 will go straight to the principal and it will start building momentum to paying of the credit cards quicker. You'll start noticing the minimum payments go down and you'll start to open positive options in your financial life.
• Seek assistance. If you're a military member, go see your First Sergeant or your service-specific Family Readiness center. The Family Readiness Centers are an underutilized benefit we all have in the military. They employ or have access to professional money managers who could help you with your finances for free. Financial advice in the civilian world could cost $50-$200 an hour.  If you're financial situation is really bad, they can grant you a no- or low-interest loan to help prevent bankruptcy.

Starting from the bottom can be difficult but there are many ways to get out. If you're staying up late at night because you're worried about your finances then you need to find help. Finding flexibility and paying down your credit cards can be a slow process but it'll be worth it when you can finally say, "Started from the bottom, now I'm here."

Give Me That Passive Income

Passive income is when you generate income continuously without doing something. Our military retirement is a “defined pension” plan and after 20 years or more of service, we collect passive income for the rest of our lives. This is one of the ways rich people stay rich—by generating more passive income. The goal is to establish multiple streams of passive income before you retire.  Here are examples of the most common types of passive income.

·         Interest – The most common type of passive income is generated by interest.  Your bank accounts, emergency cash account and brokerage accounts all should be generating interest. Take a quick look at all your accounts and make sure they are generating interest. If not, start searching for banks that offer an interest-bearing checkings or savings account. If all your accounts already have interest rates, then make sure you are generating the highest possible interest rate.  Go to www.bankrate.com and search around for the highest interest-rate accounts or ask your bank if you qualify for different types of accounts that may generate more interest. I have USAA for my checkings account, CapitolOne 360 (e-mail me for a referral link so we can both make money) for my emergency savings account, and my Fidelity brokerage accounts (IRA and taxable) both pay interest.

·         Dividends – Most rich people earn a majority of their money through dividends from dividend-paying stocks. In 2003 the tax rates were changed and dividends were only taxed at 15% versus just being added to your income, potentially bumping you up a tax bracket. Even the behemoth Microsoft (MSFT) and Apple (AAPL) started paying dividends after the favorable tax law change. When investing in stocks, make sure that your overall portfolio yield is more than a 30-year treasury bond, or else you may be taking on more risk for less reward.  You can go to Yahoo! Finance home page and see the yield for a 30-year treasury bond and then check your portfolio. If you invest in mutual funds, then find some mutual funds that pay a higher yield. Do the same with stocks. Dividend stocks tend to be less volatile too. If you are a riskier investor you can look at phone companies *AT&T (T) or *Verizon (VZ), utility companies *SunGas (SGU) and Real Estate Investment Trusts (REITs) Annaly Capital *(NLY) for the highest yields. You should also find companies that regularly raise their dividend payout rate too *Johnson & Johnson (JNJ). If the stock market scares you, you can seek interest rates from Certificates of Deposit (a.k.a. CDs [you can check those rates on www.bankrate.com too]) or Treasury Bonds, from 6 months to 30 years.

·         Real Estate – I put this one under “passive” cautiously. Anyone who’s owned a house knows it’s anything but passive. But after the maintenance is done, you’ve found a good property manager and the house is rented out, it becomes passive income. If you purchase homes while you’re young with 30-year mortgages and some homes while you’re older with a 15-year mortgage, then these homes could be paid off by the time you retire (59 ½ or older). The mortgage you’d be collecting would be passive income. For over 4 years, I was paying $1,500 every month to live in a house that had been paid off for over 20 years when I was stationed at Vandenberg AFB, CA. The house was in “decent” condition so my landlord was basically earning $18K a year just from the one house. At the end of the four years the house started needing some major repairs [not caused by us], but even after those repairs, he earned $50K+ from me in passive income. Imagine if you had one to five rentals. Our frequent PCSing in the military gives us the potential to purchase new homes each PCS and I’ve met many successful military landlords who did just that.

·         Rewards – I’m a big fan of Bitcoin (read more about Bitcoin with this post I did: Bitcoin). A lot of people complain that Bitcoin is unregulated, not-easily used and purely digital, not backed my anything. But a lot of us already using a form of digital currency with our credit card Rewards. We receive a different type of interest called Rewards when we use our credit cards. Some cards offer airline miles, gift cards or actual cash. I use my credit card to purchase everything and then pay it off every paycheck so I get all the rewards without paying any finance charges. I’m basically earning Rewards for free. Depending on how much you spend, you can look at getting a reward card with an annual fee and get all types of awards. It’s important to compare the annual worth of your rewards and compare it to your annual fee and make sure you are making money. These Rewards are unregulated, can only be used on the products your credit card allows and purely digital. During the 2008 financial crisis, many banks went under and the Rewards were lost. Only some of the banks honored the previous banks’ rewards system.

BL: If you’re not earning interest or rewards on any of your normal banks accounts, then you should switch now. Continue to grow your passive income. This blog and my YouTube channel are attempts on earning passive income. At the end of a 20+ year military commitment, you can supplement your military retirement with all kinds of different types of passive income.

* These stocks are used as examples and not recommendations to buy. Of the stocks mentioned, I only own NLY.

3 Steps to Stop Living Paycheck to Paycheck

I know a lot of people, especially the junior enlisted, are quite literally living paycheck to paycheck.  After all their bills are paid, they almost have no money for anything else.  Any entertainment or unplanned expenses go on credit cards and starts the path to bankruptcy, depression and/or divorce.  Every day that passes like this makes it harder to recover from.  Their only option is to start today and get out of the negative cycle.  Here are 3 steps to stop living paycheck to paycheck:

1. Get back to zero.  The first and most important step is to get back to zero.  Track what you spend everyday and see if there are small changes you can make to get back to zero.  If you make $2K a month ensure that you only spend $2K a month.  If you are using your credit cards to supplement your income, then you will never get out of your situation.  The interest on your credit card will slowly keep increasing and your minimum payments will keep increasing.  This negative feedback loop will eventually bankrupt you the second you don't have access to new credit.  Mathematically, you can't do anything else until you get back to zero.
2. Micro-invest.  The next step is to start getting out of debt.  You can either pay the minimum payment until a credit card is paid off and wait for months or years for that to happen.  Once the credit card is paid off, you will eventually have a little more flexibility to stop living paycheck to paycheck.  A better option is to track everything you spend for 30 days and, I can almost guarantee, you can find $25 a month in places you can cut.  Put this extra $25 with your minimum payment and the math behind the compounding interest will be in your favor.  You can cut off months from paying off that credit card and finally have some flexibility from living paycheck to paycheck.  Moving small amounts of money is called micro-investing and can be very powerful for those not making a lot of money.
3. Focus fire.  Make sure you aren't rounding up on all your payments.  For example, someone has a $246 car payment and they put $250 a month towards it; a $56 minimum credit card payment and they put $60; etc.  It's better to tally up all those extra cents and dollars and focus them on paying down a credit card.  It's a mathematical principle why it's important to focus fire on your money.  Start by paying off the smallest balance and keep rolling those minimum payments to the next smallest balance.

If you are beyond the help of these tips, it's best to see your First Sergeant to see if they can help. Self identifying a problem is a courageous act.  If you're a civilian, try seeking help from your local church, friends or family members or a professional money manager.

Quickest Way to Make More Money

Whether they are strapped for cash, having difficulties making ends meet or want to save more money, people want to know what's the quickest way to make more money.  In my opinion, the quickest way to make more money is to make sure you aren't paying ANY fees for your normal banking needs.

• Start with your normal checking or savings accounts.  Are you paying a minimum balance fee?  Are you getting hit with overdraft fees (some are as high $39)?  Military members: are you paying ATM withdrawal fees?  If you are paying ANY fees for your normal banking needs, then you need to switch banks today.  Military members can use USAA or Wells Fargo's military accounts, or any big banks' military accounts and eliminate almost every fee.  If you frequently get hit with overdraft fees, then get overdraft protection.  "Consumer advocates say the best method is the standard overdraft protection which is offered when the checking account is opened and involves a signed agreement between the bank and the customer."
  Read more: http://www.bankrate.com/finance/investing/fdic-study-outrageous-overdraft-fees-1.aspx#ixzz2Xtm1GWhZ
  Follow us: @Bankrate on Twitter | Bankrate on Facebook
• Next, look at your credit card.  Are you paying an annual fee or any other fees?  My main audience is the military and unless you are a high-ranking general or have a side business that is doing well, none of us are making enough money to fully use the benefits of having a super credit card that has an annual fee.  Most credit cards have better services the larger the annual fees get.  I don't think many military members would fully utilize the services enough to recoup the $30 - $100 annual fee.  There are so many free credit cards through most main banks that it's just money you could get back to yourself.
• Next look at any of your investment accounts.  Unless you are managing more than $1M, then you shouldn't be paying more than $9.99 for commissions and you shouldn't be paying any normal fees within your investment account.  Almost every large bank offers investment options and TDAmeritrade and ETrade are still the top 2 investment houses for anyone to enter the stock market.

This may not apply to you and you've eliminated all your fees which is great.  If you don't do it on a regular basis, then read over your statements or online banking every six months and see if your banks have added any fees.  The usually mail your a 70-page pamphlet that's written by a lawyer to inform you about the new fee without informing you about the new fee, so it's good to check yourself frequently since banks or so shady.

5 Tips to Increase Your Credit Score

Here are 5 tips to increase your credit score.  Some people get a pay raise, a new job or get some extra cash and want to know how to increase their credit score.  These tips should help and I'll post more about each one in detail later.  Increasing your credit score could save you hundreds, thousands or hundreds of thousands of dollars in your future.  A small investment of time and money now may pay off big time both financially and emotionally.

1. Keep good standing with all current debts - You can't change the past.  If you are struggling to make ends meet, then you should stick with this step until you have some extra money to tackle previous debts or trying to increase your credit score.  Your credit score weighs the most recent activity higher, so keeping good standing with current debts will maintain or increase your score more than going into past credit troubles.
2. Make sure your credit reports are accurate - There are a number of reasons why there maybe something incorrect on your credit report.  Go to www.annualcreditreport.com and get your free credit reports and make sure everything is accurate.  If something is wrong, the credit bureau should have a phone number to challenge an item.  I'll tell you upfront that it's not easy to change something and the burden is on the member, not the company who did something wrong or a person that may have used your identity.
3. Pay off any outstanding prior debts - Now that you have your free credit reports, you can try and pay off anything you may have in collections.  Call only one agency at a time because collection agencies are aggressive.  If you have a lump sum, then great, pay it in full.  If you want to make payments, then call the collection agency and be firm.  Use ultimatums like, "Take this payment plan or else I'm walking away."  They may threaten to garnish your wages, but they won't because you calling them to make payments debunks any legal case against you.  Also, try the old "Let me talk to your supervisor" line to make payments.  Go in order of smallest balances so you can get it off your record sooner.
4. Maximize your score - If you have nothing in collections, your credit reports are all accurate and you are current on everything, then it's time to maximize your credit score.  Credit scores are made from "corrupt" math that us humans have decided to make to oppress other humans.  Sorry, that's a little of my own ideologies coming out.  But really, it helps to get help from the source with credit scores.  I recommend going to www.myfico.com and paying $14.95 for their credit report & score.  At the end of the report, there are summaries, tips, recommendations and simulators that you can use to maximize your credit score.
5. Get professional help - Sometimes getting professional help is the best way to increase your credit score.  For military members, USAA offers great free financial advice. Most Airman Family Readiness Centers (or whatever other non-Air Force services call it) have trained or certified financial planners that give free financial advice.  Other civilian-based companies may charge for an hour or two of time.  Either way, sometimes professional help is a great investment.