Hey, here’s $161.87 for free… Finally Making Smart Choices

“Would you like to save 5% today by applying for the Target Red Card?”

I’ve been to Target 114 times in the past 2 years and every time I got to the cash register, the cashier said, “Would you like to save 5% today by applying for the Target Red Card?” I always said, “No, not today.” What a big doh I had when I actually realized I was wasting money… a total of $161.87.

Like I said, I’ve been to Target 114 times in the past 2 years, and spent $3,237.36 on those transactions. Each and every time, I was leaving at least 5% on the table. When you hear 5%, you don’t think it’s much. However, when compared to other credit cards, 5% is an insanely good reward for spending money. My main credit card only gives me 1% cash back on all purchases (So, really, I cost myself $129.49).

There are two takeaways from this experience that I want to bring to light: number one, when a person is young, a person should try to build credit as responsibly as possible. By building credit at a young age, that person will be more attractive to borrowers in the future and will be able to take on more debt to finance a company or get a better interest rate on a home in the future. Number two, the amount of savings over a lifetime taking advantages of programs like these can have on a person.

Building Credit

Building credit is huge in today’s world. If a person wants to start a business, invest in real estate, or buy things on credit in the future, they will need to convince a lender to do so. How do we build credit? Simple: open up different lines of credit, be it credit cards, loans (for cars, education, houses, boats, home improvements, etc), lines of credit, and pay them off (by making timely payments). It’s that simple! (Make sure to pay it off on time though!)

Improving my Credit Score

Credit scoring companies recommend having more than 12 open accounts at a given time to obtain a favorable score. While this has a low impact on your score, it is still something lenders will consider. I only have 3 currently, which is one of the reasons I finally applied for the Target Credit Card.

In addition to opening another account, my utilization will decrease. Credit scoring companies recommend keeping utilization under 30% if possible. I usually never have to worry about being utilized more than 30%, but there are times when it creeps up to 50% if I’m doing a project or an unexpected expense needs to be paid.

For number two, my lifetime savings will increase by a few thousand dollars. As mentioned above, in 2 years, I spent $3,237.36 at Target and would have saved at least $161.87 through their rewards program. Let’s extrapolate that over 5 years, 10 years, and 30 years.target credit card savings

A savings of almost $5,000!?!? That’s not even considering any investing I could do with these savings over those 30 years!


To sum up, I was stupid for the past two years and missed out on $161.87. Going forward, I will be able to save 5% at Target and as time goes on, this will help me in my pursuit of financial freedom.

What other rewards cards should I be taking advantage of? Home Depot and possibly Costco are next on my list.


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How the Economic Machine Works by Ray Dalio

Currently, I am reading Money Master the Game by Tony Robbins and it is a fantastic book(I’m excited to keep reading and be able to provide you with a book review in the coming days). In chapter 4, he is discussing asset allocation and interviews many top money managers.

One of the money managers Tony interviews in MONEY is Ray Dalio, Chairman and Chief Investment Officer of Bridgewater Associates, a hedge fund which has $160 billion in assets under management. Bridgewater Associates has two main funds, the Pure Alpha fund and the All Weather fund, both of which have made investors very happy over the past 25 years (so happy that Bridgewater had to stop taking on new clients as they became too big).

Ray Dalio

Ray Dalio is becoming a role model of mine. He is constantly asking himself, “What don’t I know, and what should I do about it?”and looking to find the answers. Ray Dalio put together a presentation on the economy: How the Economic Machine Works, and it was very beneficial for my understanding of, well, how the economy works. I want to share it with you; I have attached the YouTube video later down in the post. First, a picture of Tony Robbins and some key points and takeaways.

What I’m Reading

Main Points from the Video

Some key points and takeaways to watch out for in the video:

  • There are three things that drive the economic machine:
    • Productivity Growth
    • The Short-Term Debt Cycle
    • The Long-Term Debt Cycle
  • A market is all buyers and sellers of a certain market
  • The economy is the sum of all transactions in all markets
  • The central bank of a government control credit.
    • The central bank can modify interest rates and print money.
    • Credit is the most important part of the economy.
  • The cycle of economic growth is as follows:
    • Income -> Borrowing -> Spending -> Productivity -> Income
  • Productivity matters most in the long term
  • Credit matters most in the short term
  • Short-term credit cycles last 5-8 years, while long-term credit cycles last 75-100 years
  • Anytime you borrow, you create a cycle
  • Spending drives pricing,
    • If spending increases and prices rise, inflation occurs and the central bank can step in raise interest rates.
    • If spending decreases and prices fall, deflation occurs and the central bank can lower interest rates or print money.
  • Debt burden is very important to be aware of when assessing the health of an economy.
    • If debt burden is high, individuals or corporations will have to divert income to debt repayment which will result in less spending, which will result in less income for others, which will result in less wealth, which will result in less credit, which will lead to less income, and so on and so forth.
      • If prices decrease and deflation occurs as a result, this is what is commonly referred to as a “depression”.
  • After a “depression” starts, deleveraging occurs, i.e. debt burden reduction.
    • There are a few ways to accomplish this:
      • Cut Spending – this will lead to less income and possibly bring on deflation
      • Reduce Debt – through defaults or restructuring, will possibly bring on deflation
      • Redistribute Wealth – leads to less growth and stability, will possibly bring on deflation.
      • Print Money – Use new money to buy assets, this will only help those who hold assets and will possibly bring on inflation.
  • It is a central bank’s job to balance deflation and inflation.
    • Spending is what matters most in inflation
  • 3 Rules of Thumb
    • Don’t have debt rise faster than income
      • Debt will crush you
    • Don’t have income rise faster than productivity
      • You will become less competitive
    • Do all you can to raise productivity
      • Productivity is what matters most in the long run

How the Economic Machine Works

For more information, visit www.economicprinciples.org.

Did this increase your understanding of the economy? Are videos like these helpful to your understanding of things in general, or how do you prefer to learn?


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