Back when I first started working as an accountant, I played a lot of Playstation.
It was the only thing that gave me peace at the end of the day.
And, even though this story I’m about to tell you might sound borderline psychopathic, it might end up being quite useful to you too.
I had this “challenge” I used to place on myself.
I wanted to engineer my finances so I could get paid to play Playstation games.
Here’s how it would work:
Whenever EB Games or Mighty Ape would have a game I wanted on special, I’d buy it.
The key here was I’d buy it with my credit card, so I didn’t have to pay for it right away.
Then for the next six or seven weeks, I’d play it obsessively, try to finish it, and then sell it on Trademe before the credit card became due.
Hopefully, if it was a popular game and I kept it in pristine condition, I could sell it for more on Trademe than I paid for it on special.
Here’s how it looks in numbers:
Say the game was usually $99. I get it on special for $70.
I buy it on credit card, so my $70 doesn’t actually need to leave my bank account (yet). It stays in there earning interest.
I play the game for around six weeks, finish it, and then sell it on Trademe for $75.
Remember, back then interest rates were around 8% or 9%, and my $70 is still sitting there earning.
Over a couple of months, it might earn 40 cents.
Yeah, I know. Measly.
But that wasn’t the point.
The point was the challenge – could I get paid to play Playstation games?
So now I have $75 from selling the game, plus my 40 cents in interest, plus I haven’t even paid for the game yet – I still have my $70 sitting in my bank account.
My credit card becomes due.
The $70 finally leaves my bank account.
But I’ve already sold the game for $75.
I’m $5 in profit.
Plus my 40 cents in interest.
Look, Mum. I just got paid $5.40 to play this Playstation game for a month.
Now obviously this isn’t a way to get rich, it’s just a silly challenge a weird accountant would do to entertain himself.
But – could it be worthwhile adopting something like this in your everyday spending?
Let’s take a look.
Let’s say you spend $3,000 a month on gas, phone, bills, food, etc etc.
You put all $3,000 of that on your credit card.
Ideally we would want to use a rewards credit card so we get something back, but as I’ve said before, I do not pay credit card or bank fees.
The only free credit card that has some kind of rewards program is the Amex Airpoints card, so let’s use that.
It gives you $1 in Airpoints dollars for every $100 you spend.
For $3,000, we’ll get $30 Airpoints dollars.
Now, by using our credit card instead of cash for all our $3,000 in expenses, it means $3,000 gets to sit in our bank account for an extra month.
Right now, Heartland is offering 4.25% on a 32 Day Notice Saver.
We put our $3,000 into a Heartland account earning 4.25%.
Over a month, that earns us approximately $10.60 in interest.
Then our credit card bill comes, we pay the $3k, and where does that leave us?
- $10.60 in interest
- $30 in Airpoints dollars
Over a year that will equal:
- $127.50 in interest
- $360 in Airpoints dollars
But that’s not the point.
It’s the exercise of thinking about your money this way that will:
- Give you good money habits
- Start to see your money as a tool that can earn more money
- Understand the power of leverage
- Help you see opportunities in the future
Case in point: How many times have you heard that you should snip up your credit cards?
That they are dangerous and will contribute to your financial ruin?
But if you understand money, they’re actually the opposite.
They’re a helpful tool that can give you interest-free leverage for ~55 days, which will get you enough Airpoints dollars for a free flight to Aus each year (and $127 in spending money).
In fact, this “model” of using OPP (other people’s money) while your money stays sitting in the bank is fundamental to many strategies that are popular in real estate, business, stock investing and even crypto and DeFi.
As we go through this journey to get you and your money right, understanding little things like this will help you decipher the bigger opportunities as they come along.