Financial Samurai

There once was a time I was rich, but never famous as I traveled internationally four times a year for business. Each destination hosted loads of other folks who wanted to learn about the next money making idea in the global financial markets. With me was an American Express corporate card where I could expense relatively freely to the tune of ~$50,000 a year. The card provided travel insurance, access to airport lounges, concierge services, and more. 50K may sound like a lot, but that’s nothing compared to the hundreds of thousands in expenses I hear from some Black Card spenders!

I don’t have much coming in anymore, but I do have a lot of freedom. It’s a tradeoff many will take at some point in their lives. Given my desire to simplify things, I’ve only got one personal credit card, which is the Citi ThankYou® Preferred Rewards Card. There’s no annual fee and all my spending is concentrated here to maximize my rewards points.

Since we live in the land of consumerism where we want things and we want them now, I thought it’d be a good idea to do a post for all you Black Card aspirees out there. Some get Black Cards just for its status symbol. Meanwhile, other people are a little less vain and use their Black Card for better access and service. Whatever the case, I’d like to introduce my guidelines for those who can and should not get a Black Card.

SHOULD YOU GET A BLACK CARD? LET’S SEE IF YOU QUALIFY

* High income individuals. Given the official definition of a middle class income is up to $200,000 per individual, only people with income of $200,001 and above are allowed to have a Black Card according to the powers that be. In fact, anybody with income of less than $200,000 should probably not have any card with an annual fee of greater than a couple hundred dollars a year!

* High net worth individuals. Having a high income is not impressive if you can’t match it with a robust net worth. If you don’t have a net worth at least 3X your income, then please reconsider getting a Black Card. In this scenario, the definition of robust is at least $600,000 based off a $200,000 annual income. Higher the better obviously.

* Responsible people. When you have a Black Card, you will have an urge to use your Black Card. You can very easily blow a whole in your finances given the naturally larger line of credit that comes with such a card. Responsibility can be measured by a credit score of 760 or higher. After all, the average credit score of a rejected mortgage applicant is 729. Those who demonstrate the historical ability to pay their bills on time are target candidates.

* People who aren’t in consumer debt. If you are already in consumer debt, then you are acting foolishly if you are even considering apply for a Black Card. Potentially adding even more debt is not a smart thing to do because credit card interest rates are some of the highest debt rates around. Even if you don’t plan to add on more consumer debt, it’s a good idea to resolve current debt problems first.

* People who pay a premium for convenience. When you are rich, you are willing to pay someone to mow your lawn, clean your house, and change your oil. Funny enough, middle income people do this already! But, that’s why they will stay middle income because the time not spent mowing a lawn is used to sit on the coach and watch TV. Rich people are better at utilizing their time to generate more income. They appreciate services that lead to better lifestyles. Black Cards almost always come with annual fees which can be a hurdle to cross if you don’t utilize the card enough. A $500 annual fee means you need to roughly get at least 50,000 in rewards points to just break even.

* People who expect to be saved. Here’s an interesting one. Let’s say you make less than $100,000 and have a net worth of less than $200,000. You have no business owning a Black Card with a large annual fee. But, let’s say you expect to be taken care of by your parents, the government, or spouse, then maybe you’ve got an argument! Your saviors might drop you in the future, but for now, you can milk them for all they’re worth.

* People who look as good as the models in the picture above. Let’s be real. If you are hot, life is good. People will treat you better. They’ll give you the benefit of the doubt, let you make more mistakes than the average person, and want to take care of you as long as you stay hot. Good looking people get away with murder, so why not enjoy spending a little more?

If you qualify for at least six out of the seven items above, you are ready to get yourself a shiny new Black Card! But, let’s be honest, you probably don’t qualify. The following $0 annual fee credit cards are ones I currently use. You can read my review for the Citi ThankYou Preferred rewards card. Always remember to spend less than you earn. If you cannot pay off your monthly credit card statement, you are spending too much. Use credit cards to YOUR advantage, not the other way around.

BEST PERSONAL REWARDS CREDIT CARD

BEST CARD FOR BALANCE TRANSFERS, FLEXIBILITY AND REWARDS

Regards,

Sam