Why I’m making credit card points part of my emergency fund in 2020

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• Even earlier than the pandemic hit, 2020 was going to be the yr I constructed up my emergency financial savings fund.
• I used to be capable of improve my earnings and add to my fund at first of the yr, however I’ve needed to get extra artistic in current months.
• A technique I am boosting my emergency fund in the course of the pandemic is earmarking my bank card factors and miles for bills.
• I have not cashed them in but, however I might promote my JetBlue factors for money if I wanted to, and redeem Capital One miles for important purchases on Amazon.
• See Enterprise Insider’s checklist of the perfect rewards bank cards »

As 2019 got here to a detailed, I discovered myself with a handful of very lofty monetary targets. With the brand new yr, I wished a recent begin with saving and investing, particularly after years of doing little or no of both of these issues.

Approaching my fifth yr of working for myself, one of many main issues I wished to do was construct an emergency financial savings fund that I might faucet into in case something occurred (like lack of work or a serious well being drawback).

I had about $2,500 in an account labeled “emergency money” however knew, primarily based on what consultants have shared, that I wanted at the least six months price of bills saved up. I used to be distant from that purpose however wished to get smarter about my spending in 2020 so I might put extra money into that fund.

The pandemic threw a wrench in my plans

The primary few months of the yr labored in my favor and I used to be capable of improve my earnings, lower pointless spending, and put $1,250 into my emergency account.

When the pandemic hit — together with the belief I seemingly must faucet into that emergency fund if I misplaced initiatives and purchasers — it was time for me to get artistic. I wished to verify I might nonetheless add to the fund if the pandemic acquired worse, continued on, or if my work as a freelancer and a enterprise proprietor got here to a full halt.

I am rethinking how I will use my bank card factors

A technique that I used to be capable of proceed rising my emergency fund was to faucet into an unused useful resource that I had been accumulating for over 5 years: bank card factors.

I would been hoarding these factors and by no means tapped into them. However after the pandemic began, I started to analysis methods to make use of my stash of about 200,000 factors and miles (between two bank cards) as a part of my emergency financial savings plan.

I’ve a JetBlue Card (as a result of I flew JetBlue two to 4 instances a month pre-pandemic and was capable of get nice journey factors via the cardboard) and a Capital One® Spark® Miles for Enterprise for my enterprise account (due to the journey miles I hoped to make use of sooner or later for an enormous trip).

Quite than use the miles for lavish journeys or flights to a faraway vacation spot, this is what I’ve determined to do with my factors sooner or later, after I have to faucet into that fund and do not wish to pull out the entire money.

I can promote my rewards

With my JetBlue Card, I’ve much less choices in relation to changing the factors into something however flights or holidays. Nonetheless, if I have to money within the the factors for one thing aside from a visit, I can use a handful of various third-party websites to promote the miles for cash.

Web sites like Money for My Miles or Promote My Miles will calculate how a lot money they’re prepared to purchase your miles for. On a fast calculator, for analysis, Money for My Miles quotes me $100 for 23,000 JetBlue factors.

I can use them for emergency journey 

I additionally determined that a part of my emergency technique can be to maintain sufficient miles available for at the least two round-trip flights in case there’s an emergency and I have to journey someplace, reminiscent of to go to my household in Florida or to get a well being remedy at a hospital in one other state.

Maintaining sufficient factors to pay for 2 round-trip flights (which might price as much as $1,000) provides much more worth to my emergency planning.

I can use them to decrease my assertion stability

Throughout my analysis, I realized that I can use miles from my Capital One® Spark® Miles for Enterprise to pay for purchases on my bank card. Whereas I attempt to be conscious about spending, if my earnings takes a dip and I am unable to repay my bank card payments, I might put them towards paying off large purchases. That method, I might carry a decrease stability on my bank card to guard my credit score rating and decrease my total debt.

I can use them to cowl important purchases

One other a part of my emergency plan is to money in my factors to assist pay for necessities reminiscent of groceries and home items. My Capital One® Spark® Miles for Enterprise permits me to hyperlink my rewards to my Amazon account and use the miles to pay for purchases at checkout. Whereas I attempt to use Amazon just for important objects — to not splurge on pointless purchases — utilizing factors in an emergency state of affairs can cowl these vital objects with out having to dip into the money in my emergency account.

Whereas I’ve spent years accumulating factors and journey rewards so I can take holidays, the pandemic has switched my focus to build up an emergency fund. I’ve modified up the way in which I plan to make use of my bank card factors, and it seems like a mature resolution to make use of my rewards to remain out of debt longer if my funds had been to take an enormous hit.