Whether it’s gambling, points & miles, or life in general, patience isn’t just waiting; it’s staying calm and taking a long-term perspective to make better decisions.
One of the easiest ways to make poor decisions in miles & points and gambling is believing you have to solve something right now or have a particular result — even if sub-optimal — right now.
Don’t Rush a Credit Card Welcome Bonus
When getting a new credit card and spending toward a welcome bonus, I often advise people to spread spending across multiple statements, start slowly, and not cycle credit limits.
Credit cycling occurs when you reach a designated credit limit, pay the balance, and then continue spending in the same statement period. Banks may view this as risky behavior and close your accounts. Why rush, especially when you have enough credit limit to reach a welcome bonus? If you have three months to reach a welcome bonus spending requirement, days 5 and even 75 don’t have to be treated like day 85 or 89.
Too much spending, too early, on a credit card can trigger fraud alerts, declined transactions, and all sorts of hassle. With new credit cards, I often make larger in-person purchases using several cards rather than just one card to lower risk.
Even with more seasoned credit cards, I split payment methods where possible and avoid particular and larger amounts ($1,500, $1,000, and $506.95) that can look like obvious gift card spending banks may not like.
Variance Is Not the Same as Making a Bad Bet
Some in the points and miles crowd new to gambling, in my experience, have a hard time accepting variance and even a modest amount of risk.
Recently, I spoke with someone who wanted to hedge online sports wagers to have a “guaranteed win” for the day rather than playing a profit boost straight up on a modest underdog for a higher EV outcome.
Consider a scenario with a 50% profit boost on the moneyline of any MLB team. A $50 bet on a +175 team may normally give $87.50 if it wins, and that bet would win about 36% of the time. With a 50% profit boost on that +175 team, the bet could win $131.25 for a difference of $43.75. We get about $16 of expected value applying the boost and playing straight up with no hedge.
Instead, looking for a “guaranteed win,” the previously mentioned person placed a hedge bet and didn’t even apply the boost to a modest underdog. He saw his near-$5 profit as “good,” but gave up about $11 in value to eliminate variance.
Over time, though, these concessions add up over months and years — perhaps hundreds of dollars in value or more.
The Cost of Needing to Win Today
Even with $50 bets and boosts, he worried about losing his initial wager and wanted a “guaranteed win,” even though he is well bankrolled to play such bets and has a full-time job bringing in money.
I’m more than happy to withstand some variance to make more long-term profit than a short-term, lesser “guaranteed win” for the arbitrary time period of “today,” “this week,” etc.
We can be patient, trust the math, and not panic about small downswings when we’re sufficiently bankrolled to play.
Think Long Term, Not Day to Day
I often view gambling variance like fluctuations in my Roth IRA. Some days, I will lose money on my shares of VOO, but the overall trend is positive. I’m not going to lose sleep over market or gambling fluctuations I can afford to withstand.
Especially in gambling, I focus on what I can control: placing skillful bets focused on the process rather than the outcome in a short period of time.
Some days, I’ll lose money. Other days, I’ll win money. Overall, if I’m making the right decisions, the gambling math will work out over a large enough sample size.
I’m happy to ride out some temporary discomfort for an overall edge, plus the entertainment and stories along the way.
Patience Matters in Points and Miles, Too
Returning to points and miles, I have a plan for when I sign up for a credit card, including how I expect to hit a minimum spend requirement, and I focus on high value rather than just applying for something “in the spur of the moment.”
It also takes patience to research before applying for a new card, be strategic about the order of applications, and use points for good value.
Patience Doesn’t Mean Avoiding All Risk
Patience takes many forms, including staying calm, taking your time to make decisions, and avoiding unneeded risk.
We also shouldn’t be too risk-averse, either, sacrificing expected value when gambling on a “sure thing” that isn’t as good as a better long-term result.
As always, use credit responsibly and gamble intelligently.
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