My son has $28 left on a gift certificate to a clothing store. He doesn’t really need or want any more clothes, and my wife and he have decided he should be able to just give us the gift certificate for our own use, in exchange for $28 in cash.
But I object that this will mean we are effectively spending $28 we wouldn’t have spent otherwise, so I’m not perfectly happy with this.
But after a little thinking, I propose that we go ahead and make the trade, and that we do not use the gift certificate except and unless and until there are funds budgeted toward clothing for us in the normal course of events–and then we use the gift certificate.
That works, right? Once the certificate is used up, in the end we will not have, overall, spent $28 we wouldn’t have spent otherwise?
As it stands, if you do the trade you’re spending $28 on clothing today, but won’t have any clothing to show for it - it’s an investment in future clothing. Do you have that in your budget now?
Additionally, I think it depends on if you can spend exactly and only $28 on clothing when you go shopping. If you make this investment in future clothing, but go into the store and can’t find anything you want/need for less than $40, you will have to (once again) dip into your clothing budget for the extra $12, which dictates that you wait until you have funds allocated for clothing in order to do the shopping. Alternately, if you go into the shop and spend $24, you’ll still have $4 left over for future clothing when you have the budget.
What is the situation if you buy something on a card (such that the card is used up completely so you would probably throw it away) and then return it? How do they refund the money? Another card or do they give you a check?
Is it for a store you wouldn’t ordinarily shop at? That’s the only way I see that you’re spending extra money–if you’d spend $28 in cash there anyway, it doesn’t make any difference if you hand the cash directly to the store, or give it to your kid for a gift card and then give the gift card to the store. If you spend the gift card now, instead of next month when the budget has it allocated for you to buy a new pair of pants…well, you already have the pants and don’t need to allocate the money next month, because you won’t need the pants.
Its such a small amount. $28 will barely buy a couple shirts or a pair of pants. I don’t see an issue in swapping cash for the gift card. Two people will need an item of clothing sometime in the near future.
We switched about a year ago to a system whereby every cent is budgeted and accounted for. There’s a $100/mo each (for me and my wife) “blow money” budget line, but other than that, each cent goes to a specific purpose. This has increased our monetary discipline hugely, and has led to great psychological and fiscal benefits. But on the other hand, it does require us to be careful about seemingly “little” things like this–it’s all those “little” things that add up once you start making exceptions.
But all that aside, I was just trying to figure out the problem just kind of for the sake of figuring it out.
Yep this was pretty much what I was thinking. The budget allocation bit comes from the fact (which I should have made clear) that the way we do it, a certain amount accrues to the clothing budget each month, rather than us budgeting it out “as needed.” In cases of dire need, we’ll just go over that month and take the difference out of the “savings/emergency” budget line. But other than that, if we just “want” new clothes, we wait til its accrued in the relevant budget line.
My problem this morning was in trying to figure out how to reflect all this accurately in a spreadsheet of budget transactions. Where does the money come from, where does it go, etc. I probably would actually have needed to explain a lot more about how my spreadsheet works* which would have been TMI.
*Actually, proprietary software called You Need a Budget.
Just because it’s your son doesn’t mean it’s not business. Offer him $20 for the card. If he really has no use for it, then it’s profit for him. And it’s $8 profit for you when you do use the card. Everybody wins.
It’s probably best to use the gift card right away. You’ll eventually use it to buy clothes, anyway, and clothes have utility where the card itself does not. Nor are clothes significantly perishable, but the gift card might be.
At worst, you end up with a couple of shirts or something that you keep in the bottom of your drawer until the shirts above them wear out. These shirts in the bottom of the drawer don’t have much utility, but they still have some: If other clothes become unwearable faster than expected, for instance, you’ll still have the reserves to fall back on immediately, instead of having to go shopping right away.
I came in to suggest the same thing. The card is only worth $28 to someone who needs/wants to buy clothes from that store in the very near future.
And he’s savvy enough to dicker over the payment (" I couldn’t take less than $25 for it…I mean, someday I will need to buy clothes again") then give him that.
You might try getting cash for the gift card directly. California actually requires that merchants make that an option; the rules vary in different states, though.
Anyway, if I was looking at this from a budgeting perspective, I would first try to see if you can’t justify it as moving $28 from savings to gift card (i.e. no expense just yet). You’ve reduced the utility of that $28 for the time being, but haven’t really lost anything. Then the $28 is part of your budgeted expenses at the time you spend it.
If you feel that it really needs to be accounted for as an expense in the budget right now, then go ahead and call it clothes. When a clothing purchase is eventually necessary, you’ll have $28 less in expense at that time.
Unlike some people, I don’t feel that its $28 value is an impediment. Even if you can’t buy any particular item of clothing at that price, you will eventually need to buy clothing anyway. You’re only “losing” on this scenario if you run out and spend it on something you didn’t budget for, but the real breakdown there is just discipline.
