Pre-orders and Kickstarters

My husband's hobby involves making a lot of pre-orders (because items sell out and may never be available again).  The business model is that when they get enough pre-orders they start production, so items ship (and charge the card) months or even years after he orders, or never if it doesn't make.

I know the right way to handle this would be to budget the money at the moment he makes the pre-order. Then when the card is actually charged I have to match it up somehow, whether it's a pre-order he told me about, or something he just bought or a surprise pre-order, not already budgeted. How can I track that? 

This is going to be a struggle. He doesn't consider the money spent when he orders, because - I don't know? Reality is too far in the future? So he doesn't tell me. And when I get home one day to find several boxes on the doorstep, and I point out to him that we have $900 of hobby charges for the month: "I didn't spend that this month. It's pre-orders from before." I am going to have to relate it directly to not paying down the HELOC, and I'm going to need it ironclad.

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  • The money is spent when the order is placed.  Your husband needs to change his thinking, because otherwise he's just spending future income (which may or may not arrive)... which is exactly how people get into debt.

    There is a real risk he'll spend the money multiple times over if he does not recognize it as spent immediately, and he needs to acknowledge that the only way to avoid that is to consider the money spent.

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  • I always just considered such things "hobby expenses" when ordered. If income derives from a hobby, after receiving it I count it against the hobby expenses. Ultimately, if the hobby expense is negative (profitable) month after month, it is time to think about splitting it into a separate budget as a small business!

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  • Herah said:
    or a surprise pre-order, not already budgeted

    In such cases, sit him down and ask him where that money is going to come from. What does he think is of lower priority that should be cut or pushed back to provide money for that purchase?

    If he can't realistically identify a lower priority category, hopefully these non-budgeted purchases will stop. This is precisely why ANY purchase should ensure sufficient available funds before it's too late to skip that purchase.

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