Gift Card Swap Out to pay debt!
My wife and I received a gift cards for Amazon. We are interested in trying to 'swap out' the value of these gift cards by making normal household purchases we would have typically have spent from an existing budget category in YNAB and then move those funds into a budget category to then use the funds in our checking cash we had budgeted in the original categories to pay down some debt. I hope that makes sense!
I have already created a Gift Card Account and funded it with the gift cards. My initial idea was to create a Gift Card Swapout budget category.
- I have a Clothing budget category already funded with $200.
- If I were to buy clothing for $40 on Amazon using the Gift Card 'Account', I would want to move the $40 from the Clothing budget category and set it aside in my Gift Card Swapout budget category to then fund paying a credit card down.
I'm just not sure how to best handle the transactions to make this swapout something I can track easily and not lose my mind over. Anyone done anything similar to get cash out of Gift Cards for other purposes?
I don't personally put Gift Cards on my budget, but you really don't have to do anything special. No extra transactions, or budget moves are necessary. You simply put the transaction on the Gift Card account, categorize it to Clothing, and you're done.
As a couple of fellow forumites are fond of saying.... Money is fungible. Which means it doesn't matter if it comes from Savings, Checking, Your Wallet, or Gift Cards. $1.00 is $1.00. Take it from the Gift Card account, and categorize it to clothing. Done.
As soon as you add the value of the gift cards to your budget, they stop being "Amazon Dollars" and become just dollars. Move the value of the gift cards from To Be Budgeted to your debt repayment category, and you're done. As Bruce said, when you spend, enter the purchase in your "gift card" account and categorize the purchase as normal.
My initial idea was to create a Gift Card Swapout budget category.
No need for this complication. Budget the gift card funds toward debt if that's your priority. It's true you can't use this particular payment method for debt reduction, but that's no different than not being able to use a CC Payment method at the farmers market or the cash payment method to buy snacks on an airplane. Just use a payment method that is acceptable; the category doesn't care.
The only thing that would trip you up is if you spent ALL the real cash in the entire budget, because you obviously can't pay some expenses with the gift cards. If this is a danger in your situation, you should not put these GCs on budget. With an AoM of 80, though, I wouldn't think it an issue.