How I would spend a “use it or lose it” stimulus

by Government Worker FI | Last Updated: May 20, 2020

Stephanie of PoorerThanYou.com and The Money Middletons shared a Tweet by billionaire Mark Cuban that was getting a lot of traction about a “use it or lose it” stimulus plan. Mark’s point was that people were spending the previous stimulus check on essentials like rent instead of stimulating the economy with consumer spending. Stephanie’s Tweet inspired a lot of interesting comments (although if you’ve hung around Twitter long enough, most of them were entirely predictable). It got me thinking about (1) the logisitics of a “use it or lose it” stimulus and (2) my daydreams of how I’d spend an extra $500 per week.

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The logistics of a use it or lose it stimulus

Mark’s plan seems simple enough. Give people some special money that disappears after a week if they don’t spend it. Mark talked about giving people $500 per week that he hoped would go towards consumer spending. In theory this is better way to stimulate the economy than just giving people money because you block them from saving it. Restoring demand for consumer goods would then hopefully create jobs as someone would need to make and sell all of these goods.

This all sounds great in a theoretical way. But practically, I’d be worried about:

1. Predatory installment plans

What if you wanted something that cost more than $500 but knew that you were going to get $500 per week that needed to get spent for several months. Like a car? Perhaps you could enter into an installment plan with a business to “buy” that car with weekly payments. Lots of businesses would rush to get you to spend their new money at their business. And I’m sure that lots of them would come up with innovative, interest free loans for well qualified buyers to facilitate this payment scheme.

But what if you’re not a well qualified buyer? There are already shady auto loan places that charge more than the federally allowable 16% interest rate and set unreasonably long terms for the car so that they are “affordable” to lower income consumers. It’s not that lower income consumers are stupid. It’s just that they don’t have options. If you don’t have a car, you can’t get to work, and you lose your job. Predatory lenders know this. And they take advantage of the vulnerable.

Giving people weekly must-spend money seems like it was pulled out of a PayDay loan company’s dreams. The Mark Cuban money is meant to go into people’s pockets to buy stuff. Not make auto financiers fat.

2. Gift card gray market

It seems like it would be hard not to allow gift cards in the Cuban plan. What if your spa isn’t open but you’d love to use the money to buy $500 worth of massages? Should that business be penalized? On the other hand, gift cards are ripe for subverting the objectives of the plan.

As any drug user knows, it’s easy to turn gift cards into cash. My first thought when I heard this plan is that personal finance bloggers would be bragging about how they turned their use-or-lose stimulus checks into cash for investments within 24 hours of such a plan getting enacted.

This is why we can’t have nice things.

3. Is this inflationary?

The plan is supposed to increase demand for consumer goods by giving people money. This in theory is inflationary. I’m not an economist, so I have no idea if the scale of these payments would affect things. But think about it this way. Say one week everyone got a must-spend voucher for a new television. Everyone would want to buy a television and there would be mismatch between supply and demand, leading to empty shelves, higher prices, or both. I hope someone would be watching exactly where this use it or lose it stimulus was being spent and making sure we wouldn’t need a trillion dollar bill to buy our next pound of coffee.

How I’d spend my use it or lose it stimulus

I would have no problem spending a use it or lose it stimulus. In fact, we have been spending money like crazy during the quarantine. At the beginning, we were buying stuff to help us work in our new reality like a new router.

Then we started spending money on things we had been meaning to buy for a while and never got a round to buying before. Like new socks without holes in them.

Now all hell broke lose.

As I type this my basement bathroom is no more. There’s no floor. No sink. And there is definitely no toilet. We live in a former college rental. It was disgusting when we bought it. Over time, we’ve made it into a very nice home. The downstairs bathroom… still had vomit stained linoleum.

I write all this to tell you that I don’t *need* an extra $500 of use it or lose it stimulus money to spend money like crazy. I’m already doing it! But if I had even more money, or special use it or lose it stimulus money, here’s how I could envision spending it.

The house

I love DIY projects. Ripping apart the bathroom has caused me to realize that our basement is too dim. And that I really hate having a bare concrete floor. I also can’t stand how our galvanized pipes send out rust particles that destroy faucets within six months of installation. I could easily see buying and installing new lights all over the basement, putting in a sub-floor and actual floor in our basement, and replacing our galvanized plumbing with PEX. That could burn through several months worth of use it or lose it stimulus money. (Or maybe only a couple of weeks). Really, these aren’t extravagant asks. You can buy more than 4 dozen LED lights with one $500 stimulus check. Really, this is small potatoes.

bathroom
Basement bathroom with the college house party bodily fluid linoleum removed. The inside of the toilet is actually too disgusting to be posted on the internet. Seriously. What did those college kids do in here???

The dog

If you didn’t see it on Twitter, we’re adopting a former racing greyhound. I’m planning on tracking all of our pet expenses, so I can compare the cost of adopting a dog to the Financial Mechanic’s article of the costs of cat adoption. (In news that will surprise absolutely no one, dogs cost more).

I could easily see buying Kenny lots of treats, another dog bed, and one of those greyhound jackets (and booties). I guess we’ll end up buying this stuff anyway, but after the house Kenny was the second thing to jump into my head.

Get cable

Every personal finance article ever tells you to cut cable TV. I’m kind of tired of it. I don’t watch a lot of TV, but I do love live sports. Especially European football (also called “soccer” here in the US). Last week the Bundesliga restarted. My favorite team, Borrusia Dortmund, crushed their cross town rivals in a 4-0 blowout in an empty stadium. I read some Tweets about it. For $30 a month I could stream almost every football game worth watching. Hell, I would have paid $30 to watch Dortmund crush Schalke.

Get physical (with my music)

I recently got a record player as a gift and I’ve been slowly buying my favorite artists on vinyl. Flipping through music on my phone isn’t nearly as satisfying as committing to listening to a whole album from start to finish.

I’ve acquired a lot records of my favorite artists during the pandemic. I know they’re struggling without the ability to play live gigs. I bought Andy Shauf’s whole discography from Tender Loving Empire and it’s been a fantastic investment. If this stimulus became a reality, I’d definitely set aside a portion of it to support the arts. Let me know who I should check out next.

(Side note, it really felt awesome to help a musician I care about and a store I love at the same time. USPS nearly lost the records, and I had a lot of friendly correspondence with Tender Loving Empire, resulting in this wonderful thank you note & gift).

thank you note from TLE

Coaching

Okay. All of those previous things were the first things that popped into my head. I could afford them now if I wanted to. I feel like as soon as I’m done writing this I should petition Mrs. Gov for a cable TV subscription. But the more I thought about it, there’s one thing that I’d never justify buying even though I think it’d make my life much better.

I would love to hire a coach or personal trainer. When I was 35 I brought graphs of my race times and body mass index to my annual physical and asked my physician if I should start digging my grave. Seriously. I titled the graph, “TURNING 30 SUCKS”. He just laughed at me, told me I was in fantastic health, and said that I should find a coach.

It was a “duh” moment. I desperately wanted (still want?) to be the best version of myself. I want to be as fast, strong, smart, and compassionate as my genetics will allow. While I know the general formula for achieving a lot of those things, they’re nearly impossible to obtain without outside input from experts. Olympic athletes are far ahead of where I’ll ever be. And yet they too have coaches.

And as much as I wish I had a coach to help me reach my physical goals, I’d perhaps even more desire to have a coach to help me probe the deepest parts of my psyche. What do I desire most? How can I get there?

Why don’t I have a coach?

So I’ve identified that I would love to have one or more coaches in my life. But I doubt I’ll ever take that leap to pay for coaching. I think if I were single I’d consider it. But for me, a coach would cost more than my “allowance”. (Mrs. Gov and I both give ourselves a small amount of money that the other person can’t see or comment on.) And I’d feel dumb saying that we should rework our family budget so I could work with someone to improve my race times by 10%. (Or something similar).

That’s what I tell myself at least. Coaching could be great. And we have room in our budget for it… I just can’t stop thinking that I’m not worth it. So then when I thought of this use it or lose it stimulus it seemed like the perfect plan. A chance to finally hire a coach and see if it helps me achieve self-actualization.

And really, what could be worth more than self-actualization??

So that’s how I’d use my “use it or lose it” stimulus. How would you spend yours? What did I miss? Leave a comment!