Gift Dilema

I effectively moved out of the house when I went away to college. Since then, at any gift giving venture, my mom tends to transfer money into my bank account for presents. Usually it's accompanied with something like "I put X in your account. Use X for your birthday present and X for you to get you hair/nails done. Use the rest to take Gameboy out to dinner." She uses this method because we live across the country from each other. She'd prefer that I get money she would have used to ship things. When it comes to technical items she knows she doesn't know much and would rather I get something that meets my specifications.

Within 8 months this happened three times for graduation, Christmas, and birthday. I've used the money for my hair to get it done. The nail money goes towards debts. And some of the rest goes to lunch or dinner out. The problem is the actual present money. Before my birthday she asked what I wanted and I let her know it was a digital camera. Photography is a hobby of mine and I've been thinking about a digital camera for a while now. The amount of birthday money was appropriate for a nice mid range camera.

Here's the dilemma. While paying down debt it feels frivolous to spend a couple hundred on a camera. But it also feels wrong to use money she (or anyone for that matter) wanted me to spend on a specific item. The end result? Almost 1K sitting in a 'Sara's Funds' sub account on ING because I can't make a decision.

What do you think I should do?

Thanks Mom

When I was about 16 I got my first credit card. I still remember the moment, standing in our kitchen, when my mom handed me the little rectangle of plastic. I had recently started my first job and would soon be driving on my own. My mom took this as an opportunity to teacher me one of many financial lessons.

With the card came rules:

• If you don't have the money in the bank don't buy it.
• Don't count on expected paychecks or other income.
• Pay balance in full EVERY month.

In addition to the rules came two warnings. First, my mom would spot check my statements at her discretion to make sure I was playing off my balance. Failure to do so would result in loss of credit card and other privileges.* The next warning was that the card was attached to my social security number and my credit score. At the time I didn't know a ton about credit, but from overhearing conversations and watching commercials that this was something I didn't want to mess with.

A final precaution that my mom took was setting an appropriate limit on the card. I want to say it was $500. It was enough so she could see if I was going crazy with it, but not cause any serious damage. She also knew I had more than $500 in my savings account in the event that I did get crazy.

Though I know many would disagree with giving a teen a credit card I think its one of the greatest things my mom did for my credit score. Two years later when I was a college freshman the people standing on campus with clipboards and free towels weren't as appealing to me as they were to most of my peers. Over my four years a few of those cards sucked me in but I avoided the 15 cards that some of my friends ended up with. More importantly, I knew how to use a credit card. I understood responsible spending, making regular payments, and how to keep things on track. I didn't hit the GAP and go on a spending binge or charge some crazy spring break trip.

The words (and threat) from my mom have stuck with me for all of these years. Throughout college I managed to spend within my means. Four years out of undergrad I'm not still paying for a sweater I couldn't live without. Three of my four close friends from undergrad are still working to repay mindless credit card debt.** Whenever I even consider charging something I don't have the cash to cover my mom's voice fills my head.

So thanks mom, for getting me off to a good start.

*I'm pretty sure the main threat was the phone. Like many teen girls I lived and died by my opportunity to talk with my friends each night and on the weekend.

**This is clothing, travel, and dining related debt. None of them have faced any significant hardships (thankfully) that necessitated using a credit card to bail out.