Creating a slush fund for splurge expenses: the PayPal solution

Now and then, I sell stuff on eBay. Lots of us do. It gets rid of clutter, and I'm always surprised (and sometimes a little distressed) to learn that there always seems to be someone out there who's willing to pay money for my junk. But eBay, it must be said, can be a pain. For one, it forces common joes like me to get paid using either PayPal or a credit card. So despite the stupid fees that PayPal charges, I use it for its convenience, and when I sell little knick-knacks, people pay me by sending money to that account.

Pretty soon, I found a small balance was building up in my PayPal account, and I was wondering what I should do with it when I realized that these days, lots of online stores accept it. Pretty soon, a financial system developed that keeps my household budget on track: When it comes to impulse items, I only allow myself to spend what I have earned on eBay. To keep my expenses trim, I try to keep sundry purchases from mounting on my credit card by taking them out of PayPal instead.

It's a pretty simple idea, and it goes to the fundamental rule of good budgeting: Only spend what you have, and don't dip into your savings. Now PayPal is my petty cash drawer, and when it needs replenishing, I just do what I need to do anyway and get rid of some extra stuff.

It's gotten to where I will give preference to online merchants that accept PayPal so that I don't let my savings or checking accounts take hits. I try to go with the mom-and-pops first, but it's true that national chains are generally more likely to use the service.

For books, I might use Barnes and Noble (where I can use PayPal to buy a how-to book called How I Sued PayPal and Won!). For music, iTunes. And for auctions, I just pick the seller who'll take it. I have even used my auction proceeds to pay for airline tickets on my vacations. Plenty of major airlines now accept PayPal, including Northwest, Southwest, Midwest, and JetBlue. As an extra benefit, sometimes these carriers grant extra discounts for using PayPal, and I always qualify for any discounts granted for booking online, since that's the only way you can use PayPal payment.

Now that PayPal offers its own debit card that draws on funds from your account with the site, you can just use that at any merchant that takes debit cards, too.

Yeah, yeah, I know. This is exactly what eBay wants you to do. After all, it owns PayPal now, and since October, it only officially allows payment via PayPal and credit card anyway, a stupid move for the company, but at least it makes this petty-cash method easier to follow. And it bears noting that eBay won't process anything from PayPal's competitors, including Google Checkout

And yeah, yeah, I know: PayPal has notoriously lousy customer service should something go wrong.

But this isn't about a gleeful endorsement of any one online banking service or seller. Use whatever sites you like, or even set up special accounts offline, to make sure you can keep a clamp on needless expenses. Corrupt politicians learned long ago that a good slush fund keeps frivolous expenses off the books. Learn from them.
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