In DA, we don’t spend money before we receive it. For instance, even if you know you will be getting paid next week, using money you haven’t yet received is considered a form of debting. For that reason, we also don’t float checks by writing a future date or telling people to wait to cash the check. It’s true that checks can take some time to clear, but that is not our focus. We write checks when we know we have the funds to cover them.
But what if you buy something and have to return it? How do we handle that? Let’s say I have $20 in my clothing category and I buy something with that. But once I get home, I realize it just doesn’t fit right and the color is not the one I meant to select. So back to the store I go.
If I see the item in my size in the right color, I may just do an even exchange. An even exchange is not an issue because you are not spending any money. So no matter how you paid for it, the payment remains and the product is simply switched out for another. You may still want to commit it to your sponsor just as a matter of staying humble about the transaction, but technically, you are not spending or receiving money.
Returns When Paid with Cash
But let’s say they don’t have another size in that item so I need to just return it. If I paid cash, I will get the money back right then. When you pay cash, you can commit to using the $20 again for clothing that same day.
Store credit is considered the same as cash and there is no problem committing to using that money the same day in that store.
Returns Using Debit or Check
But what if I paid by check or debit card and they insist on refunding it to my account rather than giving me cash back?
We cannot use the money until it shows up in our account again because, as with that paycheck coming next week, we don’t actually have the money. If you look at your spending plan, you will see that your clothing category shows a zero balance now because you spent the $20.
Yes, we know that we are due the money. Unfortunately, my experience has been that stores say that it will be refunded immediately, but in fact, I have seen it take much longer. And if we stick to our commitment not to use money that we don’t actually have, then we must wait until we have it to spend it.
I have had cases where there was a screw-up and it took weeks for a refund to show up. So, if you think you may return an item and want to use the money from a return immediately, I would pay cash for the item to begin with just to be safe.
Note: Many stores will refund you cash if you used a debit card. If you prefer debit cards, check the store’s policy before purchasing if you think you may need to return it.
What About Income From Business?
This concept can be extended to business as well.
Delay with Credit Cards
If you take credit card payments, there may be a delay between receiving the money and having it transferred into your checking account. If you have never thought about this, you may want to check the details with your merchant account provider.
When You Receive Checks from Customers
If you get a check from someone and spend it before it has cleared, what happens if it bounces after you have spent that money? This is a bit less clear-cut because the check could appear to clear and later turn out to have bounced.
All we can do is be as vigilant as possible. It is not our fault or a break of abstinence if the check bounces. But my point is that, at the least, you want to wait until the check shows up as cleared in your checking account.
When I had a business, I asked my bank how long I should give a check before considering it totally cleared. They said it could take up to two weeks after it APPEARS to have cleared. This was often an issue as I owned a women’s health club where people changed their minds or didn’t have enough to cover their check.
Note: I would strongly suggest talking to your bank about their rules regarding checks clearing and bounced check fees. If you do take checks, you may want to set up a category for bounced check fees. Sometimes, the bank will waive the fee, but just in case, you don’t want to be slammed with a fee and not have the money ready to cover it.
Recovery From Vagueness Around Money
The point is that we are working on recovery from vagueness around money, which can lead to debting. It’s not about keeping you from spending your money, but about ensuring that you spend only money you actually have. By following the guidelines above, you will be clear about how much money you have before you spend it, ensuring that you do not debt.