The Irrational Joy of Spending Earmarked Money

Imagine you had $50 gift card that expires this weekend to spend at 7-Eleven. If you’re like me you wouldn’t let it go to waste, you’d walk out with a bunch of skittles and some random stuff you wanted to try. When you have money that is earmarked, I find that you do not spend it as you would if it were just cash. Ahem, US government, looking at you.

Credit Card Coupons

The credit card arms race is in full swing with many cards rocking $500+ annual fees. It is embarrassing to admit, but my annual fees are over $5,000. In theory I receive more value than that, but let’s break it down to show how it may not be as valuable as we think it is, because it is earmarked money. We’ll take the Amex Platinum as an example since I’m writing this from a Amex Lounge. With the card you can get $400 in Resy credits, two $300 hotel credits, $200 Uber, $200 in airline incidental credits, $300 in Lululemon, $300 in Soulcycle, $300 in digital entertainment credits. Wow, I just listed $2300 of “value” (they claim $3500) for $895, what could go wrong?

Before this Lululemon credit I owned none of their stuff. Airline incidental was tough to use, so I bought a lounge pass I didn’t need. I subscribed to streaming I don’t watch. I did manage to extract the full $600 in value from the hotel credits. But you have to book very expensive hotels through their portal, so I ended up paying $400 a night and getting $300 off. I probably would have spent $150 somewhere else. So in reality it saved me $50, but it was certainly much nicer.

Now with this card I believe I get more value than the cost, but would I get a second or a third with similar benefits? Probably not. At some point you see that just because you can get the value doesn’t mean you actually value it so highly. If I gave you 365 $300 hotel credits which could only be used for stays of $400 of more outside your home city, how valuable is that to you?

Leaving Money On The Table

Now don’t let this “free” money take more control over you than it should. I know someone who worked at a company that offered a $1500 wellness benefit. They said they could only switch to a job that offered such a benefit. While it is great to be forced to spend $1500 on yourself for massages, skiing, and the like, it is very easy to say this benefit is worth at most $1500. So if a job offered significantly more money, but no wellness benefit, you’d be better off financially with the new job. And you can give yourself a wellness allowance.

Don’t let the fear of not maximizing everything steal your time. There are plenty of benefits I have let lapse and credits I didn’t spend the entire amount.

Conclusion

Is there any money in your life that is earmarked? Are you treating it properly or are you going out of your way to try to spend it? As for me, I’ve been taking a tough look at my cards and determining where I have benefits that don’t make sense.