Thomas already had a fair bundle of cash stashed away, but definitely not enough to buy the unit he wanted. We talked about which unit he wanted, the cost, about shopping for the best price, about how he could best get it before Thursday, and about warranties. Then we talked about how he was going to pay for it, and we opened up the idea of Thomas taking out a loan with The Bank of Mom and Dad. We talked about Principle, and how much the Principle would be after taxes, shipping, warranty, carrying case, and his downpayment. We talked about interest, and decided on a fair interest rate. We talked about his anticipated income, his anticipated expenses, and what he felt he could reasonably commit to paying off each month.
We took the idea to Dad, he hopped on board, and arranged for a trip to Best Buy today.
I think many of us can identify with the post-shopping high (in this case, ecstasy may be a more appropriate term). Thomas is eager to get his loan paid off (he mowed two lawns today and paid the full $20 earned toward his loan), and is looking for ways to earn extra money so he can do so.
Regardless how this works out in the end, I can't see how it can't be a valuable life lesson. Either Thomas will learn the pain of using credit foolishly and having to continue paying off a shiny new toy even after the shine has worn off (or it's been put through the laundry), or he's going to learn to use credit in a way that is smart and beneficial.
I'm looking forward to seeing how this all shakes out.
In the mean time, I think I really want a iTouch ;)