Don’t Spend It All in One Place… Better Yet, Don’t Spend It At All

It is official… President Bush signed the Economic Stimulus Plan the other day, promising that many Americans will get a check in May or June of this year. Of course, the plan is for you to take that money to the bank, cash it, and blow it on a bunch of crap you probably don’t need. Politics aside, this plan does not seem like a long-term solution to the economic slowdown we have seen of late.

 

Not that I can do anything about it, but there will be a check headed my way for $600 this summer. The least likely thing I will do with it is what Congress has decided I should do with it. Nonetheless, it is an interesting topic of conversation. The “rebate” we are getting is actually an advance on a credit to your taxes for 2008, so your Summer 2008 self will be getting money that is crediting your Tax Season 2009 self. Don’t worry, there is no need to pay the money back, but if you are smart with your $600, you could potentially give your 2009 self, or later even, a pretty nice present of that $600 plus interest earned OR a $600 decrease in the principal of a debt whose interest is probably higher than what you can earn in a short term savings account. So, before that pair of shoes, that laptop computer, or that weekend trip out of town claims your money, think about how much more money you could earn or save by investing in a savings account, your 401(k), Roth IRA or by paying an extra payment that applies only to the principal of your car, house, or student loans.