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The Economic Stimulus Check: Spend it or save it?

April 28, 2008

The economic stimulus checks are about to arrive in mailboxes and bank accounts across the country.

What is the best thing to do with your check?

First, take a good look at your financial situation. If you have debt, determine what debt has the highest interest rate. For example, if you have a credit card with a high interest rate, consider using your rebate check to make a dent in the principle balance of that card, especially if you’ve only been making minimum payments that are barely covering the interest you are accruing.

The second thing to consider is using your rebate check to start a savings account if you do not already have one.

It is important to have a financial cushion to fall back on should you find yourself faced with an unexpected expense, reduced income or some kind of an emergency.

It is often recommended an individual have at least three to six months of their take-home pay in savings. Another recommended saving amount is to set aside 5 to 10 percent of your take-home pay.

If those amounts seem too high, don’t get discouraged. Start by putting aside whatever you can, even if it’s only $10 a week. However, the rebate check would be a great way to start a savings account that you can then continue to build on.

What if you know you should save money or pay off bills, but you also have the urge to splurge?

In that case, consider setting aside some of your rebate money for fun and some for reducing your debt or starting a savings account.

To estimate how much money you will be receiving, check out the IRS’s Economic Stimulus Payment Calculator.

Once you have an idea of how much money you may be receiving, you can formulate a spending/savings plan that makes the most sense for you.

A CNN/Opinion Research Corp. poll shows that 41 percent of those surveyed plan to use their rebates to pay off bills, and 32 percent said they would put their money into savings. Only 21 percent of the respondents said they planned to spend the money, and 3 percent said they are going to donate their money.

What do you plan to do with your economic stimulus check? Please feel free to share your thoughts or tips.

Written by admin · Filed Under News, Debt 

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