How to Spend Stimulus Checks and Tax Refunds

You've heard the buzz about the extra money coming to you after you file your tax returns. But this isn't a tax refund for 2008. It's part of the economic stimulus package approved by congress. Lawmakers hope you will spend the money on manufactured goods and services in order to boost the faltering economy. Will these measure help stall a recession or ward of a economic depression? It's doubtful, but you are not obligated to buy things you don't need in any case. here's what to do with your stimulus checks or tax refunds.

Difficulty: Moderately Easy

Instructions

1. 

   Remember that it's your cash, even if it is backed by debt and little else. Simply put, you should spend it n the way that most benefits your family and improves your financial picture.

2. 

   Keep it in a savings account for emergencies if you don't have any reserves. An emergency fund is one of the first steps to financial health. use the money only in case of emergency, such as income loss, unforeseen medical expenses or a similar scenario.

3. 

   Pay off debt. If you already have some savings for a rainy day, use your stimulus check or tax refund to pay off credit card debt, school loans, car notes or other debt. Eliminating monthly debt payments will help increase your cash flow and improve your finances.

4. 

   Save up for a down payment for a house. If you're hoping to buy a house in the next few years, put the money from your tax refund away for a down payment. Gone are the days of 100% financing, so you'll need to start saving.

5. 

   Give it away. Donate your tax rebate stimulus check to the poor of your community or to a favorite charity.

6. 

   Buy stuff. If you have no debt, own your house and have nothing to save for ... by all means, spend it. Support local businesses, nearby farmers and those close to you to have the most effect on your local economy.

Tips & Warnings

• Stay current on filing your tax returns so that if another tax stimulus package or new wave of rebate checks is approved by Congress in 2009, 2010 or beyond, you will receive yours.

Resources

• Frugal Homesteading Blog
• How to Make a Budget

[GreenGardenChic]

on 5/14/2008 Health care for us. Nice article.

[arwen1964]

on 5/9/2008 Debt needs to be retired first. It makes absolutely no sense to have a savings account giving you 2.6% interest when you are carrying debt at 20% or higher. Pay down the debt with the highest interest rate first, then the next highest, and so forth until all debt is retired. THEN it makes sense to have a savings.

[arwen1964]

on 5/9/2008 Unfortunately, putting the money in savings account at 2.6% interest while carrying a credit card balance at 20% is foolish in the extreme. Retire the debt with the largest interest rate first, then the next largest, until all debt is retired. THEN you can put money in savings.

[shahbasharat]

on 5/9/2008 this article should replace the one that ehow featured on the main today. also read this: http://www.ehow.com/how_2276340_spend-tax-refund.html

[juliesam3]

on 5/8/2008 bills here as well.