Spending your rebate

Car repairs and/or pay it towards reducing the principal on our mortgage.

We (me and my new husband) are planning to pay down debt with it after giving a nice chunk to our church. We are getting entirely out of debt. We are just shy of 50 and plan to buy a house in this 'buyer's market' in the next year or so. So, all 'extra' money is going toward those goals.

In my dreams? A Gibson Thunderbird Bass Guitar.

In reality? Probably credit card debt, like everybody else.

My .02 The painting really isn't so bad. If you can get through the scraping -that's the tough part- and you've got a good ladder, it goes fairly quickly.

The point of these stimulus packages is to inject money into the economy when the economy is weak. Thus using the money to pay down debt or to invest, while it may be the optimal answer for you, is not accomplishing the goals of the benefit.

If you want to do your part to help the economy, you should spend the money now. You can still be somewhat financially responsible in doing so though if you use the money to accelerate a purchase you know you are going to make someday anyway. That way the money gets into the economy now, when the economy is weak, and you save having to make the expenditure later, when the economy is (presumably) stronger, which puts the money back into your pocket in the future, which is kind of like saving.

Here's a couple of ideas:

1) I have a new baby at home (my first). I know that I will need to buy a child bed in a couple of years. A good use of my check would be to buy a child bed now and put it in the basement for the time being. That way I create near term demand for the company that makes the bed when demand is in short supply, and I'm effectively richer in the future by the amount of the bed because I don't need to buy it down the line.

2) Say you give $1000 to a food bank every year. Give them an extra $1000 now, but withhold your donation next year. That way the money gets circulating now and net-net you end up in the same place as if you had just saved the money.

In general, if you're going to spend the money its probably better for the economy if you spend it on labor-intensive goods. So a diamond necklace is bad - most of the cost is the cost of the diamond itself, which is a labor-free commodity. But buying a hand made table is good - most of the cost is the cost of the labor used to make the table.

Your idea of getting the house painted is good - almost all of the money flows to painters who could probably use it. And again, if you are certain you'd spend the money anyway in a year or two, its not fiscally irresponsible to just accelerate the expenditure.

Going out to eat a lot is great for economy - almost all labor in the cost. But if you have your own debts or financial issues to worry about, it may not be a prudent answer for you.

Wait a minute, I know that I am missing something here:

So the National Debt has reached over 9 trillion... The value of the dollar is going down... And so our government's solution to the problem is to invent more money so we can place ourselves into more personal debt.

Didn't Germany try to do the same thing after World War 1?

Buy Sushi, save the rest. Stop shopping. Changealleuah. It's time for the economic realignment!!!! The shopocalypse is upon us!!!!!

What are you painting your house with Rod? A crushed ruby based lacquer? 8 Grand! :)

Slightly off topic: This has got to be one of stupidest Federal government schemes since Hoover and Roosevelt managed to parlay the 1929 stock market crash into a massive 12 year Depression.

Let's have the government throw money away it doesn't have and run up the deficit!! If we're lucky, people will blow it all quickly on stuff they don't really need! That will artificially inflate demand for goods and services! John Maynard Keynes lives!

I suppose this is the sort of economic twaddle we should expect now that the genius of G.W. Bush has been complemented by that of Nancy Pelosi and Harry Reid.

If the government hands it out, it has to borrow. I wish newspapers would report that this largesse is not from the government, but ultimately from the taxpayer. Or the government can print money, debasing the currency, and penalizing anyone who has money in the bank or in T-bills, notes and bonds.

Why wouldn't anyone like to paint his own house himself? When we painted our contryhouse it took several weekends but it was a great pleasure (we painted it orange).I'd rather demand money from anyone who want to paint it, like Tom Sawyer.

What I'm spending the rebate on: Savings. If I had any debt, I'd probably use the rebate to pay it down.

Irrelevant political commentary:

1. $150e9 sounds like a lot, 'till you recall that the 2007 US GDP was ~$14e12. Seems like a drop in the bucket to me.

2. Interesting how the budget deficit was suddenly been forgotten by both sides once they agreed that bread & circuses were now politically convenient (oops, I meant "necessary to the health of the American economy").

3. If the government is going to spend borrowed money in the name of stimulating the economy, why not do something useful with it along the way? $150e9 would buy (or subsidize the purchase of) a lot of nuclear power plants, or windmills, or hybrid vehicles, or cogeneration systems - any of which could make a decent dent in our consumption of imported oil & gas.

We need a new computer.

$8000 - WOW - I thought you lived in a small house? Side and you will never have to paint again.

Pffft, we want the money now, not 5 years down the road when energy prices are skyrocketing.

Given my druthers, we'd pursue energy independence in a more rational manner than spending money on the construction of government-owned nuclear plants or windmills. My point was that there are perhaps better ways of utilizing deficit spending than simply ladling out bread & circuses (i.e., rebates). Here's another one: Capital upgrades for the military. I suspect $150e9 could do much to halt the impending shrinkage of our Navy. I'm sure people on this blog could think of other ideas. Of course, such proposals have a downside, namely, that the politicians won't be able to ask, come Election Day, "Who do you have to thank for those rebate checks?".

This is what we elect people to do? This is what we do with our republic? I used to think that the government ATM was only for the Chryslers or the needy, but this is a reminder that, as a nation, we're all pretty excited to be citizens of the welfare state.

Let's add bond insurers to the bail out list.

Oh, if only. Yeah, our old house is 1,800 square feet, but the price includes doing small repairs, sanding the whole thing down, and using a better quality paint than the guy from whom we bought the place did. The Texas sun is absolutely brutal on wooden houses. The back side of our house gets a lot more sun than the front. You can see the difference in the condition of the paint job.

We have a baby due in June, so might as well just wire transfer the payment to Babies R Us.

Neil

Rod - and everyone - go with paying off credit card debt if you have any that you carry. And then, follow this edict for life: credit cards are just a payment method. Don't use them if you won't have the money to pay them off within three weeks of your purchase. Make it a goal never to pay another cent on credit card interest. I haven't paid any since 1993...

If you have no credit card debt, pay down or pay off any other revolving debt (like lines of credit).

If you have none of that, pay down any expensive (interest rate over 10%) installment debt.

If you still have money from your tax rebate, save it. If your savings are in good shape, spend it on your house. If you don't want to do that, blow the whole works on frivolities or give it away.

Talk about sticking your nose in - I'm Canadian so I don't get one of these rebates, and no one asked for financial advice. But there's a bit anyway, from an ex-banker.

Oh, and Rod, just say the word, and I'll fly to Dallas at my own expense and I'll paint your house for half the cost you got quoted. A cot in your garage and three squares a day, and we're in business.

This is what they write chapters in history books about, and they will ridicule the ridiculous.

Well said, gjoe.

Rob, the Gettysburg visit is such a wonderful idea. Sharing our history with our children should be a priority for every parent.

1) Avoid the "haunted tours". They're a waste of time and money.

2) Depending on her age and reading level, encouraging her to read Michael Shaara's The Killer Angels before the trip is highly recommended.

3) Depending on how finicky an eater she is, I strongly recommend dinner at Dobbin House Tavern. Expensive, but worth it.

We have no debt apart from our mortgage, so we'll either stick it in the short-term savings account (i.e. the bank, at a whopping 2% interest), or spend it on something. Hmm, on what though? My husband and I haven't discussed it, but I think my first choice would be to get the driveway repaved. He'll probably want to do something more entertaining, though.

Oh, and I agree with gjoe and Simon -- this whole thing is just absurd.

Mrs. Pringle

Un-be-freakin-believable! We're in debt up to our eyeballs(probably, a cause of the recession), and the bipartisan solution is another tax break.

I'm going to put the money under my mattress. Just kidding. My husband wouldn't let me. We won't do anything different. It will go into the checking account in the bank and go towards day to day bills.

I have to give Rod a little credit. He's not going for any of that cheap, illegal immigrant labor down there in Texas if he's paying $8,000.

I don't think that Rod has the time to do this blog and paint his house. Seriously, painting looks easy, but it's very time consuming.

We decided to paint a door and our shutters last fall after getting quite a few estimates. The door became rather time consuming because we chose to paint it red and didn't know that red was tricky. We finished the shutters on the first level of the house, and then my husband said, "Well, I've accomplished what I wanted to accomplish until spring." The leaves that hid the second floor shutters have since fallen, and I have to say that our house looks pretty silly.

I'm with the "ridiculous/absurd" opiners. The best thing individuals could do is pay down our personal debt and not buy one more thing that we don't need. But this stimulates the economy how?

Spend it on needed home repairs now while folks need the work and defer maintenance when the economy is hot. That is the best strategy for the economy, your community, your fellow working man and your own personal finances. The herd says "I gotta have X" when everbody else is getting X. Resist and run against the herd. You'll be much happier and wealthier in the long run. But, always maintain your minimum long-term savings whenever possible.

Food, gasoline and private school tuition - same as everything else that I earn.

How much do most of you expect to get? You're talking as if you're expecting several thousand dollars each. I won't be getting very much, and I'm not sure this program is worth the effort and expense of sending the checks out.

Re: savings accounts (Mrs. Pringle, above). You can do better than that. I bank by telephone with ING Direct (no connection to them whatsoever) for savings, and there are online banks with even higher rates.

SiliconValleySteve
Spend it on needed home repairs now while folks need the work and defer maintenance when the economy is hot.

I like that. Put up some new weather-stripping, buy a new air-compressor for your AC/heat pump, buy a heat pump if you don't have one.

Rod,

I hope this will find it's way to you, as this is an older post. But I've come up with an alternative way to use the money.

Give It Away

The story that this tells about the American people is a sad one. We're likely to be facing a serious recession, yet none of us can wait to get our hands on this money to spend it on . I think there is a better way.

I'd appreciate it if you'd take a look and share your thoughts.

Thanks!

Amy