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The stimulus package is here, now what?

I've read mixed comments about the highly anticipated "rebate." For example, on a January 31, 2008 press release, the Financial Planning Association advice consumers to be carefull how they will spend their rebate checks.

One of the strongest observations from the personal finance perspective is that "spending the rebate may not be in the best interest of many Americans. Not setting up a household budget is how many Americans got into financial trouble in the first place." according to Mark Johannessen, CFP®, president of the Financial Planning Association® (FPA®)

The FPA made a point if we consider that the national savings rate is minus 1/2 percent, bankruptcies are increasing, and the average American household credit card debt is $8,400.

"The economic stimulus carries the wrong message, because it is anti-savings and anti debt-reduction," said Johannessen.

In a few weeks the checks will be in the mail, and Johannessen is urging people to carefully consider using the money to pay down their credit card debt or add it to their savings for an emergency fund or retirement.

Another item to consider on this package is HR 5140, which will increased home loan limits in metropolitan areas. This means that HUD will have 30 days or less to come up with the median prices for areas throughout the country, which may then cause an increase to the conforming limit in those markets. Ironically enough, the NAR just publish this data today under the title "Metropolitan Area Existing-Home Prices and State Existing-Home Sales."

Posted by Joseph David, CMPS® on 02/14/2008 06:40 PM

Comments (4)

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4 Comments on The stimulus package is here, now what?

Hi Joseph- I dont think the economic stimulus carries the wrong message, because it is anti-savings and anti debt-reduction at all. We all have free will and will use the money as we see fit.

Remember many people who will get a check do not pay taxes thanks to President Bush who took just over 25 million people off the taxpayer roles. I think the stimulus should only go to people who paid taxes last year.

The smart ones will save or invest it, I for one am happy to get a little of my money back.

Cheers,

Larry

02/14/2008 07:07 PM

by Larry Hultberg Newark Delaware Realtor (EXiT Central Realty Delaware Home Search)

I don't know about anyone else but I am going to go buy stuff made in China from Walmart. Just kidding. Its going to pay my gas bill and go to the oil cartels. Just kidding again. I'm going to Disney World.

02/14/2008 07:22 PM

by Joey Remondino Broker, GRI, E-Pro (StoneHouse Realty Inc)

Hi Joeseph..I hope we see some benefit from all of this, an it was not just a political ploy...;)

02/14/2008 08:02 PM

by Konnie MAC Northern Virginia Real Estate (Konnie McKee )

Joseph. I agree with you 100%. It's because the rebate is so small that I would rather make a contribution into my Roth IRA where at least it can work for me the rest of my life, instead of filling my gas tank for a month (which I can spend my own money on anyway) I would rather see the stimulus package lower the cost of gasoline, so food prices and other basic necessities of life go down as well. This is merely a temporary fix to a very long-term problem. I personally feel Warren Buffett should bail out the entire banking system, get them back on solid ground(as he will profit VERY HANDSOMELY from that) and put this disaster behind us. Meanwhile, those of us who recognize this current market as a buying opportunity should add to their current holdings. Afterall, when the tide goes out ALL ships go down. I know where I will be when the tide comes back.

02/16/2008 07:08 AM

by t A (none)

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