LOUISVILLE: What are you going to do with YOUR Tax Rebate?

Be watching your mailbox:  It's not Publisher's Clearinghouse, but some money IS on the way!  The government's $168 BILLION DOLLAR Economic Stimulus package is coming soon - maybe as early as Spring.  Intended to jumpstart the economy by distributing tax rebates across our land, the Feds are hoping you'll run out and spend it and thus bolster the economy.  But should you?

I'm sure you can think of dozens of things you can do with the extra money, and you may already be making a mental list.  But the last thing you want to do is go out and spend money in anticipation of the money coming in.  The wise thing to do is NOTHING until you have the check in your hand.  (Be sure to file your 2007 tax return; the gross income listed on your return will determine you much you'll be getting.)

Regardless of how much you receive, make a budget and stick to it.  We all know how easy it is to go to the store with a fixed amount in mind, only to walk away realizing you've blown your budget.  If you do that, you may end up spending your entire rebate and then some.

Consider NOT spending at all.  The government is issuing these tax rebates with the hope that Americans will help bolster the economy by spending their checks.  But spending isn't always the best plan.  If you have high-interest credit cards or large balances you're trying to knock down, use the rebate money to help pay down the debt and get out from under that burden sooner. 

If high debt is not an issue, consider saving the rebate check in an interest-bearing account, funding or starting a college savings plan, or even putting the money in a retirement account that will grow with time.

Our favorite loan officer here in Louisville, Rodny Davidson with First Horizon Home Mortgage, tells us in his weekly report  that the Economic Stimulus Plan features a number of other benefits.  In addition to rebate checks, it includes new conforming loan limits that may allow you to refinance and save money every month, or purchase a home more affordably.

SO HOW MUCH WILL YOUR CHECK BE?

The amount you receive is directly related to how much money you make.  For instance, individuals with adjusted gross incomes up to $75,000 will receive a rebate check of $600.  If you're married filing jointly and earn up to $150,000, you can expect to receive $1,200. 

If you make more than $75,000 as an individual or $150,000 as a married couple, your rebate check starts to shrink.  You can plan on receiving $50 less for every $1,000 you earn over those limits.

Finally, if you have children, you can expect to receive a $300 credit for each child.

GOT QUESTIONS?

Rodny Davidson will be happy to help you look at your overall financial picture and help you make the best of this opportunity.  Rodny can be reached at 502.396.2598.

Jacki and Jerry Shafer are "mega agents" with The Shafer Team and Keller Williams Realty Louisville East.  Jacki and Jerry specialize in selling real estate in their own "back yard" - Oldham County, as well as in eastern Jefferson County (Louisville), Henry, Trimble and Shelby Counties in Kentucky.