As most of you probably know, last week the President signed the Economic Stimulus Act of 2008. Among other provisions, the package will pay $600 to most individual taxpayers and $1,200 to married taxpayers filing joint returns, as long as they are below income caps of $75,000 for individuals and $150,000 for couples. There is also a $300 per child tax credit. So, a typical family of four will be receiving a rebate check for $1,800 around May or June of this year. If you are wondering about how this will apply to you, the IRS just posted a new FAQ section on it's website about the rebate program.
Of course, the government is hoping that each one of us goes out and spends it on U.S. products and services to give the economy a pick-up. I’m sure most people will probably not have ANY trouble figuring out what to do with their check. A quick vacation, a new laptop, car repairs, new clothes, or even just everyday expenses could easily eat up one’s check quickly. But, there may be some of you that will spend a little more time thinking about how you can make the most positive impact on your financial situation. Even though we are not talking about a huge sum of money, we decided to ask a couple of our favorite financial professionals for their opinions about ‘smart’ ways to spend the Rebate of ‘08.
Lynne Lehr-Buck, CPA and Founder of IntraScope Accounting Solutions, LLC:
- First, retire as much high interest debt as you can.
- Stash it in a retirement or college savings (529) account
- Have some fun and de-stress! Take a vacation, get a massage, do whatever will relieve the unhealthy stress of everyday life.
Rich Maves, Certified Financial Planner:
- If you have debt – this should be #1 priority
- If you have no debt, put the money into an investment
- Finally, if you absolutely must spend it, look at those involuntary expenses that you know will be coming soon (such as an appliance that may need replacing, or other home/auto repairs and maintenance)
Jonathan Mather, Senior Mortgage Planner, Clarion Mortgage Capital:
- If you are looking to purchase a home, put the refund in the bank to use for your down payment.
- If you have a home, retire credit card debt. The interest you pay on consumer cards is much more expensive than the returns you could hope to get by investing it first.
- If you do not have much in debt, invest it in real estate or stocks.
We at The Bibeau Group would be thrilled to see everyone give at least a portion of this unexpected windfall to the cause or charity of their choice. However, if you are thinking in terms of buying or selling a home, our recommendations would be…
- Save the check to be used as down payment or closing costs
- Save for after your move for those expenses such as paint, décor, furniture, etc.
- If your home could use some professional staging (confer with your Realtor about this), it would be a great investment.
- Do some fix-ups on your own….paint, re-carpet, landscaping, new appliances
- Come up with a unique buyer incentive…maybe purchase and include a big HDTV, a top of the line gas grill on your deck or patio, or simply just put it towards paying some of the buyer’s expenses.