Stimulating the Economy...

You've probably heard by now that a tax rebate is going to be issued this year. It's also referred to as the 'Economic Stimulus Package'. Single filers will receive $600, Joint filers will receive $1200, and an additional $300 is added to that for each child in the household. These numbers assume you make no more than $75,000 (individual) or $150,000 for joint filers. Low-income filers must make at least $3,000 to receive a rebate, which is $300. Those who make over those limits will receive a rebate, but it will be reduced by 5% for every $1,000 over $150,000 and it is capped at $174,000


So, what do you have to do to receive this money?
You must file a 2007 income tax. If you do not file, you will not receive the rebate.
Then you wait. The rebates are expected to show up as early as May, so it may be beneficial to file early this year instead of waiting until the last minute. Then again, it may not make a difference to file early. Just be sure to file your return and you'll be ok.

"I'm getting a rebate, what should I buy to stimulate the economy?"
Whoa there, cowboy. Not so fast. Let's remember that the politicians in Washington are calling this tax rebate an "Economic Stimulus Package" so that you'll feel inclined to spend it. But that's not your job. This money should be used to help you get out of debt.

Here's some tips on what to do with it:

• Get current on any outstanding debts that you've fallen behind on.
• If you haven't already, build up an emergency fund.
• Pay off those credit cards, or throw as much as you can at them.
• Refinance your house and use the rebate for closing costs.
  

It can also be used to invest in 401K, IRAs, or another investment vehicle. Do this only if you are out of debt, in which case I'm not sure why you're reading this blog!

So while Washington may want you to stimulate the economy, you should use it to stimulate your own household instead.