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That Rebate: Have a family get-together about how to make those extra dollars work best for you
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Published: May 8, 2008
We have begun receiving our stimulus or tax rebate check from Uncle Sam. In order to qualify you must have received benefits or earned income of $3,000 or more in 2007.
Even if you did not owe taxes in 2007, you must file a tax return to receive a rebate check. If you earned more than $3,000 but paid no taxes, you will receive $300.
If you made more than $3,000 and paid taxes you will receive $600. And if you have children under 17, add an additional $300 per child. A single person will receive a $600 rebate check and a married couple will receive $1,200.
The IRS will use Social-Security numbers to determine the order of payments and expects to send 34 million payments by the end of May. For taxpayers who elect to receive paper checks, payments will not be mailed until mid May. The mailing is expected to be completed by mid-July.
The legislators who voted for the economic stimulus package are hoping that you will spend this payment and boost the economy. Many businesses are gearing up to help you decide where your payment should go.
Appliance stores, car dealers, furniture stores, retail stores, and other businesses will accept the economic stimulus payments toward purchases of their products. Watch for retailers who want to capture some of the stimulus dollars to lower prices.
So, what are you going to do with your money? You and your family should sit down together and prepare a plan before you receive your check. It's a proven fact that managed money goes further. When you plan your spending, you help ensure that you use the money in the best possible way for you and your family.
A great way to get the most out of your stimulus or tax refund is to have a written plan and to follow it. A suggestion is to use 80 percent of the money for practical purposes and use the remaining 20 percent to pay cash for enjoyment or to make a special purchase. Carolyn Bird, a family resource management extension specialist at N.C. State University, offers the following uses for managing your stimulus and tax refund money.
□ Paying down credit will save you money on high-interest rate debt. Credit can be hard to pay off when only making the minimum payment, since the majority of the payment goes to interest.
Only a few dollars of each minimum payment are applied toward reducing the principal amount owed.
□ A modest deposit can have a substantial impact on your retirement account. Increasing one of the components, such as the initial deposit, the regular monthly deposit, the average interest rate earned or the length of time to retirement can increase the account balance.
□ Make an additional deposit into your holiday account or open a new one especially for this purpose. Then regularly make additional deposits over the coming months.
Whatever you save in this account will go a long way toward avoiding credit-card debt during the holiday season.
□ Open an emergency savings account to provide easy access to money to take care of unexpected events. When the tire goes flat, the car battery needs replacing, or the washing machine goes "ping," money in an emergency account will let you pay for these expenses without using credit.
If you become stranded along the road and have to use your credit card, you can use the money in this account to pay the credit-card charge in full. An emergency savings account can help you stay out of debt or at least keep the balances down while you pay off the account.
How you choose to use your stimulus payment is an individual or family decision. Take time now to make a plan that will benefit you financially. There's nothing wrong with saving or paying off debt, or even spending some of your payment.
If you have questions, call Deborah Womack with the Forsyth County Cooperative Extension Service at 703-2850.
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