what should you do with your economic stimulus check

April 15th, 2008

What Should You Do With Your Economic Stimulus Check?

Now that the tax deadline is upon us, and most everyone will have filed by this evening, the discussion of money from the government turns from tax payments and refunds to economic stimulus checks and their impending arrival. I’ve seen a lot of posts lately from US bloggers wondering or discussing what they should do with their economic stimulus check on when it arrives. I’ve already said that I’ll do whatever I want to with my economic stimulus check, and I of course feel that everyone else should do the same (whatever *they* want, that is). But sometimes there is more than one choice, or many choices that could be made, and just saying “Do whatever you want” isn’t enough. Decisions have to be weighed and different options compared to determine what the stimulus should truly be used for to give the most benefit to the recipient.

A few weeks ago, Being Frugal posted about her own dilemma, which fit into this category. She wanted to use the stimulus to bolster their emergency fund as well as pay off some credit card debt. Her spouse wanted to take a vacation. One might jump to the “vacations are frivolous, pay off the debt!” answer, but the situation was a lot more complicated than that. Lynnae and her husband eventually came to a decision they were both happy with, which may or may not be the decision you or I would pick. The point is, the decision was uniquely personal to the factors present in their lives. I don’t know what criteria they exactly used to decide, but I am going to go into the criteria we used to determine where our stimulus check would go.

For us, the distribution of the economic stimulus check is a deeply emotional decision. We chose, as I have discussed before, to apply the stimulus to our debt, specifically my spouse’s student loan debt. For us, the question is – what is our debt costing us emotionally? There were a number of things that we considered using the stimulus check for, and a number of places where $1800 would be incredibly satisfying to use. But the end all of the discussion was – what is our current situation costing us emotionally? How far can this money go towards relieving our day to day stress? For us, past a vacation, past more emergency savings, past anything else we could come up with – shrinking our debt by a sizable chunk would give us the most inner peace and security. As the economy slows and calls of recession grow louder, we want to have as few obligations as possible to prepare us for the future.

And, on a related note, the less minimum payments we have to pay, the smaller our monthly expenses become – so in effect, we are raising the “value” of our emergency fund by eliminating one of our debts. The stimulus check will not eliminate this debt – but combined with our current overpayment schedule and an “extra” paycheck for my spouse, we will be on the verge of eliminating it by the beginning of summer.

So what should you do with your check? That all depends on you of course. What piece of your financial picture costs you the most emotionally, and what can you do to ease that burden? Do you need to be able to relax and recharge? Do you need a little more buffer against a recession? Do you need to have your monthly expenses become just a little less burdensome? Only you can decide. For when push comes to shove – you still should do whatever you want with your economic stimulus check. It is your money, after all.

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15 Responses to “What Should You Do With Your Economic Stimulus Check?”

  1. We plan on paying down the car loan. We have an emergency fund in place. We’ll save some before my student loans become due. (*sighs*)

  2. Mine will go for living expenses during May as I have little contract work next month….but I also plan to siphon off a little just for FUN…maybe a movie or two, a day trip…small pleasures, but experiences that add enrichment to my life. I could pour that small amount into debt payback for the huge educational loan I pay every month. But, as a woman of a certain age, I owe myself something too. So, I am looking forward to May 9 when my stimulus payment will be deposited. Let’s see, what movie will I rent???

  3. We used pretty much the same criteria when we chose vacation. Our crazy schedule over the last year has made our family seem somewhat disconnected, and we need some time away to regroup (especially my husband). Right now that’s more of an emotional need for us than paying down debt.

  4. I will be putting the majority into savings, with a small amount to a little bit a fun this summer :)

  5. Although I really have no business telling you what to do with your refund check, wouldn’t it be fair to atleast let your husband have a small deposit into his PS3 fund that he willing gave up for the car repairs. That way if he keeps saving for it and buys it, it will eventually contribute to stimulating the economy.

  6. We’ve got a lot of student loan debt with high interest to pay off, so most of it will go there.

    But of course, 5% will be taxed for fun money, and 15% for retirement.

  7. We will spend it! No debt other than a mortgage, so we plan on doing a few small home projects to enjoy for a year and prep our house for selling.

    Stimulate, stimulate!

  8. @ jill – he is getting his PS3 fund replaced from some contract website editing work I am doing. He’s got $100 of it already and the rest will follow shortly. He’s been a good sport. Maybe after his birthday he’ll be able to afford it lol.

  9. I need a newer car, and I am going to pay cash for it. This check will go right to the car fund, and I think it will give me the added boost to get the car a couple of months a head of schedule.

  10. It’s good to see everyone giving some thought to the best use of their own rebate checks.

    Although the president would like consumers to use their rebates to bolster the economy, our CreditCards.com poll found that about half of Americans don’t plan to spend their checks.

    That’s probably a good thing: Experts I spoke to agreed that it would be best for consumers to use the rebates to pay off debt or establish a rainy day fund.

    creditcards.com/credit-card-news/federal-tax-rebate-check-plans-1264.php

  11. I’m going to pay off debts! Argh! Someday I will be able to do something fun with my windfalls, like Save it!

  12. i’m putting that sucker right in my daughter’s 529.

  13. Man, do I love this question:

    “What is our debt costing us emotionally?”

    And we can substitute all kinds of other stuff for the word debt as well…

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