What to Do With Your $600 Tax Rebate?

So the recently approved $167 billion economic stimulus package promises to put $600 pack into your pockets this May, when the first round of checks is scheduled to be mailed.

Now, I understand that the purpose of this plan is to get more money into the hands of American families so that more cash can be pumped into our economy. Some recipients will, I'm sure, go out and buy something like a brand new TV, or some other "big ticket" item, and tell themselves that spending the money was their "civic duty."

How about you? Before you spend the money, consider this:

• Are there outstanding bills that need to be paid?
• Do you carry a balance on your credit cards from month to month?
• Do you have an emergency savings fund?
• Do you have a vacation or holiday savings account?

Spending it, and doing your part to stimulate the economy, doesn't have to happen immediately. If you don't have a savings account right now, consider using the check as seed money to get one started. And certainly, if you're carrying a balance on your credit cards from month to month, use this "found money" as a gift to help you reduce that balance.

Above all else, your responsibility is to your family. In fact, Jean Chatzky, contributing editor for "Money" magazine, said as much last month when she appeared on Larry King Live¹.

"...People should look at their own individual situations and decide whether or not they should spend that money. This is not a time when it's up to you or to me... to go out and prop up the economy. This is the time to look really hard at what your situation is and say, 'Do I have credit card debt that I need to pay back?'"

You don't "owe" it to anyone to spend the money. In fact, you might "owe" it to yourself and your kids to save it or use it to pay down any debt you've accumulated. The government wants you to spend it - certainly, they're hoping you'll spend the $600 long before the checks are even mailed - but you need to do what's right for you and your kids.

¹Reference:
Chatzky, Jean, Kim Kiyosaki, and Dave Ramsey. Interview with Larry King. Larry King LIve. CNN. 17 Jan. 2008. Transcript.