Economic Stimulus Checks: Save or Spend?
Tip It!Over the past week, I’ve put together some details about the tax rebates associated with the proposed economic stimulus plan. Given all the attention that this has been getting, I thought I’d put together a formal poll just to get a sense of how likely it is that people will do as the government is hoping and spend this money.
As a reminder, I noted in my tax rebate followup that this a straight up payment, and not an advance on next years tax refund. So, with that said, lets get to the poll…
Note: If the poll doesn’t work properly in the RSS feed you’ll have to click through. Sorry.
Published on January 26th, 2008 - 88 Comments
Filed under: Economy, Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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88 Responses to “Economic Stimulus Checks: Save or Spend?”
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January 26th, 2008 at 10:08 am
I guess it could be considered spending the rebate but I put other anyway. I’m going to put it towards the last credit card I’m working on paying off.
January 26th, 2008 at 10:27 am
I curious about the results but I have a feeling your poll will skew toward the saving side simply because of your reader base, so figure that the actual “spend it” rate of the average consumer would be at least 10-20% higher than what you will find in this poll.
January 26th, 2008 at 10:44 am
I think even if this poll were on something like MSNBC, you’d see a very high number of people saying ’save’ (probably at least 50%). When in actuality, several newspapers and have indicated that close to 75-80% of the money will get spent within 6 months.
January 26th, 2008 at 10:45 am
I’m going to forward every single penny of the stimulus checks we receive into our outstanding credit card debt, immediately and without second thought. I’m not quite sure how much we’ll get quite yet, but we’ll certainly be getting our fair share.
January 26th, 2008 at 11:14 am
I plan to save it. Nothing says warm fuzzy like free money and compound interest on free money.
January 26th, 2008 at 11:31 am
I’m still confused. I saw in the Baltimore Sun article you referenced where they say it won’t be an offset to next year’s tax like the 2001 rebate.
But I also see sources that say it is an elimination of the 10% tax bracket for 2008.
These seem to be conflicting statements.
January 26th, 2008 at 12:03 pm
I’m going to the Bahamas with mine
January 26th, 2008 at 12:07 pm
Oh I am SOOO saving it! Which is why the Fed cutting interest rates is really irking me.
January 26th, 2008 at 12:32 pm
I am going to pay off Debt so it is just going back to the banks and CC companys
January 26th, 2008 at 12:43 pm
I am one inclined to save. I fit the profile of most of the readers here. But this check is being spent on American goods. My portion going to stuff I like, my wife’s to stuff she likes and my daughters to presents for her. My normal policy for “extra” money is to save/pay down debt/retirement account and invest in an index fund.
The government wants us to spend this money. I don’t fully agree with the stimulus and happen to think it is not great wisdom to borrow against our debt to do this when inflation is going sky high as it is (don’t like preemptive interest rate cuts much either.. I think like forest fires, economic recessions are sometimes necessary to help prune and eventually strengthen the economy… preventing either through unnatural means only makes the fire or recession worse when it finally beats the feeble attempts to stop it)..
Even though I don’t fully agree with it, there are things that we all would like.. For me it will be fly fishing stuff from a local fly shop. Going to purposefully buy American made goods (there are a few manufacturers in NH where I live and I may even steer towards their goods). This way I can at least feel like my ever so tiny portion at least helped a local business owner, a local supplier and a regional or at least national manufacturer. Will my check being spent alone dent the GDP? No. but if we all spend some or all it would make an even bigger impact and actually do what congress hopes it would do.
January 26th, 2008 at 12:45 pm
m.b. -
The bottom line is that you aren’t going to owe this back the following April.
It is an adjustment to the 2008 tax rates. So it is not an offset of 2007 as near as I can tell but it is actually a reduction in the 2008 tax structure and we receive all the benefits of that reduction in one check in May. So this should not give you a smaller or larger refund or make you owe less or more when you file your 2008 taxes in April. So spend away.
January 26th, 2008 at 1:00 pm
I’m going to invest it international assets or gold. It’s really starting to get to me how the government keeps spending money it doesn’t have. Handing out free money just comes back to bite you in the form of inflation.
January 26th, 2008 at 2:16 pm
Pay down CC debt!
January 26th, 2008 at 2:55 pm
I wish we weren’t getting it – the gov. does not have any money to begin with.
January 26th, 2008 at 2:59 pm
Well, in the first place we don’t have a tax rebate yet: it hasn’t been approved by Congress.
I’ll believe it when I see it. If anything is forthcoming, I expect I’ll end up using it to pay taxes. Just printed out a Quicken report for my tax lawyer: 126 pages! If any money comes back from the gummint, it will go straight to the money market account where I set aside savings to pay taxes. And tax preparers.
There’s no excuse for this country’s byzantine tax structure, nor any excuse for the vacuity that lets some of our leaders imagine forking back a few hundred bucks to taxpayers instead of using funds to provide needed services is a grand idea.
About 90 percent of the junk our esteemed leaders think we’re going to diddle this money away on is made overseas. We’ll stimulate an economy, all right: China’s.
January 26th, 2008 at 3:06 pm
I’m going to spend it all paying down my mortgage.
January 26th, 2008 at 3:31 pm
I plan to spend most of the money locally, at owner-run stores and restaurants as much as possible. I think that’s the best way to stimulate the economy and not feed the banks / insurers and importers of foreign-made goods. I’m a retiree with little debt and a lot of neat shops and restaurants within walking distance; those are real factors in my decision.
January 26th, 2008 at 4:22 pm
The rebate will be used to payoff a little debt we have left and the rest will go into a MMA to grow a little more so we can stay on course to retire early. Trying to be personally responsible now so I can reap the rewards later. Yeah – I’m an ant.
January 26th, 2008 at 5:55 pm
If they’re just going to give you a pre-April 15th tax ‘refund’, then you’ll just want to pass it back in quarterly taxes or make sure you calculate it in your taxes.
January 26th, 2008 at 6:00 pm
I’m paying off debt with mine. We also want a Wii, so we might use a small portion to cover the amount our numerous gift cards don’t cover.
January 26th, 2008 at 8:55 pm
I was watching Your Money on CNN today and the “experts” were saying that many people will use the rebate to pay off debt or save it for times of uncertainty. They gave many reasons – rising costs of food and gas, job uncertaintly, personal debt, etc. They said its during times of uncertainty (like now) that people cut back and during boom times (the 90s) or times of easy credit (early 2000s) when people spend like drunken sailors. So maybe this poll isn’t too far off – but I agree with most that this sampling is going to be more inclined to save.
I need new tires so that’s where mine will go, although I would have bought them with or without a rebate. But get this – I priced 4 high performance Michelins for $170/tire (gasp!). 18 months ago I had to buy 1 (same tire) because I slashed the wall on a sewer grate. That 1 tire was only $125 then. I know tires are made from petroleum and it has gone up in the last year and a half, but an extra $55/tire hurts! Inflation, OUCH!
January 26th, 2008 at 10:09 pm
I’m making an extra $500 payment on credit cards and banking the remainder in emergency savings. I’m too close to the edge to put the entire amount down on credit, and I’m definitely not spending any of it on junk I don’t need.
January 27th, 2008 at 12:44 am
Why don’t you have an option for pay down debt, or put towards emergency fund? Or is that included in the save option?
I’m going to put all of it towards my student loans as well as my tax refund.
January 27th, 2008 at 1:56 am
I think given the readership of this blog (and others like it), the results are skewed toward not spending it
-
Ryan
http://uncommon-cents.net/
January 27th, 2008 at 7:06 am
If it comes (and it probably will. After all, what member of congress is going to want to be remembered for voting against it, especially in an election year?), I plan to put the $600 in my IRA and will let it grow tax-free.
January 27th, 2008 at 8:09 am
Matt: You have a valid point with regard to paying down debt. I would either classify that as savings or ‘other’. But the emergency fund? That’s clearly saving, no matter what name you choose to attach to the end result.
January 27th, 2008 at 9:11 am
Save it…to spend later …saving for the downpayment on our home. We plan to buy a home in the next 18 months.
January 27th, 2008 at 11:20 am
Planning to pay down student loan debt. Though we might keep a small slice ($100-$200) and treat ourselves to something fun.
January 27th, 2008 at 11:52 am
This money will go into our already-established fall Hawaii trip fund. Not sure it this counts as “saving” or “spending”. I did a first run of our taxes, and given this rebate plus my federal and state refunds, the trip is pretty much fully funded. Aloha!
Hey, I noticed that the original post has a misspelling: “givernment”. Was this a Freudian slip?
January 27th, 2008 at 12:11 pm
There is a poll on MSN Money. http://articles.moneycentral.m.....ebate.aspx But right now only about 7000 responses (which is pretty small for them). Pay down credit cards is winning. Followed by spend it gleefully.
But, of course, all polls are skewed. Internet polls tend to be skewed towards the affluent.
January 27th, 2008 at 1:24 pm
Curious if you know much about the proposal in the stimulus plan of raising level on Jumbo loans from $417,000 to something like $795,000? Would this potentially impact the interest rates of these loans – hopefully bringing the rates down a bit? Thanks.
January 27th, 2008 at 6:43 pm
I’ll save it for about 5 months, when it’ll be spent as a small part of my house down payment.
Since I’m spending it this year, I voted ’spend’.
January 27th, 2008 at 7:56 pm
If I qualify, it will go straight toward paying off my debt.
January 27th, 2008 at 11:11 pm
Like many of the other commenters, I’ll use it to pay down credit cards. Well, I will if I actually end up seeing it. I’m not counting it until then!
January 28th, 2008 at 4:05 am
I’m spending it, either on a Springfield XD45 or a Tikka T3 Lite.
I figure that oughta *really* irk Nancy Pelosi. >:-)
January 28th, 2008 at 8:58 am
Eric, Just make sure to get the full size one with the 13 round mag. That really tends to get a rise out of people. Or better yet just go for the AR-15 or AK47. Get them before they try to ban them.
January 28th, 2008 at 10:54 am
I’m planning on paying part of my 2007 tax bill. We try to set up withholding to be close to break even, but owe a bit every year. I don’t know if handing it right back to the gov’t counts as spending?
January 28th, 2008 at 5:55 pm
I count spending it to pay down debt as spending, and that is what we will do with 1/2 of it.
We will probably use about 1/2 of what we get to supplement our vacation savings. That money will be going to travel expenses and hotel for a trip to Glacier National Park sometime in mid-summer.
To bring back and old travel slogan “See America First”.
January 28th, 2008 at 8:46 pm
Paying of the last of the CC debt.
January 28th, 2008 at 9:22 pm
While the government certainly hopes that people will go out and spend the money and boost the economy, I will be saving it and likely investing most of the money. One has to do what is best for their own situation.
January 29th, 2008 at 1:15 pm
Yea,
I think I am going to have to put it towards remaining debt. That is my big financial goal for 2008, so I am going after it with every chance I get…
January 30th, 2008 at 12:41 am
Give it away to people who deserve it more than me, and will stimulate the economy more than me.
January 30th, 2008 at 8:54 am
I will use the rebate to pay my next estimated tax installment for 2008. I won’t even cash the check, I’ll just sign it “Pay to the order of the US Treasury.”
January 30th, 2008 at 11:46 am
Half to savings, half toward replacing a couch that has long since outlived its usefulness
January 30th, 2008 at 6:36 pm
I will probably use it to pay property taxes without dipping into the savings account we would usually use for that purpose, though honestly I’m also considering a charitable contribution so it can go to someone who needs it more than I.
January 31st, 2008 at 12:03 pm
Credit card debt.
January 31st, 2008 at 12:49 pm
donation to a local charity, same as the last rebate check from neocon central.
January 31st, 2008 at 8:06 pm
It will get spent to pay homeowner bills, pay down debt. Childs will go into their savings account
February 1st, 2008 at 12:42 pm
I plan to spend some of it on food and emergency supplies. I hope to acquire a 3 month supply of food stores for my family. That way if a recession hits, we will have a head start on our groceries. I will save the rest.
February 1st, 2008 at 3:01 pm
We will be choosing to cash the check; if we recieve one as we still have our doubts, a lot of things can happen between now and then. Once the check is cashed and money is broken down to smaller denominations it will be stashed in a secure area of our property. (Picture bills in a rusty coffee can buried in a hole in the backyard, kind of thing only better!)
This really is saving but not in the conventional way, therefore our anwering “other.”
We are planning this so as to have some reserve more than likely to barter with. There will always be those who are so comsumed by monetarial greed they will trade things for cash. Keeping a sum outside of normal financial institutions won’t earn us any additional interest, but should the loans the US have be recalled by China or other holders, as is becoming more and more likely, that earned interest would never be seen by us anyway, let alone any of our personal funds being kept there.
If we keep it with us for a time when we may need it to get something we need/have to have and otherwise would not be able to obtain, we look at that as emergency preparedness.
This rebate may be looked at as found money by many, but in reality we have already spent it once through payment of income tax, so why not just continue to live without it, putting it away for not a rainy day but a day the the sky truely falls.