| Free Money Gov Tax Rebate Check |
| By Credit Federal |
Published
05/8/2008
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Financial Tips
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$152 billion in free government money is in the mail for 130 million taxpapers
Who's eligible for the gov money? Those who filed a tax return and made less than $75,000 (filing single) or $150,000 (filing joint) in 2007. Most people filing single will get $600, while those filing jointly will get $1,200, and parents will get an additional $300 for each dependent child. Seniors and others who don't earn enough to justify a tax return but who filed one anyway can receive $300.
Tax payers who provided the IRS a bank account number will get their free tax rebate money within the next two weeks, whereas other filers will receive their check rebates by the middle of July.
The tax checks are being sent out based on Social Security numbers, with the lowest ending numbers getting paid first. Full details are at the Internal Revenue Service Web site.
The free government money is aimed at helping to revitalize the economy by stimulating spending. In reality; however, it may only be enough to help consumers cope with rising gas and grocery prices, as well as catching up on mortgage payments for many others. If you're in a financial hardship, you may want to curb the urge to go on a spending spree and instead use the money more wisely. Below are some suggestions:
Pay off credit card balances. If you have a high; or recurring, credit card balance, you likely have a habit of spending beyond your income and have already done your part to stimulate the economy, so use your tax check to pay down your credit card balance. Even if it's not enough to wipe out your debt, it's still enough to save you hundreds of dollars in interest over the long term. To see exactly how much interest you'll save, use our credit card interest calculator. Or, to see how long it will take to pay off balances, use our credit card balance payoff calculator.
Negotiate for better deals. Every retailer is competiting for your business. Just like you, they are also feeling the impact of the sluggish economy and will bend over backwards to get you to buy from them instead of from their competitors. For example, some retailers such as Sears, Albertsons, Shop 'n Save and Kroger's are offering 10 percent bonuses to customers who trade their $300 rebates for gift cards. Consider stores where you generally shop and offers a bonus that's better than you'd get through an ordinary sale.
Invest for future savings. Just like paying off credit card bills, investing in other areas can save you money over the long term. Home remodeling for greater energy efficiency not only saves money on heating/cooling costs, but also offers tax incentives. You can save further on utility bills by switching to high efficiency appliances and fluorescent light bulbs. And don't forget to tune up your car, replace filters and properly inflate tires. If you're too confused on which to do; or to do first, put the money into a savings account until you reach a decision. Or, you can raise the deductibles on your home and auto insurance to lower your monthly premiums, and use the money in the savings account to offset the increased deductibles.
Plan for retirement. If you're not maxing out your 401(k) plan, raise your contribution by the amount of your rebate. You'll cut your taxes next year, take advantage of having your interest compound forever and possibly snag some matching funds from your employer. If you're already filling the 401(k) to the brim, put the money in a Roth IRA. Let that one $1,200 stimulus payment ride for 25 years at 9 percent and you'll have $11,000.
Invest in your children. If you have children, you'll get an extra $300 for each one. Start an education savings account or a 529 college savings plan. If you have working teenagers you can use the money to match their summer job earnings and establish Roth IRAs for them. Seed a family investment club and start teaching your kids how to pick stocks. Learn how at the National Association of Investors Corporation.
Invest in yourself. If you've been neglecting your own medical/dental care, remedy that now. You'll be investing in your most important asset (review medical and dental insurance rates). Or increase your employment options and value by furthering your education. Or splurge for one-on-one, professional financial advice. You can find a fee based financial planner at the National Association of Personal Financial Advisors, or at the Garrett Planning Network, which has advisers who charge by the hour. Let them figure out a way to save you a stimulus check every year.
Recharge yourself and build memories. Money isn't worth spit unless you are happy and have others to share your life with. Take a family vacation. Not only will that help recharge you, it will also help recharge the economy.
Donate. Don't have any financial problems or have a heart bigger than your debt? Donate the money to a worthy cause. It's unfortunate that charities suffer deeply whenever the economy is in distress. You could help children, pets, improve the environment, save less fortunate families from foreclosures, and all the while feel better about yourself. To make sure your check gets used in a way that's meaningful to you, give it to a charity you already embrace or to your local church. Beware; however, of scam solicitors and telemarketers pretending to represent a charity. If they ask for your bank account or Social Security number to urge you to transfer the tax money quickly to them, it could be a scam.
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