Your Take: Would You Spend A Stimulus Package?
There’s talk of an economic stimulus package that may involve some funds going back to low and middle income Americans in the hopes that they’ll spend it, boost the economy, and make everyone who watches stock tickers sleep a little easier at night. Matt Lauer interviewed Henry Paulson, the US Treasury Secretary, on the Today show and discussed the potential stimulus package and brought up a very good point. He brought up a quote in the Wall Street Journal about how the last time this tactic was tried, back in 2001, many low and middle income Americans saved their check from the government and didn’t spend it. (wsj blog article discussing this idea)
That’s what people do, they spend in times of prosperity and save in times of crisis. With the stock market taking a pounding, with the billions in bank write offs, with the sub-prime news, and all the talk of a recession - whether we’re actually in a time of economic crisis or not, people think we’re in a time of economic crisis so I’m inclined to believe they’ll save any money the government decides to dole out.
(As an aside, I love how we’re always going back to Reaganomics and supply-side economics, which was really the last time we truly battle a long period of economic slowdowns, in that case it was stagflation caused in part by oil prices. Tax cuts plus deficit spending… how much longer can we be ripping the golden eggs out of the golden goose before the poor thing dies and China stops buying T-bills?)
So my question to you is, if you got money as a result of the stimulus package, would you spend it or save it?
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Tags: 2008 Tax Stimulus Package, Your Take
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59 Comments - Share Your Thoughts
I recently paid of the last of my credit card debt, so I would take the money and put it in my high-yield savings account at ING. That wouldn’t help the economy much, but it would increase the amount I could put down on a house.
If I didn’t save it, I would pay down my credit card with it. That’s it.
I’d go out for a fancy lobster dinner and probably put a down payment on a new hot tub…
Actually it would probably just go towards some debt, or maybe part of it would go into the IRA since this is a good time to buy.
I’d either put in my savings account or put it towards my student loan debt. Definitely would not go on a spending spree
I’ve got *way* too much stuff as it is. I don’t see this sort of package helping the economy at all.
I’d definitely put any sort of stimulus check into my bucket of funds that I’ve been using to make monthly distributions into my various investment and retirement accounts.
I agree. When I feel nervous about money, I go into savings mode. I’d save it.
I’d spend at most 25% of it. The remainder would be applied to debt.
I would fill up my gas tank about 4 times with the stimulus package and then buy myself a $0.99 double cheeseburger with the left over cash.
I wouldn’t be a “good” consumer. I’d do one of the following:
1) Put it toward paying off my student loans
2) Put it toward paying down my mortgage
3) Invest it
I’m already applying extra towards 1 and 2, and I’m already investing…so unless it’s a large amount from the ‘gubment I don’t see how I would be helping to stimulate the economy…and chances are, any amount they give to me, I’ll just have to wind up paying for in taxes and then some.
The very act of them issuing a stimulus package will cause feelings of an economic crisis.
Personally for me it will go directly into savings…I am not going to needlessly spend any extra money I receive regardless of where it comes from.
Depending on how much we are talking, I would divide three ways. I would save 1/3 of it in my emergency fund (I am currently looking to boost my savings). I would take another 1/3 and spend it - I guess out of patriotic duty, and because there are a few things around our house that need replacing. With the final 1/3 I would make an extra payment on my lowest-balanced credit card to get it within striking distance of payoff.
I would use it to pay down/off my credit card debt. As such, it would stimulate the economy due to my putting less of my hard-earned cash into paying down/off my credit card debt. Ultimately, this would be a greater benefit to the economy than simply spending it, because it would increase the available funds by the amount of interest I would have otherwise paid.
Lend it out at Lending Club. hee, hee
From what I was seeing today - it looks like $800 per person and $1600 per household. I can’t believe that most people saved it back in 2001, if that really was the case, I am surprised. As quick as most Americans are to spend MORE (credit cards) than what they have, it is surprising to think that they would actually save money that they DO have.
We’d put the entire amount towards our debt and wouldn’t spend a penny on ourselves.
I’m gonna spend the next 25 years paying for stuff for my future children. The least I can do is spend some of their money now.
In all honesty, I would likely invest it in My IRA or something. We’ll see though.
Invest it.
I would buy stocks that are now at a 15% discount, compared with two months ago.
I would pay off my credit card. Or pay for another graduate class.
I imagine I’d spend it. I decided a while ago how much I need to save, and I’m saving that much. I mean maybe I would put the money into my IRA but that would bjust be to have it invested earlier in the year, and at the end of the year, when I have money to put into the IRA whose limit is reached I would spend it then. Anyway buying stocks still helps the economy.
First off, whenever the Government sends me money versus losing or wasting it I grab it and RUN!!
Now as to what I will do with the cash that one is easy. I am going to add it to my high yield emergency fund and then use it to buy items low and sell them high on ebay/craig’s.
I also agree that most people did not “save” the last meager rebate check. It was blown probably the day it arrived. This is a consumer economy with a zero or negative savings rate on average.
Whomever, came up with those stats is a moron.
The financially smart who visit the money blogs are, of course, going to save or wisely spend the money. The 99.99 percent that make up the rest of the nation will be getting an Iphone or big screen with the money.
the money will go towards replenishing what we are planning on spending already.
Apparently they are saying that last time people spent between 1/3 and 2/3 of the rebates. I saved mine then and would save it now. That doesn’t mean it won’t be spent over the next 12 months, but when it comes in it will go into savings. Over the year it might accelerate some of our other purchase or investment plans we were hoping to get to.
Also, I’m relatively new to blogging and posting. I wrote a little article about this the other day, which you can find if you want to see more of my opinion.
I would send it back to the government and tell it to pay off its debts first before going further in debt to stimulate me. I am already debt free, have an emergency fund, health insurance, own my own vehicles, live frugally and have an investment portfolio. What would really stimulate me and this economy is if the government acted to balance its budget. I also intend to start pushing this idea to my friends and readers. It really is time that we stop thinking of ourselves so short-sightedly and CHANGED for the better.
It would go right straight into a Vanguard fund. That fund is actually to pay off a small 2nd mortgage, but because I’m not sure where the value of the house is going (or where the whole danged economy is going!), I’m keeping the money liquid rather than tying it up in real estate.
It sure ain’t gunna get spend on “stuff,” though. I’m with rhbee. And sure do wish the leadership of this country were even just a LITTLE smarter….
Last time I got a tax rebate I split it down the middle between contributions to the American Civil Liberties Union and the Electronic Privacy Information Center. Maybe I didn’t help the economy, but it sure as hell helped the United States.
I’m a graduate student basically living off savings and loans. So any windfall will get spent. On rent. And on groceries. Which results in less sell-off of my stocks and less begging to Mom. So much for my contribution to the economy.
I spent the last rebate, but that was before I was paying attention to my finances. This time, I would stash it in my on-line, high-interest savings account where it would be harder to get to.
i’ll probably end up saving a good bit of it . . . but remember that we as americans are terrible savers, so on the whole, i’d bank that most, if not all (or more likely more than all — in the form of debt) will go directly into the economy.
I wouldn’t, but you know most of America would spend the “free money”.
When there is fear of a recession, people who get money will save it. This is because people are afraid to lose their job. I can’t believe this is the package that the government came up with.
Booze and women.
saladdin
It would seem that seniors would spend the money most.
id buy chinese-made goods
Save it. Thank you Mr. Bush, one can never have enough rainy day funds these days.
I’d spend half of it just to be patriotic. Then I’d save the rest.
Buy something made in the USA!!
wwwDOTusstuffDOTcom
I wouldn’t go out and spend it on purpose. I’d probably invest it in the stock market, hoping that this recession were in will eventually end and the value of my stocks will go up. I might buy a few more things… or at least, I’d spend normally compared to thinking that I was going to be drastically effected by the recession (job loss, etc).
I’m already planning a trip to Europe this summer that I was going to pay for out of savings. How does using this instead of tapping that count? I’m one plane ticket away. Andiamo!
ok….under normal circumstances, I am on of those people who would save it! But I have a daughter going to college in the fall so, I would buy her a laptop with the money, and try to help our economy get out of the trouble the its in, normally I would have waited but because I know what I want it for then I would buy it now!
ok….under normal circumstances, I am on of those people who would save it! But I have a daughter going to college in the fall so, I would buy her a laptop with the money, and try to help our economy get out of the trouble its in, normally I would have waited but because I know what I want it for then I would buy it now!
Reagonomics was the absolute WORST policy that ever hit this country. He rang up the largest deficits we’ve ever had to endure, until, of course, the current bozo occupying the White House has done.
No, supply economics completely sucks, in a word. I would use my pitiful rebate check to pay part of a credit card down.
I’d put it in my ROTH or savings. Would not spend it at all.
Most likely, my husband and I would put that extra money towards paying off my car loan early. If the estimates are right, then by June, we’ll have paid off the car. The car payments would then be directed towards our joint savings account.
buy a bunch of Levi jeans to sell to foreigners online.
Then I’d take that money and put it towards an awesome refinance.
There should be no rebate for several reasons. First, those individuals like me that worked their butts off to earn a good living, even if it is close to 6 digits pay the highest taxes for the same rights and benefits as everyone else. You earn a medium or low-income? Then get a new job or a new career, It’s not my fault that I make more money and yes, we are being discriminated against, always.
Second, if you want to stimulate the economy, then cut the tax rate so that people have more to spend.
Third, you want to fix the problem? Then get rid of all the current tax rules and implement a flat tax of 17% FOR EVEYONE, regardless of race, creed, or color, or income!
I think all these people are idiots. I cant believe you are against this Stimulus Plan! Just let them help our economy. I cant believe that your all saying you’ll save the money:( your suppose to spend it and help our world be a better place! If you were to die tommorrow, I sure hope you can take that money with you. Stop thinking about yourselves and do something for your country like all our men and women in Irag fighting for our freedom. Your answers and comments just make me so upset! This is why were in so much trouble.
Im sorry to be irrate but I need to get my feeling sout to the US
This is mostly directed at hawai8ilady. You are brainwashed. Why do I need to spend this money?(your quote, “You are supposed to spend this money”) Do you realize that this is OUR money they are giving you, and that this package increased out deficit? A deficit that will follow our children for years. No, I don’t want this stimulus package. It is only a bandaid. No matter how much we don’t like to hear it, we NEED TO STOP SPENDING MONEY WE DON’T HAVE. Economics 101. Want to stimulate our economy, get the hell out of Iraq where we are spending trillons of dollars. We might as well build a bonfire in our backyards and burn the money there for all the good we have done in Iraq. What a sad, sad situation for all the hard working Americans.
I am going to spend mine on the increased interest on my mortgage as this is causing rates to rise. It should cover the increase for about a month!
not spending the money will only keep us where we are now and make bad future for our kids. For this thing to work…we must ALL spend every penny! and i agree it is our money “the country’s money” so lets put it back where it belongs. SPEND SPEND SPEND SPEND SPEND SPEND SPEND!!!!!!
My husband and I have decided to use 1/3 of the check on a well needed couples vacation to Catalina for some relaxation, and the rest is paying off the large majority of our hampering bills. Thankfully this will SERIOUSLY help us to climb out of the financial hole, much faster then expected, and we can finally saved up with the family car we’ve been wanting to buy with money still set aside in our savings.
How can we not spend it? This amount of money will only help cushion inflation for a couple months.
I’m going to do my duty and spend it all. All I ever do is pay bills with the money I earn. If I can help stimulate the economy and buy my first ever new set of golf clubs, then I’m all for it. Besides, life is supposed to be enjoyed once in a while, go treat your self to something special.
I will take the 600 add to it the remainder of my rent and pay my landlord a few days early. My landlord will then put it in the bank and thier it will stay.
My husband and I intended on spending the money on something for our
home, however I don’t think that we are going to be able
to do anything because we are having to check and balance everything else
to compensate for the rising gas prices. I think people in general have to do what is right for there present situation, for those of you who can afford to spend the money by all means do so and have a great time, but for those of us who are really affected by the economy I hope you prey that we come out of it soon.
I am a retirement services specialist at a bank in MA and I am glad to read that people plan to put money into their IRA. I hope some young ones who don’t have a 401(k) at work will use this opportunity to start investing for their future. Who knows if Social Security will be there for them.
Personally, I am putting money into my Roth IRA and am going to pay my credit card down.
Another stimulus payment would be great. I think most people used the first one to pay down bills and with a second one, people would be more likely to maybe buy something they want instead of something they need. I know I would greatly welcome it! It’s not so great trying to live from paycheck to paycheck (barely) and trying to support a child.
Ours paid what we owed in taxes for 07 then the rest paid our house taxes. So, a second stimulus check would be great.
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