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Your Take: Would You Spend A Stimulus Package?

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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?

{ 76 comments, please add your thoughts now! }

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76 Responses to “Your Take: Would You Spend A Stimulus Package?”

  1. JSB says:

    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.

  2. Sean says:

    If I didn’t save it, I would pay down my credit card with it. That’s it.

  3. Jeremy says:

    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.

  4. jayne says:

    I’d either put in my savings account or put it towards my student loan debt. Definitely would not go on a spending spree

  5. MonkeyMonk says:

    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.

  6. I agree. When I feel nervous about money, I go into savings mode. I’d save it.

  7. andy says:

    I’d spend at most 25% of it. The remainder would be applied to debt.

  8. Tom says:

    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.

  9. mjmcinto says:

    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.

  10. Frank says:

    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.

  11. Frugal Dad says:

    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.

  12. Glenn Lasher says:

    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.

  13. rocketc says:

    Lend it out at Lending Club. hee, hee

  14. ChristianPF says:

    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.

  15. M.B. says:

    We’d put the entire amount towards our debt and wouldn’t spend a penny on ourselves.

  16. razmaspaz says:

    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.

  17. Rev says:

    Invest it.

  18. Rick Morley says:

    I would buy stocks that are now at a 15% discount, compared with two months ago.

  19. Kami says:

    I would pay off my credit card. Or pay for another graduate class.

  20. Jason R says:

    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.

  21. 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.

  22. Tim says:

    the money will go towards replenishing what we are planning on spending already.

  23. planner says:

    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.

  24. rhbee says:

    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.

  25. vh says:

    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….

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