The Federal Economic Stimulus checks should be going out soon. My understanding of the purpose for the checks is to “prime the pump” and give middle and low income households money they can go spend. The spending will create demand for products which will in turn create demand for jobs. The idea here is the money will be a “patch” on the economy until it does better.
For me this is a great opportunity to add more to my savings account or buy another certificate of deposit (CD) in my ING account. Problem is, the government doesn’t want me to save it!
With the Fed lowering their rates banks are lowering their savings and CD rates as well. This discourages people from putting their stimulus check into savings. Why bother with savings when their rates are so low? You could end up losing value when you take inflation into account.
So it seems your now low savings rates are there for a reason - so you take your money and go spend it!
I’m not saying you should do this. We don’t plan on making any purchases because we’ll have some extra money. Since our tax refund came through direct deposit to our savings account our stimulus check will come to us the same way. But if you have debt, such as from credit cards, you will probably be best off paying that down. I just find it interesting how the government works together to get us to spend.
I see how this extra money in the economy can help boost business. But I think it’s a shame that people are discouraged from saving, especially at a time when our personal savings rates have been declining already.
How do you feel about the Economic Stimulus checks?
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I am definitely looking forward to receiving my tax rebate check. I love ING Direct. I’ve been a customer for many years, and they really have some great rates. Thanks for sharing.
I heard from a finance guru on CNBC that the best thing you could do with the money is use it to pay a debt like credit card or if you’re debt clean, put it on 401K, emergency fund or any good investment instrument. I think this is the best time to buy stocks because the rates are super low. I believe her advice makes a lot of sense.
Cheers!
Hi,
Great stuff…
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Tammy
I was hoping to save the entire check, but now I think I may take $100 and go spring shopping.
Personally, I don’t make my financial plans based on what the government tells me to do
And despite low savings rates, I plan on banking 85% of my stimulus check and using the rest for a “treat”…
@ April - Our check will come direct deposit directly into our ING so we’ll start earning interest once it hits.
@ Lotus Flower - Sounds like good advice. Paying off debt might give you the best returns especially if you’re paying a high interest rate. Putting the money in an IRA sounds good too. We just set up our direct deposit plans for our Roth IRA’s but the check might be a good time to add a little extra to help us max out our allowance.
@ Tammy - Haven’t checked out Fast Pitch but I’ll go take a look. Thanks!
@ Asgreen - A little treat now and then can be a good thing. You hear a lot of talk about being frugal all the time but sometimes you have to let go a little bit. Enjoy!
@ Joe - As I just said, a little treat can do you good. Sounds like you’re being responsible with the money by saving 85%.
It’s not going to work. The stimulus checks going to go in the gas tank within a few weeks. The economy is in a lot of trouble.
@ Curt - My guess is that whatever happens it will be made to look like a success.
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