Tax Rebate Details Nearly Final....What will you do with it?

The eternal question.... to save or spend!

By: Matt Mansfield
Marketing Director, ERA Reardon Realty

As many of you may have heard on the news, a tax rebate check may be headed to your mailbox in early Summer. Good news for sure! You will most likely receive between $600 and $1,800 depending on your marital status, yearly earnings and if you have cheldren. NOW, the real question for our flagging economy is, "Will it help"?

That depends on you...

Lawmakers are counting on the fact that you and everyone else who gets the check will go and blow it as "fun money" on electronics, meals and vacations, etc. The history of tax returns and rebates does point to the fact that most of you have done exactly that in the past. This however is not the past.

If you want my advice, and I am not sure if you do, I would save the money. The economy is weak and jobs are unpredictable. Put the money in the bank, especially if you are living paycheck-to-paycheck. There are many online savings accounts that will pay 4-5% interest!

While spending the money on an X-Box 360 or a flat screen TV does feel good in the short term, here is a list of just a few things that "creep up" on us that you should most likely save the money for:

1. Loss of a job. If you unexpectedly lose your job you will need as big of a cushion as possible to tide you over. Enough said...

2. Medical BIlls. If you get injured, you could have hefty bills to pay. Even a trip to the Dentist can get pricy.

3. Car repair. You just can never see this one coming, and you need your car.

4. Gas Prices. We could see prices of $4 per gallon this year. Keep a supplemental "gas fund" in the bank.

5. Paying down credit cards. Paying some extra dough on those high interest credit cards can save you money each month in the form of a lower payment, not to mention help your credit score ;)

6. Prom, Dances, Cars, etc for Teenagers. If you have a teenager, these expenses never stop.

7. Excess Mileage on your lease. If you chew up your lease miles, don't roll them over into your next lease! Pay them off at the end of the term with your saved money. Financing negative equity is a bad idea.

8. Christmas! Don't put gifts on your credit cards next year. Bank some cash and pay all of your Christmas bills on time!

9. Downpayment on a new car. You never know when your car will die. Coming up with a downpayment on short notice can mean not paying other bills.

10. Downpayment on a house!If you are looking to move or become a homeowner for the first time this year, start banking that downpayment now!. With historically low interst rates it could be the best investment you could make!


So there you have it...the choice is yours. Spend or Save? Only you can decide. Me, I am going to try and save it, but one of those unexpected expenses will unboubtedly creep up in the near future and take it from me. That's exactly why it will be waiting in my online savings account.

What do you think? Let me know by clicking on the "Comments" link under this story.

Have a good one,

Matt