Story originally printed in the Onalaska Life or online at www.onalaskalife.com
Published - Tuesday, May 27, 2008
COULEE CONSUMER: To spend or not, that’s the question
If you haven’t seen them, you will soon — the promotions and ads identifying ways for you to spend your economic stimulus rebate. A recent poll shows six out of 10 Americans plan to save their money or use it to pay bills. Retailers are doing everything they can to get you to spend.
The government is sending out almost $100 billion in economic stimulus checks through July 11, and retailers are doing whatever they can to get you to spend as we go through a time when everyone has major concerns about the status of the economy. Check out the billboards, the promotions, advertisements, etc., and listen for their new marketing pitch.
The competition is heavily promoting this idea — go on a frugal spending spree. Supermarkets or grocery stores, catalog stores, electronic stores, pizza places, and yes, even some department stores are now offering cash bonuses to customers who will use their economic stimulus tax rebate check for gift cards.
You will see all kinds of slogans like “stretch your stimulus check.” What they are offering is a 10 percent bonus if you buy a gift card with your stimulus check.
Who wouldn’t take a second look at a 10 percent bonus — $60, $120, $180 dollars? If you were to put the $600, $1200, or $1800 rebate in to a savings account, you could not draw that amount of interest in a year’s time.
But be cautious. If you have to tie up your whole stimulus check in a gift card(s) that can only be used in one store, you won’t be able to pay off any debt that you might have, and that possibly would be more cost-effective for you and your family.
The idea is that if you have put your entire check on a gift card for one particular store, the likelihood you will then spend the entire check in that store is greatly enhanced. But if you’re not careful, you might spend your entire check and not know where all the money went.
Some businesses are offering to cash your checks for free. Some businesses might already do this for free or they might require you to make a purchase. If there is a cash balance remaining, they put that amount on a prepaid credit card that can be used elsewhere. This promotion is aimed at attracting customers who might not have a bank account.
About one-third of Americans selected direct deposit for their tax refund this year, and in doing so, their tax stimulus check will automatically be sent electronically to their bank accounts also. If your check is automatically deposited at your financial institution, don’t be surprised when you try to take advantage of the bonuses offered if you are asked to show some proof of that direct deposit. You should also watch for any deadline dates by which you either have to purchase or use the gift cards by.
The government is counting on the spending of the tax stimulus checks to promote the economy. If you choose to spend your rebate check, then do so wisely, and plan in advance.
Review your financial obligations and debt load before you rush to spend that economic stimulus check. Using these funds to pay bills first can help to reduce your interest costs.
If you have paid all of your bills, then look at your emergency fund. If you don’t have one, start one. If you do have one, put some if not all of your check in this. And then think about your retirement account, and put the remainder here.
If you have children, and are receiving the $300 per child, consider establishing a savings account for your child’s college fund or startup expenses when she graduates.
No one knows any better than you how you manage money. If you are in a situation where you can control your spending, and know that you will use the money you put on a gift card to only purchase items included in your spending plan, then the 10 percent bonus might be a good deal for you.
If managing your money is a challenge for you, and you wonder where all your income went at the end of the month, then possibly you should look toward paying down debt and establishing an emergency fund. Whatever you decide to do, you don’t want to look back in three or four months and wonder — where did that economic stimulus money go?
For more information or to make comments, write to La Crosse County UW-Extension, Attention: Coulee Consumer, 400 N. Fourth St., La Crosse, WI 54601, or call 785-9593.
All stories copyright 2006 Onalaska Life and other attributed sources.