Do some good with that tax rebate check
April 15 is behind us, and millions of Americans are starting to get their tax-rebate money from the Internal Revenue Service. If you qualified for an "economic stimulus payment," you could help boost the sagging U.S. economy by rushing out and buying stuff, or you could concentrate on a personal stimulus plan to benefit your household for months, if not years, to come. Here's how:
1 Jump-start your emergency fund. Everyone should have an emergency fund stashed away that could cover three to six months of living expenses — but most of us don't have one. Put your tax-rebate check toward that fund and squirrel away money toward it each month.
2 Put bills before pleasure. Tackle your bills. It's a fabulous idea, and one that ultimately would be far more beneficial than buying up consumer goods.
3 Tackle credit card debt. If you have balances on credit cards, particularly cards with high interest rates, focus on paying down that debt. Transfer them to a card with a lower interest rate.
4 Invest in your future. If you've been neglecting your retirement savings, use your rebate check to get back on track. Even if your employer doesn't offer a retirement benefit, open a traditional individual retirement account or a Roth IRA and start saving anyway.
5 Invest in someone else's future. Start a 529 college savings plan for your child or another child you love. It's possible to start a Florida College Investment Plan with a $250 payment or an automatic bank withdrawal of $25 a month. Visit www.florida529plans.com or call toll-free 1-800-552-4723.
6 Invest in your potential. Could you benefit from a job-skills upgrade? If so, take a class or two or three that could give you a boost. Check with local universities about extension programs that offer courses for professional development. Look into classes offered through community colleges, accredited online degree programs and the New Horizons Computer Learning Center (www.newhorizons.com).
7 Don't let your house sink you. Are you among the millions of Americans who have borrowed against their homes? Use your check to pay down your home-equity line of credit and help put this extra debt behind you while interest rates are low.
8 Remember your ride. Use the money to take care of some important car maintenance. If you're approaching the time for a 30,000-mile full service, get that behind you. Make sure that your vehicle's battery, belts, hoses and windshield wiper blades are working.
9 If you're going to buy something, make it worthwhile. Want to use your newfound cash to save yourself money and help the environment? Buy an energy-efficient appliance, especially if you're relying on older, less-efficient appliances. For instance, horizontal-axis (front-loader) washing machines use far less water and 60 percent less energy than top-loaders.
10 Recharge your
batteries. Take a not-too-expensive, not-too-stressful trip with someone you care about. Short jaunts involving two- or three-night stays in beautiful spots can help you save your sanity and regain perspective.
Laura T. Coffey
Sources: Kiplinger's Personal Finance magazine (www.kiplinger.com); and Bankrate.com