I’m saving my check from Uncle Sam for later

(If I get one.  The chickens aren’t hatched yet.)  That’s what I did with the $300 check I received in 2001.  It wasn’t burning a hole in my pocket at the time.

The $100 billion (give or take a few billion) injection of liquidity — also known as a “stimulus package” — into individuals’ wallets that’s being discussed now is meant to encourage consumption.  Money that’s spent stimulates the economy; money that’s saved really doesn’t.  That’s why there’s also discussion (no decision has been made as of now) about income caps for the rebates.  The thinking here is that lower-income individuals will be more likely to spend the check than save it, since there’s a higher likelihood that they’ll be more strapped than higher-income individuals.

Which is all fine and good, I suppose.  Really strapped folks will get good meals for a while, and kinda strapped folks will be able to knock their credit card payments down $10 per month or so, or stay in their homes a month longer, or buy that flat-screen TV they’ve been eyeing.  Or whatever.  Then it’s gone.  Meanwhile, we’ve kicked the national debt ever closer to fourteen figures.  We still have a stock market that’s behind where it was at the start of the decade if you adjust for the 20% inflation that’s occurred since then, with more bad news each day.  We still have oil hovering around $100 per barrel and gas hovering around $3 per gallon.  We still have housing prices dropping and ARM payments resetting upwards.

The checks will be nice, but I don’t really see it solving much.  It’s like a bar offering one on the house at last call.  Everyone’s happy for another 20 minutes, and then people get to stagger home and wake up the next morning, hung over, to face the stress and the weight of payments that remained in the background while they were forgetting about life for a while.

If you get one, let me offer a suggestion:  Assuming you don’t need to spend it on necessities, rather than blow it now, save it and wait for an opportunity to buy something at a crazy discount from someone who really needs to sell it.  There will be lots of opportunities for folks who have a little cash on hand to help someone else out of their problems by buying up their assets at fire-sale.

John Wedding

Husband. Father. Web publisher. Musician. John has blogged at Mighty Bargain Hunter since 2005, helping people to recognize the good deals in life.

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  1. I sincerely hope that this "spending package" doesn't go through. A lot of money was wasted because one group of people was looking to score a quick buck by lending money to people who bought houses they could not afford. While the market was going up, they all thought of themselves as geniuses, but now they're all crying victim. I really don't have much sympathy and bailing them out won't teach anyone anything. What we have is an overcapacity of housing. Large houses don't make anyone rich. They only make us spend even more money on unproductive assets. What is needed to save the budget deficits is not more spending. It is more savings. Savings lead to investments and investments lead to higher productivity that is sorely needed to pay off this huge debt that has been incurred by living beyond our collective means for far too long.

  2. I agree — I am also hoping that this thing doesn't even leave the ground. Beyond the fact that this has to come from SOMEWHERE, and that where means worsening the long-term national debt situation, I'm opposed to this because it represents so much of what is wrong in this situation.

    The guys pulling the shots are counting on us to spend these checks. Thatisall we are to them — a statistic that pays our taxes when they tell us to, and spends like fiends because they want us to. They have manipulated the system to the point where the strength of the economy is dependent on us mindlessly consuming ourselves to death.

    Let's not give them the satisfaction!

    The real answer to this problem is to revitalize job and economic breadth in this country — including building up a manufacturing base again as well as returning services jobs that have been shipped overseas. We need wages to start rising again. And we need personal savings to rise as well as personal debt falling.

  3. Remember, that in 2001, that "rebate" check you got was then deducted from your fed tax refund in 2002. It is your money and nothing more – they'd likely just be giving you an advance on something you'd see the following spring. PLEASE don't be fooled by this.

  4. If we were eligible, I'd definitely save ours too. Not quite the economic stimulus they're looking for, but if I invest it then I suppose that helps the economy in its own way.

  5. People love to spend that tax check in the long run and I don't know about your but the stores around me always offer some sort of incentive if you cash or use your tax money there.

  6. Thanks for your comments everyone!

    ERE: I agree, but it's likely that something will go through. There are too many potential winners among the people making the rules. We'll all pay for it, but the bargains will be that much better later.

    db: Right, it seems like we make less in this country.

    Sue: Really? I recall something to the effect that I didn't need to declare that 2001 check as income or handle it on my taxes in any way. It was just a gift from Uncle Sam. (I think it was 2001.)

    Mrs Micah: Right. They're looking for consumer spending.

    Tom: Ha, didn't think of that. It's good marketing nonetheless.

  7. You comparing the $$ to the bar offering one on the house at last call was BRILLIANT! That is a perfect analogy- well done!

  8. I hate to think of the national debt situation getting worse, but man, I hope it goes through–I could really use the money this year!

    I won't be spending it, or at least not much of it. I have to move on rather short notice, and my emergency fund is taking a rather large hit. I also expect to owe taxes, so this rebate would mean I either don't have to pay (and so can use the money I set aside to defray moving costs) or will even get money back, which I can use to start building my emergency fund back up to six months.

  9. IF i get one & IF the check clears (this is the gov't) I will using mine to feed the ER fund at ING.

  10. I like online shopping as it saves time & money Recently I found SmartBargains Reward Codes store on Couponalbum.com which provides all fresh online discounted coupons, coupon codes & deals..!!

  11. I wish I could save it. It doesn't solve all the problems, but could be of help to a students like me .

  12. I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!

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