Monday, April 14, 2008

Pay Down Debt With Tax Rebate

A week or so ago I posted a poll asking people what their plans are for the tax rebate coming in May (if you're eligible). Thirteen responses and 74% said they'd pay down personal debt. Two said they'd save it and one person said they're going to buy something. I thought those were results were pretty encouraging.

I love straight talk. Wisdom that lovingly smacks me right between the eyes. I need it. I came across an article the other day that I classify as straight talk on what one should do with their tax rebate.

Using rebate to pay down debt might rescue economy.

It starts out:

If you're like me, you might be a little confused about what we should do to jump-start a dangerously weak economy.

Here's what the federal government suggests: Spend!

But this is what many personal financial experts and economists recommend: Save!

There are always choices:

A White House fact sheet says the checks are designed to "stimulate consumer spending."

But some economists say the best thing we can do is to save those rebate checks and pay down debt.

"We are spending like there's no tomorrow," Michigan State University economist Charles Ballard told me.

A sociological phenomenon?

"It's almost beyond economics," Ballard said of our spending habit.

"It's more like a sociological phenomenon in which we have this desperate desire to consume, consume, consume."

Ballard says we need a more balanced mix of spending and saving so we don't end up owing our financial souls to our Chinese financiers.

Oh it is so much more than that!!!

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