GrowYourFunds RSS readers know by now that the real passion of mine is the stock market, but today I wanted to step back and look at a personal finance issue. I wanted to follow up yesterday's post regarding which companies are poised to benefit from the spending of economic stimulus checks by taking a look at what you should do with your tax rebate/economic stimulus check.
The most obvious answer to this question is that it depends on your situation, but there are some steps you can take a look at to decide which category you might fit in.
The first thing you should do is look at any debt you may have. If you have any kind of debt you must pay it off first. Many Americans have credit card debt and they are being eaten alive by it. The average rate Americans are paying on that debt is about 13%, which means if you have $1,000 of debt you are paying $130 a year on that debt. You simply cannot afford to pay that high of an interest rate if you can avoid it at all. If you have debt then you need to pay it off before anything else, period.
If you are near retirement and have little debt you are a good candidate for investing the economic stimulus check into a certificate of deposit. While cd rates are much lower than they were a couple years ago, they are starting to creep back higher. If you shop around at local banks you may be able to find a 3.5% or 4% one year cd. CD's are great investments for capital preservation as well as some guaranteed return on investment.
If you are younger and have no debt then you are more of a candidate for a little bit more aggressive of an investment in something like a mutual fund or even individual stocks. Mutual funds are a great way to play the market if you have smaller amounts of money to invest. For those who want to go the individual stock route make sure you diversify your portfolio, but don't spread yourself too thin.
While yesterday's post outlines what many Americans will be using their economic stimulus check for, today's post is to address what you really should be doing with that money. While I love a big screen tv or iPhone just as much as anyone else, I guarantee you that you would be far better off in the long run paying off debt or investing that money. Use your money wisely and grow your funds!
» How I spent my stimulus website gains popularity from GrowYourFunds
One of the most interesting websites I have seen that has been recently created is howispentmystimulus. The site is dedicated to collecting stories from people who have received economic stimulus checks on exactly how they used that money. How does... [Read More]
Tracked on: July 12, 2008 8:32 PM | Permalink to Trackback