The Federal Stimulus Package and some things you can do with the money

Now that the Federal Stimulus Package is slated for passage, what are you going to do with all your new found wealth? While I think it is a waste of money, the politicians need to seem like they are doing something, I guess. With the huge deficit that the current administration had saddled us the tax payer with, a bit more debt is not needed. The current state of presidential affairs, while different because the offending politician, George Bush, isn’t running, reminds me of the saying “to the victor goes the spoils.” Whoever is elected will have a debt deficit mess of titanic proportions. That being coupled with a still unsolved health care issue and a messy war to wind down, I wish our next president well.

 So on a more positive note, what can you do with you new found money? Some ideas below might be worth considering.

1. Give the money to charity.

   While this may seem contrary, most poor people are far worse off than the average person in a recession. Government spending programs are based upon tax revenues and funds from the federal government. When the government is intent on reducing costs, programs that do not contribute, but cost, are on the cutting board for reduced funding. Think locally for your community on how you can best. Some places here in Santa Cruz,California, might be GreyBears for seniors, Goodwill, or Second Harvest Food Bank.

2. Add to your 401K or retirement plan.

   Some people did not fully fund their retirement plans and can still add to them this year for 2007. Contact your tax preparer or review some retirement tax information on what is appropriate for your situation.

3. Build a emergency fund.

   Many suggest that you have a rainy day fund of 6 months. Start a savings plan with these proceeds, and while you are at have the bank do automatic withdrawals to contribute to this. Use it for emergencies only. You never know when you might get hit with an accident, job loss, or health problem unexpectedly. Look into putting the savings into a money market account, if the fees aren’t bad as the interest rates are much better than ordinary savings.

4. Cut your debts.

   Pay down your credit cards, highest interest payment ones first.Consider doing a refinance on your home, if you values have not been dramatically reduced due to the housing decline. As realtors, we had to work hard to get the provision into the stimulus package for the higher mortgage amount being raised to $729,000 so the conforming interest rates apply. This alone should save hundreds of dollars for California, Florida, and New York residents.

So there you have it, some positive ideas on how to put your money to work in an effective way. Save and invest, don’t spend it. If you want to buy a home in the Santa Cruz area, there are some great values, and now is an excellent time to do that.

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