Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective
06.26.2008
The Main Monkey Business

The Main Monkey Business

Creative Commons License photo figure credit: ezola

Last week ScrapperMom and I received our “Economic Stimulus Package” via Direct Deposit. Since there are the two of us plus one dependent, our package totaled $1500. For now, this money will sit in our high interest savings account. With all of the bad economic news lately, we feel a bit more secure with more of a buffer — just in case. (I would like to thank our children and grand-children for giving us this money — you guys really shouldn’t have — really)

If you haven’t received your stimulus check or deposit yet, you can check the schedule at the Economic Stimulus Payments Information Center at the IRS website.

Even though we will be squirreling away our refund for the time being, that doesn’t mean that we won’t still be able to take advantage of some really great additional incentives offered by a number of retailers, including grocery stores. A number of stores have made the offer to increase your stimulus check by 10% if you use it to shop at those stores.

Here’s a list of stores participating:

Each of these stores has a different policy on the increment value of your check that you can redeem, but they all offer to stretch your check an additional 10%. Now I certainly don’t encourage you to spend at these stores just to get the extra 10%, but if you were going to shop there anyway, or needed something that one of these stores offers, then by all means, stretch away.

If, like us, you received your stimulus payment by Direct Deposit, you may still be able to receive the 10% by showing proof of your receipt of the stimulus in the form of a bank statement. This article from the Boston Globe states explicitly that Shaws will allow you to redeem your 10% in this way.

In our case, we will be getting triple credit by using the Stimulus like this:

  1. Purchase $1320 worth of gift cards from Shaws (which is where ScrapperMom typically does our grocery shopping) for a cost of $1200.
  2. Use our Chase Freedom card, which offers 3% cash back on grocery purchases to buy the gift card, to reduce the cost of the gift card to $1164.
  3. Keep the $1500 Stimulus in our high interest savings account until September when our credit card bill for the year is due (point 2 in this article).

And actually, since we would be spending money at Shaw’s anyway, the final payment for the gift cards will come out of the grocery line item for our spending plan (aka budget) for the next 3-4 months anyway, allowing the Stimulus to continue sitting in our high interest savings account, earning away.

Here are some other ideas for what to do with your Stimulus:

  • Start or augment your emergency fund
  • Pay down high interest debt like credit cards or car loans
  • Fund your Roth IRA
  • Pay down low interest debt like student loans
  • Fund your kids’ 529 college savings plan
  • Donate it to your favorite charity or cause

Have you received your stimulus check yet? How did or do you plan to spend it? Let’s hear it in the comments section!

If you liked this article, you may be interested in seeing some related articles:


10 Responses to “Economic Stimulus Received”


  1. peder Says:

    we will see how well the economic stimulus package helps us later in the year. while we are getting a boost in spending confidence now, what will happen later in the year when the stimulus money is all gone.

    i have been blogging about this for the past month and i will continue my year long mission to blog about the economic stimulus package. 600 dollars divided by 365 days is a buck64aday.

    i am the help the goverment never though they would get. I am spendning my stimulus a buck64aday.

    read my story

    http://www.buck64aday.blogspot.com


  2. Freshman Fund Says:

    Thanks for authoring such a useful guide to financial management and planning on Don’t Feed the Alligators.

    As someone who’s interested in saving for college, I wanted to introduce you to Freshman Fund, it’s a registry for 529 college savings plans.

    Parents create an account, register their child(ren)’s 529 college funds, and send a link to family and friends. Any contributions they receive go directly into their college fund(s). It’s a great alternative (or supplement) to the usual birthday/holiday gifts.

    I’m one of the company’s founders. We are reaching out to parent bloggers for feedback and to find folks who are interested in sharing our service with their readers.

    We’d be more than pleased to have you take a look at the site, and if you have any questions or feedback, please don’t hesitate to contact me.

    Sincerely,
    Jeff Frese


  3. Rachel Says:

    Sigh… I plan to do nothing with it, because I didn’t get one. It’s remarkably easy to earn too much to qualify. :-( Even if I had gotten it, I wouldn’t have been able to contribute to a Roth IRA for approximately the same reasons. It’s all part of the usual “being punished for success” thing that the tax code seems built around… as our earnings increase, every damn year it seems like there’s some nice thing I don’t qualify for anymore. And yes, it does annoy me.

    Ah, well, enjoy this kind of thing while you can get it.


  4. fivecentnickel.com Says:

    Dang, I want free money, too! We would’ve received a nice big check, but we don’t qualify since we make too much. Poor us, I know. Still, I can’t help be feel a bit unstimulated.


  5. MITBeta Says:

    Thanks for the comments, everyone. It would be interesting to find out what Nickel’s and Rachel’s effective tax rates were. Warren Buffet only paid 17.7%. I know that psychologically it’s nice to get a big fat check in the mail, but the “haves” probably already realize that they’re getting their stimulus check and more in taxes not paid rather than taxes returned.


  6. fivecentnickel.com Says:

    “The “haves” probably already realize that they’re getting their stimulus check and more in taxes not paid rather than taxes returned.

    Not sure what you mean by this. We actually got hit by them AMT, so we certainly paid our fair share (and then some). Are you talking as a percentage of total income, or AGI? I think I need to talk to Warren Buffett’s accountant.


  7. Rachel Says:

    Similar to what fivecentnickel said — if you specify what ratio you mean by “effective tax rate” I could dig something up. But, as a married couple who earn approximately equal salaries and have no children, we get slammed. Like I said, there are a lot of nice tax breaks that we no longer qualify for… the only things we’re not taxed on are 401(k) and the mortgage interest. Percentagewise, those are less of a break every year.

    I think that to get Buffett-style tax breaks one has to incorporate, stop earning a salary and instead get money from long-term capital gains, etc. And anyway, IIRC, a married couple only had to be earning $150K to be disqualified. Two people with $75K jobs? Not poor, in this area, but not superstars either.


  8. MITBeta Says:

    Clearly the amount that one is taxed is evaluated by one’s own perspective on things. My perspective is that we make in the area of what Rachel describes as “Not poor, but not Superstars”, and yet we paid an effective rate of 12.85% for 2007 — without qualifying for a number of tax benefits having to do with children, retirement funds, student loans, passive income, etc. So my perspective is that since we are well within the top 1/8 of household income, and we pay nowhere near our marginal rate, that many others in this income range pay similar effective rates. The Buffet challenge story that I posted seems to fit my perspective on this issue, as does a lot of other anecdotal evidence. I apologize, however, for not being able to back up this (perhaps untrue) perspective with statistical evidence.

    Nickel’s situation in being hit by the Alternative Minimum Tax is a different story altogether. For the AMT to hit such a “regular” person as Nickel indicates that something is clearly broken in our tax system (as if that wasn’t obvious…).


  9. Michelle Says:

    Well, I have nothing lofty to say.

    Just that I’m pissed that we have not yet received our check.

    We got “the letter” and it was due to be mailed or received by 6/27 (not clear which in the wording of the letter) and it never came. I suspect it’s due to the fact that we have recently moved and perhaps they will not forward.

    Bummer is, when I call the IRS they give me an automated message that they cannot and will not help me until 7/25, and explicitly state not to call back until then.

    So, I’m pretty bummed that I may not be able to take advantage of the Shaw’s offer as it is scheduled to run through 7/31.

    Thanks for the information on it, though. We are now shopping there, and I would have done it, except we seem to be the unlucky ones on that score.


  10. MITBeta Says:

    Michelle:

    We took advantage of the Shaw’s offer this week. ScrapperMom says that they barely looked at her bank statement indicating the direct deposit of our stimulus. You may actually be able to go in and say that your stimulus was direct deposited and actually be able to buy gift cards without having to show any proof at all. Good luck.


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