Stimulus Package Checks

What are you planning to do with the check that the government is sending you in a few months? You know -- the one where the government is going to borrow the money from tomorrow for us to spend today. I was talking to a friend the other day about this and she related to me an interesting story. It seems that another friend of ours is planning to use the money to buy a playground/swingset contraption for her backyard. Apparently, though, her husband wanted to save the money. She, however, told him that the government is sending us these checks to stimulate the economy and that we are supposed to SPEND them, not SAVE them. So she says she's giving her kids a backyard playground "courtesy of President Bush".

Look...I have no problem with them spending the money any way they want. That's their business as a family, not mine. But I have a few thoughts about this. First, the playground isn't "courtesy of President Bush". It's courtesy of all of us and our tax dollars. More accurately it's courtesy of the tax dollars of our children in the future since this money is being borrowed in order to send to all of us. Second, if this family (or any family for that matter) has any sort of consumer debt then this money should be used to pay it off or at least pay it down. That would be a lot better for an individual family than buying a playground for the kids. Third, saving the money in the bank should help to stimulate the economy because then the bank will have more money to lend to other people and will make more money off the interest. In the long run that will help the stock market and our overall economy. (Of course I'm against most forms of borrowing money with the exception of a mortgage but that's a discussion for another day.)

We are planning to use the money to start a small home business. I'll write more about it later in the week when the kids aren't clamoring for my attention. :) But we feel comfortable spending the money in this way because we have no debt except for our mortgage and have an emergency fund in the bank for a rainy day.

Along those lines, let me share with you Dave Ramsey's "baby steps". Maybe you could use these as a guide to help you decide what is best to do with this windfall of money.

1. Set aside a $1000 emergency fund.
   
2. Pay off all debt (except the mortgage) using the debt snowball.
3. Set aside 3 to 6 months of expenses into an emergency fund.
4. Invest 15% of household income into ROTH IRAs and pre-tax retirement.
5. Set up college funding for your children.
6. Pay off the mortgage early.
7. Build wealth and give!

I'll write a post in a few days about how we are working on these steps ourselves. Hopefully it will inspire you to start as well. It's not easy, but remember (in the words of Dave Ramsey) -- DEBT IS DUMB, CASH IS KING, AND THE PAID OFF HOME MORTGAGE HAS TAKEN THE PLACE OF THE BMW AS THE STATUS SYMBOL OF CHOICE.