What should we really do with a tax rebate check?
Washington is at it again.
Provided the Senate doesn't add something President Bush doesn't like, we can expect tax rebate checks in May.
Worried that the economy may be headed into a recession, House Speaker Nancy Pelosi, Republican leader John Boehner and Treasury Secretary Henry Paulson hammered out a deal that they hope will pump about $150 billion into the economy.
Under the agreement, individual taxpayers would get up to $600 in rebates, working couples $1,200 and $300 per child.
Thanks to the Democrats holding out, an additional 35 million families that make at least $3,000 but don't pay any taxes will get $300 as well.
The payments will be phased out on a sliding scale for those who make from $75,000 to $150,000.
Forget, for now, that Washington is trying to curry our favor using our own money, or that they want us to spend that money to improve an economy they have mismanaged.
What should we really do with the money?
Consider these facts from Bankrate.com:
* Some 40 percent of American families annually spend more than they earn.
* The average American household credit card debt is $8,400 -- $9,205 if it has one or more cards.
* The typical American family today pays about $1,200 annual in credit card interest.
* The typical credit card purchase ends up costing you 112 percent more than if you used cash, and if it's in a fast-food restaurant, you probably spend 50 percent more than you would have with cash.
* The personal savings rate in the United States dropped from 8 percent in the 1980s to under 2 percent since 2000.
* The average personal wealth of a 50-year-old American, including home equity, is less than $40,000.
* One out of every 73 U.S. households filed for bankruptcy in 2003.
What will you do with your rebate check?
If you're like most of us, spending it on a new purchase is the last thing you should do.