What can you do with $13 extra a week?
Photo credit:
Flickr / Lisa Brewster On Friday the 13th of February both the House and the Senate passed a new $789 billion stimulus package as a continuation of the efforts by the United States Government to jumpstart the economy. A significant portion of the package gives a tax cut of $400 to each individual worker and $800 to a couple starting in June 2009. This works out to a paltry $13 per week for individuals making $75,000 or under per year and couples making $150,000 or under per year. How will you stimulate the economy with $13 a week?
When the Bush administration gave out a $600 stimulus last year, Michelle Obama said that it "doesn't pay down every bill every month", and that "it may even feel good that first month when you get that check. And then you go out and you buy a pair of earrings". So I guess if the First Lady qualified for this tax cut she could buy about 24 pairs of $13 earrings this year.
Personally, I would apply the extra money towards my mortgage since my mortgage is fairly new and any added principal cuts down future interest significantly, but this is not the right thing to do for everyone. For those with high interest credit card debt this money is probably best applied there. However, paying off debt does not "stimulate" the economy.
In 2010, the stimulus starts in the beginning of the year so you will be stimulated by approximately an extra $7.70 a week. Eventually all of this money has to be paid back by the U.S. Government to its bond holders, and the U.S. Government's source of revenue is its tax payers. So the $7.70 a week I am getting may equate to hundreds to thousands of extra taxes in the future. So perhaps the best thing to do is to invest this extra money now to pay for taxes in the future?
As a final thought, I just turned in a bunch of cans and bottles at the recycling center and got $8.57 and then I bought two pounds of potato salad at the supermarket next door and still had some money left over. I am sure a lot of people are able to turn in enough cans per week to make $7.70 to $13 so perhaps a more green and less debt-laden plan is to encourage people to recycle? What do you think?
Tagged: Personal Finance, Consumer Affairs, Credit Cards, Debt Management, Taxes, debt, dumb, stimulus
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$13 a week does little to stimulate my local economy. As long as the gas prices continue to drop, this will leave my budget with a little more breathing room. If anything, I'll use it to pad my rainy day fund or take your suggestion of putting towards my mortgage payment.
I hate the idea of the government giving away my money in order to have me spend it back into the system. If it didn't work in May, it sure won't help when 3 million people have lost their jobs and can use it to keep themselves going.
whether it's in the form of a tax break or a rebate, give money to us consumers and we mostly spend it on imported junk at Target and Walmart, thereby transferring money from government coffers into the pockets of the rich owners of these chains.
that's why, although i don't think the infrastructure-building parts of the stimulus plan will work to fix the economy, i like them better. at least we're getting something for our money, and in many cases it's work that has been sorely overdue from years of neglect.
except for any such money that goes to Chicago. That'll just go into the pockets of Mayor Daley's cronies. Sigh.
$13 a week is about $52 a month. For people in debt, this makes a sizeable extra payment on a credit card and helps you pay it off faster. Once paid off, you'll have more money to spend because you have less money tied up in debt repayments.
Tax breaks do little to stimulate the economy, especially giving tax cuts to people who are already rich, they just keep it --... it doesn't work, so what do you get when that's a policy for eight years? If you haven't figured it out yet, it will soon become painfully clear... the real problem as demonstrated by a few responses above is people don't understand how when spending occurs in the right areas, it stimulates the economy-- Ignorance gets you responses like "we mostly spend it on imported junk at Target and Walmart, thereby transferring money from government coffers into the pockets of the rich owners of these chains."So what, if people go to Target and Walmart and spend their extra money?
What are you doing when you buy at Target and Walmart, other than buying foreign made goods? You might be adding an extra shift for the lowly Wal-mart check out girl, you're increasing traffic in the store, so maybe the floors need to be cleaned an extra day a week, so the outsourced cleaning crew gets a bit more business... the distribution routes(i.e. truckers. loaders, etc) have more liquidity, they pick up a couple of extra loads -- and what does that do, those people now have more money to buy the kids some clothes, maybe go to a movie, buy more food, go out to eat... etc, etc, etc - it's a huge snowball rolling down a hill, if it works correctly --
So don't be so short sighted on what spending can do and why the government needs to pump copious amounts of it into the economy, stop trying to micro manage, just as long as people spending forces the next guy to spend so that they can continue to make money, it will work ... and frankly if that means lining the pockets of wealthy interest, than so be it, we can worry about that later -- nothings moving, everyone is holding on for dear life to what they have, because we think once it goes... it's gone forever. The only worry is inflation, which is a problem because we don't manufacture goods like we once did...
Well, I for one... say spend away, I hope it works, or it's gonna get really ugly in the next couple of years.
Didn't we do a lot of spending already in the last few years? That's how most people got into a bad financial situation. The economy is in a very bad state so I do not think that more spending will "stimulate" it.
It's a myth that the Bush tax rebates didn't work. They worked just fine. We were in a recession in 2000 and then when 9/11 happened the economy stumbled. It was a rebate, meaning, our tax money was given back. We had a booming economy for about 5 years; but bubbles burst. If you paid more taxes (the top 5% of earners pay most of our taxes, low income people pay nothing in taxes, in fact, they are given our tax money through EITC) you got more back. See how that works? That's how the myth of tax cuts for rich became a mantra. Then people started spending and investing again. What brought things to a halt was our government's constant interference in the housing market. Like the bad peanuts from one company, the toxic paper affected us all. Just like the FDA wasn't doing its inspection job, so our Congress wasn't doing its oversite job.
Not only is this blatantly false it has nothing to do with the extra payroll money average people will be seeing. An extra $50+ per month is nothing to sneeze at for the average household. People are constantly told to cut an expense like their phone or cable TV. Ironically, the cost of those cuts is about $50 a month. So that small amount of money matters. It matters more what you do with it. If you use it to do something that further improves your bottom line like putting it in savings or using it to save money on a required expense you just improved your situation two fold.
I want to see things that directly help regular people. The ultra rich don't need our help.
Please tell me more about these bonds! :) Awhile ago in Ireland we had something called the SSIA which was basicly a saving scheme invented to get the government more money and man did it work. They got a ton of money they needed and at the end everyone who used it got an extra 1/4 of what they invested. For every four euro's you put in you get 1 euro back.
It made people save money so the government had money to spend and when they got the repayment they just spent it on big stuff!
Hi Trenchspike,
The bonds the US sell right now have very low yields. It's nowhere as good as the 25% return you describe. The ten year treasury has a yield of around 2.9% now.
I haven't heard anything regarding how self-employed folks will be getting our $13 dollars. I'm assuming it's like any other pre-paid tax cut, where I'd get it at the end when I file. Regardless, I'll be using mine to help offset the SE tax that my non-existant employer won't be paying for me. :)
Linsey Knerl
For anybody who does not absolutely need(/want) the (paltry) $13/week tax break, consider a worthy charity. Your generosity would be very much appreciated.
Wow, that $13 a week really goes a LONG way toward making up for the job we lost in July and haven't been able to replace!
not.
The funny thing is that the unemployed will receive much more from this stimulus package. I wrote a rundown here:
http://www.ineedajobnow.net/what-the-stimulus-package-means-for-the-unem...
I think the future is going to be more blissful than most imagine. Why do you think the people in power don't care about chopping down every rain forest, polluting the air, killing the Earth and its environment. Perhaps they know something we don't? Perhaps they have technology that shows them something we can't invision?
As for me, I keep that to heart, I don't pay my bills. In fact I only pay on things that will last in the moment in order to have a functional life. I don't see how paying bills will matter in the end anyhow. Disconnect your phone, change your billing address and you never get hassle from those debt collectors. The money you so called borrowed was not there anyhow, it;s an illusion. You are paying them in interest on money that does not exist, how do you think they profit? It;s not by the interest alone, they are profiting because every interest you pay is full money in their pockets!
It covers four skinny vanilla lattes per week. Or two quick lunches out. For the month, my cable service, or cell phone service.
I have a job. If I wasn't working, I would be thinking more along the lines of it covering the food budget for one person. Or two doctors visits a month. Or most months gas bills, or insurance for my car.
Call me frugal, but I don't think those are insignificant.
The tax credits of $13 a week are a complete waste of money. If the $600 checks didn't stimulate the economy, this certainly won't.
A little more in every paycheck will help everyone in some way. I would certainly rather see a small amount of money staying in average people's pockets than another tax cut for the super rich.
Ours will just go into the ongoing pool of money used to pay expenses or pay down debts. If I was feeling highly organized I would divert that $13 to some sort of savings.
We average about $10-$20 a month in recycling income. Our garbage hauler has a program that weighs your recycling and you can use that for money off at certain stores or gift cards for stores or restaurants. Right now I am letting the points pile up and we will probably use that to obtain restaurant gift cards for an upcoming trip.
I've got to disagree with your statement that paying down debt doesn't help the economy. You're borrowing the money from someone, and paying that money back allows the bank to turn around and make more loans.
Same with savings - my savings account allows my bank to make loans to other homeowners, businesses, ect. While our economy runs on spending, we wouldn't have loans without savings and debt repayment.
We'll probably split the increase between prepaying the mortgage and retirement savings. Every little bit helps!
Well, I won't get it since I'm unemployed. Yes, there will be $25 extra in the unemployment check, but consider that it's less than half of what I was making to begin with, and now I have almost $600/month to pay for health insurance in addition to my usual monthly expenses. I won't get help with that, because I lost my job prior to September.
But let's imagine... say I was working and making enough to pay my bills, and say I plan to specifically use the $13/week (really maybe $8 after taxes) to stimulate the economy. It occurs to me that most of my normal purchases go to major corporations; the amount that reaches front-line American workers is only a trickle. Even so, it can fund that extra Wal-mart cashier's shift (as someone said above).
I often refuse to buy produce when it gets more expensive than meat. $3.00 a pound for tomatoes seems ridiculous. So I'd benefit myself by paying for good, locally grown tomatoes and other produce (and vote with my pursestrings against imported broccoli and other in-season vegetables and fruits).
I've long wanted to splurge on commissioning a set of artisan-crafted ceramic dishes.
I'm really tired of seeing all clothes, even underwear and socks, made with stretch fabric, so maybe I'd have someone sew me some good all-natural-fiber outfits.
I'm due for some major car maintenance.
I need dental work. The money wouldn't cover it, but it would help.
Maybe I'd buy some gift cards for the supermarket and donate those to food pantries or social service agencies to distribute. That way, people could really choose what they want and get non-food items like toilet paper and cleansers, too.
Its going to be invested along with the rest of my savings. Our nation's debt is astounding and one day we'll have to pay it back via inflation, taxes or the selling off of assets. Prepare for it.
What a load of donkey manure! This bill, the largest spending bill in the history of mankind, took more than 1100 pages. Not one - I'll repeat - not one legislator read the piece of junk. It won't accomplish anything except line the pockets of political donors and help the cause of future inflation. The American public - the world public at large - is ignorant of what will be happening in the near future.
If you doubt we are in trouble see what Rep Kanjorski, Democrat, said:
http://www.youtube.com/watch?v=_NMu1mFao3w
Rep. Paul Kanjorski of Pennsylvania explains what former Treasury Secretary Paulson and Fed Chairman Bernanke told congress during the September 2008 closed door session. During the first third of the video an enraged caller is ranting to Rep. Kanjorski about how wasteful the first $700 billion bailout was. The best part is 2 minutes and 15 seconds into the tape where Rep. Kanjorski reveals what Paulson and Bernanke told congress that shocked them into supporting the first $700 billion bailout.
On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two. Money was being removed electronically.
The Treasury tried to help, opened their window and pumped in $150 Billion but quickly realized they could not stem the tide. We were having an electronic run on the banks. So they decided to closed down the accounts.
Had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours. $5.5 Trillion would have been withdrawn and the entire economy of the United States would have collapsed, and within 24 hours the world economy would have collapsed.
This is not a joke.
Rent the movie 'Rollover', a film from 1981 to get a taste.
Everything will fall apart.
Nothing can stop this, so please, take steps to protect yourself and your families.
If the above didn't shake you up, read the following message from a respected financial guru:
Officially “Out Of Control”
Posted: Feb 14 2009 By: Jim Sinclair Post Edited: February 14, 2009 at 8:26 pm
Filed under: General Editorial
Dear Extended Family,
I sent you a certain few emails that I consider to be the most important communications issued in my career that started in 1958.
I am the son of what I know to have been the greatest Lone Wolf trader in Wall Street history ever, Bertram J. Seligman. He was a past master at his business and believed to be a market sensitive. I apprenticed to him, learned from him and inherited some of his ability, not all however.
From this background of experience understanding and sensitivity the following flows.
The emails of note:
1. Said, "This is it."
2. Said, "It is now."
This communication is to inform you as of 2/13/09, "It is totally out of control." There is no longer any means of reversal of the beginning of the final phase of the downward spiral now solidly set in motion.
For your sake, protect yourselves immediately.
Be prepared for disruptions in distribution common to hyperinflation.
1. You should have already distanced yourself from your financial agents. If you haven’t you are headed for significant displeasure and strain.
2. Make sure you stay three months ahead on necessary items that could experience distribution delays such as prescribed medicine and preferred foods.
3. Even though real estate is far from a buy, if you can afford a second home outside of major cities it would serve a good purpose.
4. Own gold.
5. Consider that good gold shares of non-US companies incorporated in a non-US country operating in third country, traded on multiple exchanges are a means of money expatriation legally and in broad daylight if required.
6. For currencies, all you can do is own a spread held by a true custodial ship wherever that might be.
Simply said, as of Friday February 13th, 2009 the situation is in confirmed "Out of Control" mode as this well engineered downward spiral enters into a terminal phase.
The motive was profit and degree of the disintegration caused in the pursuit of this goal was not anticipated.
The key event was when Lehman was flushed - all hell broke loose. The hell cannot be contained in any practical manner.
I seek nothing of you, but the protection of yourselves.
Respectfully yours,
Jim
Why don't you save the political diatribe for a political blog? Not to mention it is extremely long. The question of what to do with the extra money you now get to keep out of your check is a good one and doesn't warrant some of the political astro-turfing that is going on. We all get it, some people are mad about the change of political power in the US. Screaming at every opportunity is certainly not winning anyone over.
Groceries. Most of the food companies continue to have increased profits despite the recession due to price increases. Many items have increased 30-50% in last year, so even if further gouging slows down in 2009, $13 a week will easily disappear.
Something simple and productive people could do with that extra $13 a week. Use it to buy sales and loss leaders at the grocery store.
I frequently see some really great deals on those off weeks where fewer people are buying groceries. I have started setting a bit of extra grocery money aside to stock up on those deals. This over all lowers your grocery bill. With two caveats. It has to be something you will actually eat and something you can store or eat before it goes bad.
Another option is to use that money to buy up those super deals that show up at the grocery store. $1 a pound turkey breast, older bananas for 10 cents a pound and things like that. I have really been able to stretch our food budget when I can jump on things like this. Both of these mentioned I bought about half a grocery cart of the item and either made things that could be frozen or froze the items for later use.
This is a strategy that doubles the value. That extra money was used to save you even more on a mandatory expense.
If it's such a waste, why not find somebody who will appreciate the additional $13 and give it to them. A dollar spent in the economy in any form is still a dollar and returns likewise.
$13 per week is not very much, but I would not turn it down if someone was to give it to me, which apparently they are. I would guess this additional money would go toward groceries, or gas once those prices go back up, which I know they eventually will.
Just like the last stimulus check that I didn't get. Gee, sometimes it's really nice to be the "ultra rich" (not!)
an extra $52 a month is actually really helpful for me!
I liked what Siena had to say.
I just wonder . . . what would happen if we each took personal responsibility for using our $7.70/week to buy something locally produced($15.40/week for a two-adult household)?
After reading the expiration date on the organic milk I was buying for my preschooler, I switched to home delivery from a local dairy that runs its cattle on pasture and uses glass bottles. It's more pricey than the sale milk at the grocery and gas station, but shout-out tasty, and a great use for that stimulus money for people in my neighborhood. I've also discovered that there are two local coffee roasting companies, one of which supports coffee growers in Guatemala, which is the country where our son is born -- I'll need to talk to the resident coffee drinker (my husband) to find out how fast he goes through the stuff, but it might be that an extra buck or two a week would get him a higher quality product that also benefits the economies of two places we care about.
My husband is out of work & sometimes the global picture seems overwhelming. I'm just trying to think about whether there's anything we might be able to do do to help our neighborhoods / towns / communities out of the current economic malaise . . .
Anybody who feels the $13 a week is paltry can send theirs to me. Before taxes it comes to $56 and change a month. I could pay my water/sewer and trash bills with that.
During the Depression FDR reportedly said "If everyone bought 4 pairs of socks the economy would recover". Certainly not true but there is a kernal of an idea there: They say that consumers make up 75% of the economy. Let's demonstrate that power and link it to a national referendum. Example: If you support Obamas' efforts and have confidence in this country, this week go out and purchase 6 pairs of (American made) socks. Each week a different item, but all storable, necessary products. Each item a domesticaly produced item that employs American workers. People would love the idea of shopping as a patriotic statement. Vote with your purchasing power.
Somebody please take this idea and run with it!