What does the government do when the economy slows down during an election year? Give money back to the hard working people of the country. Car Loans are not the only thing we could think of to spend the money on. With only a couple of weeks or so until the money starts going out, many people have already started to think about what they will do with the money. The staff at WashingtonAutoCredit.com has outlined some great ways you can spend your “free money”.
The first step is to figure out how much money you can expect.
The IRS has created this handy payment calculator. We *think* we figured it out, for most people. An easier way to estimate your stimulus check is to figure the number of wage earners (1 if filing individually, and 2 if filing jointly) and multiply that number by $600. Add $300 for each dependent (child) and that is the total you *may* receive. ****SEE DISCLAIMER BELOW****
So a family of 4 with 2 kids and 2 working adults could possibly see a check of $1800…if our calculation is correct. That much money could be used for lost things with short term benefits or long term benefits. You could pay down your credit card balances. You could contribute money to your IRA. You could buy that big TV you have been looking at. The possibilities are endless.
More and more, we have been hearing people say they want to use that money to buy a new car. Many of our customers are using this stimulus injection as a second tax refund and plan on spending it the same way. Wouldn’t it be better to actually use the money toward something with more long lasting benefits? If you have bad credit, and you need the extra money to get approved for a loan to rebuild your credit, that could make sense. However, if you are just using the money to get a slightly lower car payment…don’t do it. In Washington, we find (on average) that every $500 down affects your car payment by about $10 per month. Obviously the term and interest rate can make that number higher or lower, but $10 is a decent round number.
Why blow all of your “free money” on an auto loan when it has such a small affect on the monthly payment amount? We highly recommend using the stimulus money to help with your future. That is why we came up with our top five uses of your stimulus money.
5. Pay off old bills. - There is no time like the present to pay off old collections, medical bills, credit cards and other debts.
4. Donate to Charity. - Karma can be a good thing. Giving the money to a deserving charity can be very rewarding.
3. Home Improvement. - If you own your own home, spending a little time in money in certain areas of your house can increase your homes value, and make the place more enjoyable to live in.
2. Fund your IRA. - The limit on IRA contributions went up to $5000 from $4000 this year. Might as well start contributing now.
1. Vacation. - Okay, so there are not any tangible long term effects. However, a vacation can help you relax and focus. Both of which can help you do your job better, make more money, and contribute to your bottom line.
***DISCLAIMER - The writer of this blog is in no way affiliated with the IRS and their interpretation is not a representation of the actual amount (if any) you will receive. This estimate method may be wrong. The only way to get a true estimate of your check is to use the IRS calculator.