NEW YORK—Wallets will be weighing heavier this week as the first round of rebate checks is distributed.
Between now and mid-July, over 130 million Americans will be receiving a portion of the $152 billion destined to be mailed into taxpayer homes as part of a broader $168 billion economic stimulus package signed by President Bush on February 13 to boost a receding economy. Taxpayers will be receiving anywhere from $300 to over $1,200 depending on finances and family size.
The influx of money, however, poses a serious question. What to do with all that cash?
For Mindi Cooper, a Houston teacher, the answer is similar to what millions nationwide will probably be doing: paying off debt.
An anticipated $1,500 in federal refunds is scheduled to arrive early May to her family of three. A large portion of it is slated to pay off the debt gathered on two credit cards and the remaining will go towards essentials such as gas and groceries.
"It's nice to know [the money] is coming," said Cooper. "You won't have to worry as much, at least for that month."
In the past six months she has felt the belt tighten on the family budget especially when paying at the pump. Although the average price per gallon of gas in Houston is 10 cents below the national average of $3.60 and even further below that of high-priced states like California and New York, the increased strain on her wallet is enough for Cooper to cut back on driving.
Cooper said warning signs of a receding economy have been popping up. In the past few months, she has seen over four homes foreclose not far from her own.
"It makes you a little scared that [homes] are foreclosing right down the street," said Cooper. "It makes you want to be sure you pay on time. But the [rebate checks] will be helping us to be able to budget better."
For Dawn Liska, a hefty share of the rebate will go towards home improvement. "We are allocating money to saving energy," said Lisa who plans on insulating the windows of her home in hopes of reducing her electric bill.
Christopher Fatheree of Houston is expecting a $1,200 check, but for a different kind of spending.
"I suppose if I get [the rebate money] I will buy a new computer," said Fatheree. "Maybe a laptop. I've been wanting a new laptop."
The expected spending spree triggered by the extra dollars hitting consumer pockets have also lit the hopes of retailers who in the past few months have seen a sharp drop in sales.
Eager to lure customers, large U.S retailers such as Sears and grocery chain Krogers will be offering gift cards with an added 10 percent bonus to customers who shop with rebate money. Home improvement retailer Home Depot plans to encourage consumers to spend rebate checks with promotions and discounts on energy efficient products.
For many, the rebate meant to stimulate the economy may instead go to stimulating their savings accounts.
"We are not worried about 'stimulating the economy,' we are worried about our future," said John Schultz, a physics teacher from Centralia, Wa.
His wife, Tammy Schultz, said, "We are going to take our stimulus check and put it into a 'Roth IRA,'" referring to a popular Individual Retirement Account allowed by the U.S. Internal Revenue Service.
"I'm going to put my stimulus check in the bank, keep it as a little nest egg," said Dr. Susan Lowery, a chiropractor from Tumwater, Wa.
Additional reporting by Reid Schram
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