Tennessee: Nonprofit urges saving not spending stimulus funds

Rather than springing for that high-definition, flat-panel TV or a soothing, weeklong trip to the beach, you might want to take that IRS stimulus check and put in the bank, some financial advisers say.

“It’s a great time to stock that money away and invest it or put it in a savings account for a rainy day,” said Holly Ashley, assistant director of development for the Partnership for Families, Children and Adults. “What we’re hoping that people will do is take a real hard look at their current finances and make an informed decision on how to best use the tax rebate for their specific situation.”

Congress in February approved a plan to send rebates of $600 to most single tax filers and $1,200 to most joint filers, plus $300 for each dependent child under 17. Other low-income filers will receive $300 payments.

The Internal Revenue Service has been sending payments to tax filers since late April and plans to finish sending them out by mid-July, according to its Web site. Dan Boone, a Tennessee spokesman for the IRS, said the payments have been going smoothly so far.

Congressional leaders and President Bush said they hoped recipients would spend that money as a means of boosting the economy.

Most plan to just that, poll data show.

According to a poll of 1,235 adults conducted by AARP, only 4 percent of adults younger than 50 and 18 percent of those older than 50 plan to save their full stimulus payment. Most said they probably would spend the money on personal necessities and bills.

Less than half of the respondents said they would spend the money on a vacation, dining out or luxury goods.

Andrew DeSouza, a spokesman for the U.S. Department of the Treasury, said the department is not making any suggestions as to how people should use their money.

“It’s their money to do as they please,” he said.

In remarks earlier this month about the stimulus, available on the department’s Web site, Treasury Secretary Henry Paulson listed several ways taxpayers could use the money but didn’t mention saving it.

“Seniors, veterans, moms, dads and grandparents can each put their payments toward what is important to them — whether it’s gas for a summer vacation, clothes for back to school, or a trip to see the grandkids,” he said.

People with a considerable amount of debt should look at using their stimulus money to pay off their creditors, Ms. Ashley said.

“Those high interest rates are just going to keep adding up and keep adding up,” she said. “This money, which was completely unexpected, is a great way to pay off some of that debt.”

Those with no debt but little or no savings should find ways to invest their money, Ms. Ashley said.

Taxpayers who are unsure of their financial situations can visit the Partnership’s Consumer Credit Counseling Services, she said.