IRS Economic Stimulus Payment Notices in the Mail

By Staff

In the next week or so taxpayers should start seeing notices from the IRS in their mailbox. IRS notices have a tendency to cause panic in the hearts of their recipients, but not to worry. The notices are simply a “friendly reminder” from the IRS that this year’s economic stimulus payment eligibility is based on your 2007 tax filing. Those of you who delay filing for the 2007 tax year will likely see a delay in the first round of rebate checks, which should start rolling out in May.

The subject of what to do with these tax rebates has been written about in the personal finance community ad nauseam. So instead of piling on, I thought I would share what we plan to do with our tax rebate. According to most estimates we should receive $1,800 – $600 for me and my wife, and $300 for each child. Initially, I planned to use the entire $1,800 to pay down debt, but things have changed over the last couple months.

I desperately needed new tires on my old beater because steel thread was showing through and a blow out was probably imminent. We used a sears coupon code which saved us some money but it still cost quite a bit. Our emergency fund took a hit after finding the truck also needed new ball bearings and an idler arm. We’ll use the first $600 to replenish the emergency fund from the cost of repairs, labor and new tires.

My wife has been diagnosed with a problem with her knees, and I’ve got a bad ankle. Both our doctors have recommended a stationary bike to rehab our knees/ankle, respectively, and as a strategy for me to drop some weight. Jogging, and even long-distance walking, is out because I can’t take the pavement pounding. We’re currently looking at picking up a used recumbent bike in good condition from Craigslist or local advertisement. Prices vary, but we’ve set aside a couple hundred dollars from our refund for this purpose.

With the remaining $1,000 or so we plan to beef up our emergency fund and pay down debt. We plan a 50/50 split, putting $500 towards both efforts. I’ve always thought the $1,000 baby emergency fund suggested by Dave Ramsey was a bit anemic, considering larger repairs or replacement appliances can easily top that amount. Bumping up to $1,500 makes me feel a bit more comfortable and motivates me to really stretch to make large debt payments each month.

Have you locked down your plans for the tax rebate?