Another Stimulus Check

You can tell it is an election year because there is talk of the government passing out another taxpayer-funded economic stimulus check.  I mentioned a few weeks ago the possibility of receiving a second stimulus check, and it appears from recent rumblings in Washington that the prediction may come true.  We used our payment to stimulate credit card companies, and add to our savings account, while others are now the proud owners of plasma televisions and iPhones.

Teaching a Man to Fish

A great article over at Moolanomy pointed out the similarities in giving additional stimulus checks and a famous Chinese proverb:

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

I agree with Pinyo’s sentiments, and would add that by distributing two stimulus checks in the same year we are setting a bad precedent for rough economic times in the future.  Imagine five years from now, after years of economic expansion, we hit another snag.  Maybe this time it is the demise of the student loan industry, or maybe credit card debt finally reaches such epic proportion that borrowers en masse begin to struggle to meet minimum payments.  Citizens will once again be clamoring for another stimulus check, citing 2008 as the year the “government” sent out two stimulus checks to “help the economy.”

Save One, Spend One

Full statistics are not yet available, but I would suspect a large percentage of households put the first economic stimulus check in savings accounts.  Many others probably used the check for debt repayment.  I personally find nothing unpatriotic about either one of these plans.  However, it was the hope of most politicians that recipients would take the checks and spend, spend, spend.  What they failed to count on was a majority of the citizenry is up to their eyeballs in debt, and without a dime in savings.

There were a few other factors that contributed to foiling politicians’ plans for increased consumer spending.  Rising gas and food prices ate up a large chunk of stimulus payments, reducing what people were willing to spend towards a television or new clothes.  The real estate debacle also spooked many homeowners, who decided to toss the check in their emergency fund as a hedge against future problems meeting their mortgage payments.

Perhaps a second stimulus payment would spur economic spending, but I’d rather “the invisible hand” allow this to happen naturally, and without the artificial inflation of disposable income from yet another economic stimulus check.

Comments

  1. Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime. Give a man back the fish he already caught, and he can take a breather.

  2. It would be pretty crazy to me if they dropped another check on tax payers. I would just throw it into my ING account and put it in my down payment fund, but it might make me reconsider buying some stocks that did well thanks to the last stimulus check that went out.

  3. while i thoroughly enjoyed getting my tax refund (my freelance income makes it difficult to accurately change my husband’s withholding so we’ve gotten refunds the last few years) and my stimulus check, both went directly into savings/emergency fund. we are working to pay off credit card debt, so if i got another check, that’s where it would go. and i would sure love another check…but i think it’s the wrong thing (for the government) to do.

  4. When will the American people realize that getting one of these checks is just like getting a new credit card. Aren’t we just borrowing from ourselves?!

  5. My first stimulus check was headed for the emergency fund, and ended up being quickly eaten by a medical test not covered by my insurance, an ac repair, and an electrical repair (all within 2 weeks– yay Murphy!).
    Do I think a second check is really a helpful idea? Like quite a few other people, my vote is no. It feeds the whole government-will-bail-me-out mentality– which I consider dangerous because it seems to discourage people from financial planning.
    But if the second check should show up… it’ll go into the emergency fund, right where the first one was headed.

  6. “However, it was the hope of most politicians that recipients would take the checks and spend, spend, spend.”

    Was it? Publicly, maybe. Surely recapitalization of the banking system was not unexpected or unintended?

  7. @Sean: I guess we’ll never know, but I’m sure the side effect of an increased money supply amongst the financial institutions caused a few smiles around Washington.

  8. I’d save the second one. I’d hoped to save the first one, but, depending on how you look at it, I guess I ended up spending it. (I had a couple of large expenses. I probably would have made them even without the check, but I like to consider them “discounted” by the check.)

  9. The state of the economy has definitely affected us as a family, so while I DO look forward to any extra money that would come our way, I also doubt that it’s a good long-term solution for our country. That being said, whatever we receive will probably go toward bills. We are funding a small business, and it’s really tough to make enough to live AND grow the business. But I’d rather have short-term pain than long-term pain, as far as the economy goes.

  10. We ended up saving the first one and I would imagine we would do the same with the second. I guess I am not doing what they hoped with it, but I would rather have the savings!!

  11. We’re following Dave Ramsey’s Total Money Makeover and already have an emergency fund – yahoo! If we received a second check it would go right to our student loan debt (since we have no cc debt).

  12. We are basically taking from ourselves. The government hasn’t changed their spending either. A stimulus check will only ultimately hurt our economy. What we should focus on are better spending practices and inflationary problems.

  13. For the most part, we put our first check ($1500) into savings. However, we have probably spend just as much on gas and food that would have gone into savings. We would probably also save any other stimulus checks.

  14. I used my first stimulus check to complete my 3 to 6 month emergency fund. I’d probably throw a second one into my savings for a newer vehicle.

    Like the others here, I question whether a second stimulus check is really fiscally responsible. I think this is a natural time of correction in the economy. It seems like there could be consequences later if we continue to overstimulate the economy.

  15. We spent the first one as part of acquiring a new Roof on our house.

    A second one would go to finish our full Emergency savings account, and any left over probably into a College savings account.

    But once the Emergency Savings is full, that will free up monthly income to spend (if we so choose).

    While I think it’s probably a bad idea for the gov’t to do this, I’m fine with them giving me some of my own money back. How about they just lower taxes and stop wasting money?

  16. yet another one?! This is definitely ridiculous. Washington is all about the quick fix right now and for some stupid reason, they think that giving us yet another check will fix all of our problems. I’m curious to know what the consensus would be in D.C. about these checks if it wasn’t an election year.

  17. Well, I wasn’t all that thrilled about the government doing the first one so I feel even less happy about a second one. Have all the first ones even finished going out yet? Anyway, we used our first one to finish our $1000 baby Emergency fund and put the rest towards debt. The second would probably be used the same way, especially since that baby EF has taken some serious hits this summer.

  18. Last time we bought the lovely macbook I’m typing on… if it happens again though, the $$ will definitely go towards debt repayment or savings.

  19. We’re in agreement with everyone else here, that the idea of a second stimulus check is ridiculous, and the check would simply be put into savings and forgotten.

  20. I think this reinforces the idea that the government is supposed to bail people out – BAD IDEA!!! The 1st one shouldn’t have happened.

    The second check, if received, will go exactly the same route the first one did – into savings. Period. Retirement is not that far away. If I had debt, I’d pay down debt, but I don’t, so into retirement savings it will go :)

  21. Spent on a medical test because of a $1,000 deductible. The next one would probably go towards the principle of my car payment.

    According to the Dallas News, May 19, 15,000 checks were deposited into the wrong bank accounts, and the checks were bearing another taxpayer’s social security number! Of course, this money has to be returned.

  22. I suppose what I do with it depends on the amount and timing! I’m sure that if it arrives on my doorstep in time for “black Friday” shopping, a bulk of it will go to that. But I would stick at least 25% into the ING account.

  23. I’m not a fan of another stimulus check either. I think there would be a minimal return for several years of payments. A better solution would be to create jobs or something more permanent.

  24. It seems to me that there are two ways to “create” money. The federal Reserve System can print more, and private financial institutions can offer loans (the money loaned is not actual money, as banks operate on a reserve principal that establishes a ratio or assets vs extended credit).

    So, If you are concerned that more money will devalue the dollar (as we all should be) you can counter act that to a limited extent by paying down debt.

    That said, of course paying down your debt will allow the banks to offer credit to another, less responsible, borrower. But, if the Fed issues it there isn’t much that we can do about it.

    I will pay down my student debt!

  25. First, any additional entitlement just makes the American dollar worth less! I hate the term “inflation”, because what we really experience is the dwindling value (purchasing power) of the dollar. Second, from first hand experience from a friend who owned pawn shops with a check cashing service: from the 3rd week of Jan until the end of March every year he earned a small fortune (more than I make in a year) just cashing the advance on the “earned income tax credit refund” for 2% of the face value.( He would cash 2 mil in this short period from a literal hole in the wall pawn shop!! Then most of these people would spend a major portion of their new found wealth buying every piece of jewelry, electronic items, etc. in sight with a large portion spent on Lottery Tickets. In 2-3 months, most of these purchases would be in hock for 25% of the purchase price with 300% interest with at least 50% of the loans forfeited!

  26. I took my daughter school shopping with the first check. Only to learn that the new school she now attends has a dress code. She has a few new pieces for her wardwrobe. With the second check it will go into the bank for an emergency fund

  27. god do i even remember what it was spent on. a little here a little there. Two kids who need things all the time. Its kind of bittersweet. Very helpful for a young married couple with 2 small children but seeing how it will only make us hurt in the long run makes no sense to me. Although…..will we be hurt in other ways anyways in the long run. Without the stimulous check seems like we are in trouble anyways. so why not give back a little when WERE SCREWED ANYWAYS!

  28. Do I think it’s the solution? No. Do I think it’s a potentially decent supplemental solution to hopefully something to come? Yes. What will people do with it? A couple thoughts…
    1) It’s a basic economic truth that when people (in aggregate) have more money, they spend more. They don’t tend to save more. So a majority of people will spend it to fuel some activity in the economy.
    2) On the contrary, it sounds like the “invisible hand” theory will come into play as well. If people do indeed save this money, or invest it, they will inadvertantly boost overall U.S. wealth for the future enhanced by dollar cost averaging on investments while they’re cheaper right now. Time to buy.

    Therefore, a 2nd check could help in both the long and short run. Is it the right thing to do, probably not. But it’s SOMETHING! A good plan today is better than a great plan tomorrow. Sometimes a half baked plan can be better than waiting to make a move, especially when time is of the essence.

  29. If we dont get a second -all those suit wearing chair sitting polititians and democrats will get it for us-come on they make well over 1,000 a week just sitting down answearing phones.ITS OURS NOW GIVE IT.

  30. Im shaking my head, trying to figure out who’s bright idea this is? Are these people sitting around a big table asking each other what else can they do to dig us in deeper without actually having to get up off their butts and use a shovel?! Yeah, who doesnt like money for nothin’? But there are some of us that work (some smarter) for it!

  31. i agree with the people who say, yes! I also have two kids and custody of another. I feel that i can use that right now. I dont have a job three kids,you do the math. Its hard and for a lot of we are not as rich as some of you. Some of us really do need it. We are already screwed anyways.

  32. It is amazing that we would regret a stimulus check, that we worry about the repercussions if it were to be passed. Some spent the first check on bills, maybe gotten something good or put it in savings. All this given to us by the government, that people on welfare have gotten for generations twice a month. They actually expect a check for the children they are having, getting public assistance and housing from the government. While others are WORRIED about forclosures and a stimulis check the government might give us. In my opinion it is time we saw some of the benifits they offer the unemployeed and lazy!! But guess who else will get a check, Yep the ones that get one every month. Bet they aren’t worried about what has to be paid later..

  33. I agree…however I do see both sides. I myself am a single mom. I bust my azz at work every day, to provide what I can for my son. I have never been on public assistance-I can’t afford to finish College because I don’t have the money for child care, nor to pay for my tuition for college. Just makes me sick to know there are some out there who just live off the system! I welcomed the stimulus check-extra $ for gas, food, and to pay a bill or two!! Savings what–HA–Wish I could have added it to my savings!

    To each his own…I just wish our goverment and politicians would get their heads out of their butts!

    Carry on….. ;o)

  34. The reason why the stimulus checks worked when Bush was first elected, was because people had jobs and didn’t worry about their mortgages or the price of food and fuel. Now that people are worried about losing their homes and being able to feed their children, any unexpected money is going to be saved for emergencies, used to pay down old debts, or (hopefully) wisely invested. Anybody who goes out and blows money frivolously in these times is a fool and will be proven as such when the economy contracts even further and they find themselves without sufficient income to pay for all their toys and lose everything.

  35. In response to ‘Jessica’…sadly I feel she is somewhat mistaken. While there is no doubt there are MANY undeserving ‘lazy’ individuals milking welfare for all it has…there are also families like my own who are doing absolutely everything they can and STILL need a little help.

    After the birth of my second child, the job that I had when I went on maternity leave went out of business. At my fiance’s request I took 8 months to get us moved to a new home and we lived well off our savings. I also applied and applied for jobs until I got one that paid enough that I thought we were moving forward!! Unfortunately having a 3 yr. old and an 8 month old is costly for full-time day-care. I don’t have family left and his nearby family are full-time employed. So I opted for a private sitter who was a trusted family friend. Otherwise I would have been left making $75 a week after the weekly day-care costs. Our income disqualified us from daycare assistance.

    Four months into my job our sitter found another job. We had to quickly replace her. Unfortunately the woman we agreed upon turned out to be a child-abuser. After a quick call from my fiance upon picking them up after their fourth day there…I learned about the horrible events. Forced to tell my boss I would not be able to return work…I left a job that I loved because we had ABSOLUTELY no one else to turn to.

    Once again I am a stay at home mom with no options. My fiances job has roller-coaster hours….that sometimes give him copious overtime. Never knowing when he’ll get off work, I am left not even being able to get a part-time evening job, as we never know when he’ll be home. Nor can I work the midnight shift because I would be awake for about 18 hours everyday on that schedule. It is difficult to explain…but we have exhausted every possibility in the book and have had to resort to applying for food-stamps to get through this until the kids are a bit older and day-care isn’t so costly.

    It greatly angers me when middle-class individuals and up place ‘welfare’ families all in the same low-life category. There was a time when we didn’t need help…but we are asking for it because we have no where better to turn. sure we could move into a cheap rundown apartment, learn to eat out of cans for every meal, and for-go medical treatment…our income could handle that, right? Doesn’t seem like much of a solution to me.

    Right now a stimulus check could make the necessary repairs to my car. Or pay one months rent. OR secure the Christmas we are about to NOT have. We won’t always need the help….but this year…right now…we do.

  36. WE NEED THE MONEY!!!!! my hubby has lost his job due to “cut backs” and I am working 2 jobs to try to stay afloat, which is not working. Our home is going to be foreclosed on, it just seems that we are always one step behind, and evertime we start to catch up, one of us gets laid off again!!!! I am sure that you people who have a savings and no debt probably DON’T Need the money but we do!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  37. All of the comments made stating we “do not need a second check” let me guess….were made by individuals making over $60,000 a year. If you are….were your parents wealthy….were you given a hand to get your life started…..did your parents give you a car….have money to go on vacation… Well I didn’t I don’t and will never have that luxury. I have gone to college and got a B.A. in biology trying to make it on my own. I make $30,000 which is very high in my area and find it hard to even buy food every week. Sometimes I go without food just so I can put gas in my car….AND I HAVE NO KIDS. If your already making more than $60,000 than you do not have a right to make comments about what should be done to help middle class America. We are not here because we choose…we are here because we did not have rich parents…..POINT BLANK.

  38. The question is not whether people want the money,
    but whether it is good for the USA and the economy. In my opinion, it is not good for the USA and sets a bad precedent. The first one was a mistake, and a second one would only compound the mistake.

    @Danielle – Do not assume that those against it make over $60 – bad assumption. I make UNDER $20,000/yr, (even less than you) did not have wealthy parents, was not given a hand, was not given a car, do not have money for a luxury vacation, altho I could go camping and enjoy that even more :) I put myself thru 2 yrs of college, and was happy with that. 50-something Single person household. No problem putting food on the table – as I take the time to grow a very small but more than ample garden.

    I think more can be done to help middle class america by “teaching them to fish” than to keep giving the fish to them… meaning, each of us needs to find a way to make it on what we make. Cut back, do without, enjoy the simpler life.
    Play the hand you’re dealt. It’s actually very stressfree and enjoyable :)

    I think people just got too used to living “too high on the hog”, and it’s time to step back and get back to the basic cuts :)

    And actually, I have no idea what the definition of ‘middle class’ is – but on $20,000/yr, I must be upper middle class as I have no gripes and no need for government handouts.

  39. You are not upper middle class you are very very low middle class #1 that was a pretty stupid statement to make. I can’t have a kid because I can’t afford it. That’s not awful to you. It’s not that I don’t want one I would love one. I am just not going to put myself in poverty trying to raise on in this screwed up country. Its all to keep the rich richer and the poor poorer does everyone not see the conspiracy going on around them are you blind to the political corruption of America. It is not about what is right it is about who has the money! AND BY NOT GIVING IT TO THE MIDDLE CLASS WHERE DO YOU THINK ITS GOING? THERE GOING TO USE IT SOMEWHERE AND IF MIDDLE CLASS AMERICA ACTUALLY HAD MONEY TO SPEND WE WOULD BE SPENDING IT WHICH IN TURN WOULD BOOST THE ECONOMY IF EVERYONE WAS ABLE TO SHOP IN AMERICA. WE DON’T USE THE STIMULUS TO BOOST THE ECONOMY BECAUSE IT SIMPLY ISN’T ENOUGH ITS POCKET CHANGE THERE GIVING US AND WE NEED IT FOR NECESSITIES WE HAVE NEGLECTED. I DON’T GO TO THE DOCTOR BECAUSE MY COPAY IS TO HIGH.

  40. Nope – you’re wrong. I’m upper middle class on under $20,000/yr…. that’s the income, not the assets…not the net worth.

    And stupid is not a word I allow my grandchildren to say either – by the way.

    I’m debt free (because I save and don’t spend) so pretty much all I need is my spending money :)

    If more people would get SPENDING out of their heads and start thinking about SAVING and increasing their net worth, the USA would not be in this predicament.

    To say one cannot raise a child on $30,000 is ridiculous. My daughter is raising two kids on under $20,000/yr right now also – while working and going to college – which SHE is paying for. I raised 3 on much much much less than that, but because I wasn’t lazy, I managed to sew their clothes and cook from scratch on weekends and grow a garden. It doesn’t take that much to raise a kid if you do not give into the spend spend spend gotahave mentality. Oh, yeah – I used cloth diapers too – washed them every night after work….think of that! What a bundle of money I saved right there – $30 worth of material to make diapers with versus thousands for throwaways that are thrown away illegally!

    I was taught not to accept handouts – it’s a matter of self-responsibility and self-pride. And I still say it is bad for the USA to set this precedent.

    And $300 is NOT pocket change in my book.

  41. @Danielle: Your assertion that the only way for people to become successful in this country is have rich parents is not accurate.

    I was raised by a single mother who at times stuggled just to make our apartment’s rent and her car payment. I worked my way through college while working in a call center (graveyard shift) for $17k a year to get my “foot in the door.” I eventually moved up by out-hustling everyone else.

    I graduated from college and took another job for a better salary and benefits. By now I had three mouths to feed at home. I had accumulated some debt while in school because I could not always pay my tuition in full, so I started working part time jobs to pay off my debt. I mowed lawns on the weekends, wrote freelance articles late into the night, and eventually started Frugal Dad from scratch.

    I am proud of my success, and do have my mom to thank. She taught me the value of hustle, perseverance, and believing in my dreams. That was more valuable than any early inheritance I could have received.

  42. I do not live my life to struggle. How can you work for so little? Dont’ you want more for yourself? The government blows money left and right on ridiculous things, trips, vacations, why should it not go to the people who actually need it and not big business and the already rich. The economy is crashing no matter what. Why let the rich moneybag politicians run our world. Plato was correct in stating that the only way to have a just economy is to have those in power live like friars with no paycheck but to live off the people. Community housing….ect. The United States is one of the most corrupt governments in the world.

  43. Stupid is sometimes the only word that fits. Remeber “bootylicious” is in the dictionary now. You must adjust with the times and not freeze yourself in the generation you grew up in.

  44. Good Manners are never out of style – it’s not a generational thing. Good Manners and a smile will take one good places that negative words/attitude never will.

    Flexibile and Adaptable are my middle names – that’s how I got to be debt-free…just keep plugging along, saving, not spending, and it automatically happens.

    Do I want more for myself? No – what could I possibly want that I do not already have? I have enough. I enjoy a simpler life, in my paid for home, with my paid for car and truck, doing family things and friend things, and I don’t need a lot of clutter to mess it all up. I love my life, and I’m about the happiest person I have ever met! There is no wanting in my life for more.

    I work for ‘so little’ as you put it, but for ‘enough’ as I prefer to put it, because that’s all I need. I chose to only work 4 days a week not 5 as I value my time much much more than money…. and with my time, I can make up for the lesser amount of money – in my garden, my sewing, my construction skills on the house remodel, my scratch baking and cooking. Anything I do myself, I do not have to pay someone else to do. Therefore, I don’t need much money to get by. The job is just a way to get free health insurance.

    Life is just a matter of attitude – and if you have a good attitude, you will always be happy, dispite financial circumstances. Gratitude for what I do have and am capable of doing my self, and not resentment for what I don’t have – because basically, if I don’t already have it, I don’t want it nor need it :)

  45. I do not believe we should get another stimulus check. And I do NOT make more than 60K a year. We paid taxes on less than 20K for a family of four last year and we live in Michigan. Yep, that puts us into the poverty level. How much harder would you like to see my life? I work as a public school bus driver and my husband decided to go self employed when he was turned down for the emergency unemployment compensation. Could I earn more? Sure. I could go back to driving semi and be away from my sons for 4 weeks at a time. Tell me, what will that gain? I’ll have material possessions but will lose my family. No thank you. Still, I know stimulus checks only hurt us, not help us. If I continue to receive hand outs from the gov., where’s the incentive for me work to better myself? My husband has worked very hard to drum up business. He’s a better mechanic at a better price and he works on our property. He acquired a snow plow this year to earn more income. (Some customers don’t pay and deals are made to swap property.) I take extra night sport trips whenever I can. We’ve had our house in foreclosure proceedings twice. But you know what? It isn’t about the money. It’s about priorities. What I have learned in the past five years I would not ever trade. What have I learned? God is in control and He will take of us when we do what is right.

  46. Please do not right about religion on this page. This is a political blog. Now you have just turned your whole comment into a religious statement and it has no validity.

  47. Oh, I’m sorry. The site administrator didn’t seem to have a problem with my comment before it was posted. Should I take God’s glory and pretend I have been taking care of myself instead? No, better to “invalidate” my comment and make it “religous” than to claim what isn’t mine to claim. I stand by my comments.

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