10 Ways to (More Than) Double Your Tax Rebate Check

The government announced they will start sending out tax rebate checks this week to help stimulate the economy.  Some people may use this money to make the down payment on a new car, or buy a new tv, while others may use it just to help ease the burdens of every day expenses.  I’d like to suggest 10 other ways you could spend this rebate check to help invest in your future.

1. Pay off credit card debt - If you currently have credit card debt, paying it off with your tax rebate check is probably the wisest thing you can do.  Odds are you're paying 12-24% interest on that money, and paying it off or paying off a good chunk of it can help you free up even more money to pay off your other debts.  It can have an incredible snowball effect.  To see how large of an affect it can have, check out our Financial Planner.

2. Pay down mortgage - If your less than half way through paying off a 30 year mortgage, using your stimulus check to make an extra payment can have drastic results.  For example, making an extra $1,200 payment towards a $100,000 that was just opened will allow you to pay off your home 14 months early and save you $6,470.  That's like multipying your rebate by more than 5.

3. Contribute to your 401k - According to the Motley Fool, a well diversified 401k investment in US stocks has historically yielded 10.7% per year on average.  Using this average, by investing an extra $1,200 to your 401k and allowing it to sit for 20 years you'd end up with $27,726.72.  If your employer matches your 401k contributions, you can double that to $55,453.44 - over 46x the amount of your rebate check.

4. Save for college - A college savings plan has the same compounding interest effect as contributing to a 401k, but in many states it has the added benefit that the money you save in a 529 plan is state tax free, not just deferred like with a 401k.

5. Make a down payment on a house - In most areas you can buy a house for about the same monthly payment as paying rent.  If lack of a down payment is all that's stopping you, use this rebate check to finally make that move.  There are also government programs in place to help first time home owners qualify for a loan.  Housing prices are at record lows, that rent check might as well be going towards making an investment in your future.

6. Keep an emergency fund – Open an (deleted) and hang onto that cash for an emergency, or just keep it to help pay for Christmas presents.  ING direct is currently offering 3.4% on electronic (deleted).  If nothing else you'll have the cash on hand come Christmas or when some unexpected expense comes up and not have to charge it on your credit card.

7. Make home improvements - Making home improvements is usually a good investment anyways, but when those improvements go towards improving the energy effeciency of your home, you also benefit from lower energy bills.  It may be time to replace your air conditioner or windows.  Or maybe just do some basic improvements to remove drafts and improve insulation.

8. Repair your car – If your car is in need of repair, this may be the time to do it.  Taking care of repairs early can help prevent larger problems from forming.  It could also save you the cost of towing from breaking down in the future or improve your gas mileage.

9. Refinance your mortgage – What’s your mortgage rate?  If it’s higher than 6% you may want to look into refinancing.  Refinancing to a lower rate can save you a significant amount over the life of the loan.  Use your rebate to pay the refinancing fees or to buy some extra points.

10. Invest in your career – Do you need a degree or certification to advance in your career?  Use this extra cash to pay for some night classes at the local community college, or use it to buy some books and pay for your certification test.  Go after that new job you love and this tax rebate may continue to pay you for years to come.

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