Portlanders Weigh in on How to Spend Stimulus Tax Rebate

By Kimberly Schneider

Whatever one thinks of the federal government's plan to stimulate the national economy, tax rebate checks are in the mail for nearly anyone who filed a 2007 tax return. The Oregonian reports that many of us will pay down debt or increase savings. The president of Parkrose neighborhood business district reminds us to "buy local" if we're going to make purchases. Click above for the full articles or finds excepts below.

"Use rebate from Uncle Sam wisely, readers say"
By MICHELLE ROBERTS -- The Oregonian

Here are some scenarios to make the most of the dollars coming your way:

Pay down credit cards

Thanks to the Federal Reserve's interest-rate cuts over the past few months, the average credit-card rate last week dropped to 13.01 percent on cards that don't offer rewards, according to IndexCreditCards.com, a consumer-focused credit-card research company.

Even at that lower interest rate, making minimum payments every month will keep you mired in debt for decades.

If you have a credit card balance of $5,000 and pay only the industry standard minimum payment of 2.5 percent ($125) a month at that interest rate, you'd need 19 years, 2 months to pay off that debt -- and you'd spend about $3,700 in interest before you were done.

So, for a family that gets a check for $1,800 (the maximum for a household with two adults and two children) paying off a credit card debt that extracts 13 percent interest compounds the windfall. If a couple with two children pays down a 13 percent credit card debt of $5,000, and continues to make monthly payments of $125, they would have a zero balance in just 31 months and would spend about $600 in interest.

With an interest savings of $3,100, that means a family could increase the power of their rebate from $1,800 to $4,900.

If you want to figure out your own savings, check out the free debt calculators at www.bankrate.com.

Invest in your kids

College 529 plans are a great way to boost the value of your federal rebate checks.

If you're a parent to a newborn, setting up a tax-free 529 college-savings plan will allow you to turn $300 (the rebate amount for each child under age 17) into $948 in 17 years, or by the time little Austin or McKenzie is ready for Harvard. That's based on a conservative return estimate of 7 percent.

Throw in another $1,300 a year (this is easier than it looks -- it's the same you'd spend on one venti Starbucks Caramel Macchiato a day), and your babe's college fund bubbles to $39,740 by the time you're sweating SAT scores.

"It's amazing how much it adds up," says Michael Parker, executive director of the Oregon 529 College Savings Board. "People get frightened at the cost of college. Yes, college is expensive, but the cost is manageable. If you can save a little now to defray it, coupled with work study and a little debt, you're well on your way."

Invest in Retirement

Where to invest a little bit of found money? Especially when the stock market is more topsy-turvy than Paula Abdul on a typical "American Idol" episode? Let's stick to the basics. Plunking your federal tax rebate into a traditional or Roth IRA can pay off big time. (The following calculations assume a 9 percent return on Roth IRAs and 8 percent on traditional.)

If a couple in their mid-30s with two children invests their $1,800 stimulus check in a traditional IRA, they could be sitting on a $15,396 nest egg (after taxes) by the time they turn 65 -- without ever pitching in another penny.

The math is good for those who get a $600 rebate, too. If a 29-year-old sticks that money in a traditional IRA, that $600 could turn into $8,144 (after taxes) by the time the office manager orders his or her retirement party sheet cake.

In a Roth IRA, the couple who invests $1,800 could have a $23,882 nest egg, and the individual who puts in $600 could have $13,351 without ever putting in more money.

Michelle Roberts: 503-294-5041; michelleroberts@news.oregonian.com

"Local Business" By Michael Taylor, Parkrose BA President - Statistics from ILSR

There are good reasons to support your local businesses. Not only do they offer variety, unique goods, and employment opportunity, they:

Support the Economy

Every $100 spent with a local firm leaves $68 in the local economy; $100 spent in a chain store leaves $43. For every square foot occupied by a local firm, the local economic impact is $179, versus $105 for a chain store. Dollars spent at an independent business deliver twice the economic impact of those spent at national chains.

Support the Community

Small firms give an average of more than two and a half times the amount per employee than do medium or large firms (small firms give $789 per employee, medium firms $172. and large firms $334).

Support Themselves

Wal-Mart has received more than $1 billion in economic development subsidies from state and local governments across the country. Taxpayers have helped finance not only Wal-Mart stores, but also the company's huge network of distribution centers, more than 90 percent of which have received subsidies.

While we can be friends with our "big box" neighbors, we should remember that the small, medium, and local businesses are the lifeblood of our communities. Next purchase, make it local! Make it count!