Pay Off Debt With Your Stimulus Check

Any day now, you may be receiving an economic stimulus check. Maybe you already have it. But, before you give it to a big box retailer to convert it to bonus shopping cash, or buy a discounted HDTV, think about this: It's not "found money." For some families, the checks will total much more than the $600 everyone is talking about. A family of four could get $1,800.

Think about how to use the economic stimulus rebate to improve your long-term financial health. The financial experts at Quicken Loans share three reasons why paying off debt with that stimulus check is the best path to revving up the entire economy:

1. Paying off debt reduces your monthly burden

Let's say you have $8,000 in credit card debt. While most people think that $600 isn't going to make a dent in that amount, that's simply not true. Most of your monthly credit card payment is interest. By reducing the balance you owe on the card, you can reduce your monthly payments.

* If you pay down the balance by $600 and continue paying the same $200 minimum payment, you'll pay off your debt seven months sooner.
* If you pay down the balance by $1,200 and continue paying the same $200 minimum payment, you'll pay off your debt 14 months sooner.
* If you need more room in your budget, pay the new minimum balance and you could reduce your monthly payments by about the same as reducing your cable package a notch or two, or anywhere from $15 to $45 a month, depending on your credit card terms.

2. Paying less in credit card payments means a healthier budget

Now that you've plunked your cash down onto your highest credit card balance, you're paying less to that card each month. So now, you have choices. One smart choice is to pay off your card faster. Or, you can choose to do something to invest in yourself or your career.

3. A healthier budget gives you more spendable income

Now that you've paid down balances, improved your budget, and maybe even your overall financial position, you can do things you've been putting off. Take extra classes to move up the career ladder, invest in home improvement to improve your home equity, or turn your favorite hobby into a business. Notice something? All three of these ideas have a much bigger impact on improving our economy than going shoe shopping.

Don't fall for the logic that "economic stimulus money" is meant for short-term spending. Before you rush out and buy a new TV, take some time and think about ways you can make lasting improvements to your budget that will have even greater benefits to our economy.

Use your stimulus check to lower your monthly credit payment and reduce your debt. Visit www.QuickenLoans.com to learn more and start today.

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