Tax Rebate Redux

Here comes that free money! The Treasury Department has already started delivering its $152 billion in economic stimulus payments to 130 million taxpayers; folks who gave the IRS a bank account number will get their cash within the next two weeks. Filers waiting for paper checks should get their rebates by mid-July.

Just in case you forgot: President Bush and Congress approved these tax-free handouts in February as a way to loosen our purse strings and goose the economy. You'll be in the money if you filed a tax return and made less than $75,000 (single filers) or $150,000 (couples) in 2007. Most singles will get $600, couples will get $1,200, and parents will get $300 for each dependent child. Seniors and others who don't earn enough to justify a tax return but who filed one anyway should see $300. Such amounts aren't likely to change your life, but the rebates will offer some relief for those feeling pinched by rising gas prices, the increasing cost of groceries, and mortgage headaches.

The payments are being delivered on a schedule based on Social Security numbers, with the lowest-ending numbers getting paid first. Full details are at the Internal Revenue Service Web site, but most recipients don't care about the details, they just want the dollars and some advice about how to spend them. Here's a tip: patriotism is nice, but it doesn't mean you have to run out and blow the cash as quickly as possible just because Washington wants you to. Here are some smarter strategies for that windfall.

Kill the Card Debt. If you're carrying any credit card balances, you already did your patriotic duty and spent your stimulus check before you even received it. Now use that check to pay down your credit card balance. Even if it's not enough to wipe out your debt, it is enough to save you hundreds of dollars in interest over the long term. Still need some instant gratification? Go online and calculate how much you can save by paying off a big chunk of your credit card debt. This has got to be the top priority, says Scot Millen of Baltimore-Washington Financial Advisors in Columbia, Md. He tells clients to be aggressive about paying off any debt on cards carrying interest rates over 8 percent.

Get Something for It. If you're going to spend it, look for a retailer that will meet you half way. Sears, Albertsons, Shop 'n Save, Kroger's and others are offering 10 percent bonuses to customers who trade their $300 rebates for gift cards. Other retailers are expected to hop in with stimulus-slanted sales (most of which don't require customers to have actual paper stimulus checks). Just make sure the deal is at a store where you'd shop anyway and that it is offering a payback that's better than you'd get at an ordinary sale.

Spend It Now to Save Later.Home Depot is pushing us all to be environmental leaders. The do-it-yourself superstore has a program that makes it easy to spend your rebate check on a high-efficiency washing machine or air conditioner or a whole lot of compact fluorescent light bulbs. Tune up your car, start a vegetable garden, or put it in the bank and use it as a safety net so you can raise the deductibles on your auto or health insurance policies.