Suze Orman, Financial Guru
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What To Do With The Tax Rebate

Your tax rebate is the "economic growth" part of the Economic Growth and Tax Relief Reconciliation Act. What does a tax rebate have to do with economic growth? This: The president and Congress assume you'll spend this money, and thereby stimulate the economy. PLEASE DON'T SPEND IT. I want to see the economy improve as much as anybody does, but even if everyone immediately spent every penny of the rebate, we would add just one percent to the gross domestic product. By itself, that's not enough to stimulate New York, let alone the nation. What you should do instead is to invest this money. If you have credit card debt, immediately apply all $300 or $600 to your debt on the card with the highest interest rate; if you always carry $600 in credit card debt, over 40 years paying it off now (and not running up any more) will save you thousands. If you have no credit card debt, apply the money to one extra mortgage payment this year. Or dollar-cost average $100 a month into a good, no-load mutual fund like the Vanguard Total Stock Market Index Fund; earning just 10 percent a year, after 40 years your $600 will be worth $40,000.

People First. Then Money. Then Things.
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