Yesterday, Heavenly and I recieved our economic stimulus payment. I recently went through our finances for the year so far to see how on target we are with our budget and it appears that our expenses are projected to be about $2,000-$3,000 over last year’s expenses due entirely to food and gas cost increases, even though we have made significant cuts where possible. Therefore, we will most likely keep the entire stimulus payment in our savings (or add it to our investments) to help compensate for the increased costs.
I have argued that one of the biggest reasons for these increased costs is inflation caused by the federal reserve’s policies. I believe that the action of dispensing the economic stimulus payments themselves is making inflation worse as it is further increasing the money supply, without any reduction in other government spending, thus reducing the value of each individual dollar in the market.
The economic stimulus payments, bank bailouts and mortgage holder bailouts will most likely cause both gas and food costs to continue to increase over the near future.
Therefore, I would suggest that keeping the money to pay for everyday expenses, paying off current debt, buying something that will save you more money over the long run, or investing it in some sort of income producing asset would be the best and most responsible choices at this time.