Fund your own ‘economic stimulus’

3. Pay down credit-card debt. Credit cards can be your friends — but only if you pay your balances off in full and on time each month. If you’re walking around with balances on any credit cards — particularly cards with high interest rates in the range of 18 percent or more — then the answer to what you should do with any future tax-rebate check is simple: Pay down that debt. Even now, you can start the process of getting this monkey off your back by transferring your credit-card balances to a card with a lower interest rate right away. You’ll save $730 if you transfer a $2,000 balance from an 18-percent card to an 8.25-percent card and then pay off your balance at a rate of $50 a month. Even better, transfer balances to cards with rates of 0, 1 or 2 percent if you can and concentrate on paying them off entirely while those low rates last.

4. Invest in the future. How have you been doing lately when it comes to saving for your retirement? If you’ve been neglecting this important area for whatever reason, you could use your rebate check to get back on track. In many cases, you can view your contributions to a 401(k) or 403(b) tax-deferred retirement plan as an instant raise. That’s because you’ll enjoy an automatic tax break, plus many employers will match your contributions up to a certain point — often 50 cents for each dollar you contribute for up to 6 percent of your pay. Even if your employer doesn’t offer this benefit, open a traditional individual retirement account or a Roth IRA and start saving anyway. Yet another idea: If your retirement savings is on track, you could use your rebate check to invest in the future of your child or another child you love. How so? By starting a 529 college savings plan to help cover his or her future college costs.

5. Invest in your potential. Could you benefit from a job-skills upgrade? If so, why not take a class or two or three that could give you a boost? Many universities across the country offer extension programs with courses for professional development in the evenings and at other convenient times. You also could look into classes offered through community colleges and accredited online degree programs. Another possibility: The computer school New Horizons has dozens of locations, and you could beef up your technical and software skills there. After investigating your options, you’ll find that you can do your resume quite a bit of good for under $1,000. For more suggestions about how to go back to school as an adult without going broke, check out this past “10 Tips” column.

6. Don’t let your house sink you. Are you among the millions of Americans who have borrowed against their homes for various reasons? If so, you could use that $300 to $1,200 to pay down your home equity line of credit and help put this extra debt behind you while interest rates are low. You also could consider making some extra payments toward your primary mortgage as well. By paying an additional $100 a month toward the principal on a $150,000, 30-year mortgage with a fixed interest rate of 6.5 percent, you’ll save more than $51,000 in interest and be able to retire your mortgage nearly seven years early. An extra monthly payment of even $20 or $25 can make a surprising difference. Granted, you’d stand to benefit more if you could invest that extra payment in an interest-bearing account offering a guaranteed higher rate of return than your mortgage rate – say, 7 percent to 8 percent. And paying off your mortgage early means you won’t have the tax benefits of home ownership for the same number of years. But if you’re after the psychological benefit of owning your home outright and spending far less on interest over time, then the extra-payment approach is something to consider.

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