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Wise spending

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This week the federal government was supposed to start sending U.S. taxpayers back some of their own money, through what has been touted as an economic stimulus tax rebate payment.

The majority of Americans will be receiving some type of payment. In most cases, the payment will equal the amount of tax liability on the 2007 tax return, with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return). Eligible taxpayers who qualify for a payment will receive an additional $300 for each child who qualifies for the child tax credit. Payments to higher income taxpayers will be reduced by 5 percent of the amount of adjusted gross income above $75,000 for individuals and $150,000 for those filing jointly.

So the question becomes, what's the typical family of four going to do with the $1,800 the government returns to them.

The hope by the government is that the payment will be used to purchase something that otherwise wouldn't have been bought ? a new television, a lawn mower or maybe an expanded summer vacation to the beach ? something to get the economy going. The reality, however, is the prudent step to take would be to apply it to current bills already on the books. Or to save to pay for gas.

Fuel prices are up 70 cents a gallon over this time last year ? and those prices will likely go higher. A family that drives 20,000 miles a year would see $840 of the stimulus payment eaten up in that increase alone. And that doesn't take into account the rising costs of other products, such as food, because of fuel increases being passed along. Just ask teachers in Bedford County about the residual effects of this. Increases in fuel prices cost them a percentage point in raises for the upcoming year.

Anyone carrying credit card debt should consider paying off those cards with the increase, instead of buying something else. Banks that are dealing with losses from bad consumer loans are significantly increasing some credit card rates. Fees for paying late are up as high as 31 percent and rates are going up even for good customers on some cards.

It's nice that the government wants to return the money to its rightful owners. It would be even better if the government would take the time to look at ways to take less of its taxpayers money in the first place.

But the government shouldn't be fooled. Because of the state of this economy those checks are best spent on essentials, not on extras, this go-around.