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Put Your Stimulus Money Where Your Heart Is

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Now that President Obama has signed the American Recovery and Reinvestment Act, a 787 billion dollar economic stimulus package, we can all expect to see a couple of extra decimal points in our bank accounts. The law contains tax breaks that will benefit everyone from college students and the unemployed to homeowners and buyers. Most of these tax cuts will only be effective within the next two years or so, a measure designed to encourage spending (which will stimulate the economy) rather than saving (which would stagnate it). Economic strategists argue that we are more likely to spend money if we consider it a bonus rather than a steady income; we are less attached to what we see as “extra money” and find it easier to spend on an impulse buy.


But not all spending has the same effect. Sure, you could go out and buy that HDTV you’ve been eyeing, but wouldn’t you rather use your tax credits to benefit your community and help your neighbors weather the economic crisis? If the answer is yes, consider the following ways to put your stimulus money to work for the greater good.


Take a Bite out of the Local Economy
Times are tough for local farmers, so a great way to spend your stimulus money is to shop at farmers markets or join a Community Supported Agriculture (CSA) farm. Here’s how CSAs work: You make a financial commitment to the farm, ensuring the farmer’s income. In return, you receive a weekly share of the harvest. Most CSA farmers prefer that members pay for the season upfront, but some accept weekly or monthly payments. Check out localharvest.org to find a CSA farm near you. You’ll be supporting local agriculture, eating fresh and healthy food, reducing your carbon footprint, and maybe even getting a break on your grocery bills, since buying produce this way is often less expensive than buying it from a supermarket.


Go Green with Your Green
Another great investment for yourself and the environment is to spend your money updating your home, automotive, and personal efficiency. Maybe now is the time for you to install solar panels, a low flow showerhead or toilet, or better insulation for your home, steps that will reduce your energy and water bills in the future. The stimulus package lets homeowners get a tax credit of up to $1,500 for making their homes more energy efficient, so now’s the time to do it. If you are in the market for a new car anyway, consider chipping in the extra cash for a hybrid and think about how much gas money you’ll save by doing so. And if you buy a new car in 2009, you can deduct the sales tax from your taxable income.


If you’re not in a position to make big purchases right now, there are many small investments you can make that will have a big impact on both the environment and your future spending. If you regularly drink bottled water, think about purchasing a stainless steel water bottle. After all, tap water is free. And if you’re caffeine habit is making a dent in your bank account, spring for a reusable travel mug to use on your morning coffee run. If only fifty customers a day used a reusable mug, Starbucks would save 150,000 disposable paper cups daily, and those customers would save a total of $5 thanks to the 10¢ discount for BYOM (bring your own mug).


Support the Arts
Anytime there is a public belt-tightening, arts funding is the first thing to go. We tend to view art, literature, and the performing arts as luxuries, when in fact they are the life-blood of our culture. According to Americans for the Arts, the nation’s leading nonprofit organization for advancing the arts in America, a thriving arts community has a direct relationship to increased civic engagement, school performance, and overall quality of life. So buy tickets to a show, check out a local museum (and make that “suggested donation”), or visit a local bookstore that has been around for decades but is now in danger of closing. You might feel like your small expenditure is only a drop in the bucket, but you are really making a statement about what you value in your community.


Flow Cash to the Community
In addition to the arts, there are other resources in our communities that make them what they are and might need our help. Perhaps it’s a new family-owned restaurant trying to get off the ground, a regional park that needs donations or volunteering, or a school in need of supplies. Though our direct stimulus only amounts to around $400 per person, putting the money back into the things we value in our community can help keep it what it is.


Take It Home
Now is actually a great time for first-time homebuyers to make their move. If you’ve been doing your homework for the past few years, waiting for just the right moment to swoop down on a prime property, welcome to the buyer’s market. Thanks to a spike in housing inventories, especially from foreclosures and short sales, homebuyers can expect to negotiate better prices. Interest rates are also at a historic low, which means that you can expect to pay less on the price of the house you buy. But hurry; when interest rates are low, it means they are more likely to spike in the near future. The stimulus package also offers an $8,000 tax credit for first time homebuyers, but only if you buy between January 1 and December 1 of 2009. Now is the time to buy. Not only will you be getting a great deal, but you’ll be doing your part to fill vacant homes and save communities from squatters and vandalism.


Break the Rules, Just a Bit
Okay, I know you’re not supposed to save all your stimulus money, but I do think you should save some of it. Part of the reason we’re in this mess to begin with is that people were living far above their means and accumulating huge amounts of debt. If you have debt, pay at least part of it off and think to the future. Do you have kids who will need money for college? Will you be thinking of retirement in the next twenty years or so? If that’s the case, devote at least 10s percent of your tax credit to building (or re-building) your nest egg.


Times are tough and confusing. Economists have tried to explain things to us in terms of Wall Street and Main Street, reminding me of afternoons spent playing monopoly with my brothers (if only we were talking fake money now!). I don’t know if fixing Main Street will fix Wall Street, but I do know that fixing Main Street can make it a much nicer place to live.

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