It’s spring, but Christmas may be coming this week or next! Santa will not be coming down the chimney this time, but directly into the mailbox or into bank accounts, where some 130 million households families will find a stimulus check. The “stimulus” program is part of the government’s rescue package for the economy, with most people receiving $600, apiece, with an additional $300 for each child. In an earlier bankruptcy blog, I’ve written about how the whole idea of the tax rebates is to have people spend the money, thereby giving our economy a much-needed boost. I encouraged everyone to use some of the money to pay down debt and then to spend the rest on things that l-a-s-t or, at least on making memories that last.

Although I have very little time for television viewing, I can’t help but notice when I do watch TV that many of the commercials for everything from cars to appliances to vacation resorts are targeted towards us spending these stimulus checks. Everybody is trying to get us to throw our new-found money in their direction. My interest in all this is that, as a bankruptcy lawyer who’s dealt with tens of thousands of people over the years, it’s important for me to understand people’s spending patterns, so that I can help them rebuild their financial lives after bankruptcy.

Last November, while this rebate stimulus plan was being considered but had not yet been approved, three economists conducted research on how consumers behaved the last time a tax rebate was given back in 2001. The study was conducted by tracking the activity of 75,000 credit card accounts, and the results were very, very interesting. It seems that quite a large percentage of folks used the rebate to pay down their credit card debt, rather than spending the money. But, half a year later, on average, these same people had spent, on average, 40 percent more (through borrowing on those same credit cards) than the original amount of the rebate!

Although, as a consumer bankruptcy specialist in Indiana, I’m involved in helping people through the process of preparing for and filing bankruptcy, I always try to focus on the “Now what?” aspects of the process. I’m talking about the fresh start, the financial rebuilding process, that bankruptcy is designed to accomplish. This stimulus check comes at a welcome time for people struggling to pay for basic family needs while handling debt. So, it’s really important to let this really be a stimulus, not just for the economy at large, but for each of us – a stimulus to get a handle on our finances!