Money worries may hinder tax rebate spending

The rebate comes as many Americans are already tightening their belts because of rising costs for necessities. Gledhill, who lives in the Phoenix area, said his family has already cut back on things like the cable bill as they’ve seen their discretionary income dwindle. He’s now considering taking the bus instead of driving to work, even though he figures it would add three hours of commuting time.

Jean Rampy, 62, expects that her tax rebate will just go right back into paying household expenses such as gas and groceries. An office manager for a hospice company, Rampy has recently cut back on driving, eating out and spending money on things like clothes and shoes. With the economic situation still uncertain, she couldn’t see using the money to splurge.

“If they are expecting that people are going to go out and put this back into the economy by spending at Wal-Mart or wherever, no, I don’t think so,” said Rampy, who lives in Vicksburg, Miss. “It’ll help the people who get it temporarily … with gas, with food, but only for a couple of weeks or something.”

Wyss said the tax rebate will benefit the U.S. economy the most if people spend it on items made in the United States, or take a domestic vacation. A flat-screen TV will help create jobs, he said, but those jobs may be in manufacturing plants overseas.

From that perspective, David Yockel is just what the economist ordered. The father of three from Bethesda, Md., is planning to put his tax rebate toward helping pay for a trip to Walt Disney World. Yockel, who is 43, was considering taking money out of savings to help fund the trip, and he was happy to have a little “bonus money” to spend.

“It’ll just make it much more stress-free,” he said.

Yockel said he and his wife have strived to keep credit card debt down and generally live within their means, which has helped insulate them to some degree from the current economic problems. Still, when Yockel sees his wife come home with fewer groceries and a higher bill, or watches his parents living on a fixed income amid rising prices, he admits he gets concerned.

“I worry about the country overall,” he said.

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