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Buy freedom instead
It's more important, psychologically and practically, to have that little pad than it is to pay down high-rate debt -- although that should be your next priority.You may be telling yourself, "Well, I have to buy food anyway" or "I was planning to buy something at Sears eventually," but that's a slippery slope. You're locking yourself into buying a certain amount from a certain retailer. Consider, instead, buying yourself some freedom from always living on the edge.
Resisting retailers' siren calls is just going to get tougher as the Internal Revenue Service begins mailing out rebate checks and businesses ratchet up their advertising. So here's my advice for a two-step plan:
- Figure out what you should do with the money. If you haven't already, read "America, don't blow this rebate" for a recap of your best options, including paying down debt, boosting savings and, if your finances are already in good shape, buying American. Make your decision now, before your head can be turned by advertising.
- Commit to that plan. You can read "Learn when you'll get a rebate check" to find out when your check is due. If you plan to save the money or pay down debt, set up an automatic transfer that will take effect a week or so after your check is scheduled to arrive. Want to apply the money to your highest-rate credit card? Set up a transfer between your checking account and your credit card account. Want the money to go into savings? Set that up with your bank, or open a high-rate savings account online and have the money transferred there.
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The key is to do this before the check arrives. When something is important -- investing for retirement, saving for a goal, paying down debt or boosting an emergency fund -- it's best to make a decision once and set it up to continue automatically, rather than give yourself opportunities to change your mind.
Published April 25, 2008
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