Although we qualified for the Cash for Clunkers and the new Home Buyer's Credit program, we passed on on participating, for one of the same reasons we don't go to Black Friday sales -- if we needed it, we would have already bought it. The other reason we aren't taking advantage of these credits is that using them would cause us to take on debt or reduce our savings, neither of which we want to do. Here's our thinking on these stimulus programs.
For us, the financial decision was easy. If we were currently looking to buy a car or house, we may have taken advantage of the tax credits. However, the new tax credits did not incentivize us to do something that we weren't already planning to do.
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This is not financial advice. Please consult a professional advisor.
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1 comment:
These type of stimuli are similar to sales, they tend to move customer behavior forward but don't necessarily increase total demand.
The idea during a recessionary period is to close the demand gap (potential demand - actual demand) as much as possible which they hope to do by getting people to spend now what they would probably have spent later.
I personally also didn't take advantage of Cash for Clunkers or the home buyer's credit and I know very few people that did (although one friend did purchase a house slightly sooner because of the credit).
This is similar to the tax rebate people received. The hope was that people would take that money and go spend it (estimates by the people in charge were that only about 20% would spend the money instead of using it to pay off debts) but most everyone used it to pay off debts (as predicted).
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