Plans for our stimulus rebate

by Rocket Finance

The stimulus rebate intended for the Rocket household arrived in our checking account late last week and we have began discussing plans for that money. Ultimately, the money will simply reduce our budget deficit for the year, however we want to make sure that the free money makes the greatest possible impact on our bottom line. Our rebate was $1,500. I sure wish that I could stick it into an IRA or use it to pay down our car loan, but with our recent move and the fact that we are currently making lease payments, mortgage payments and HELOC payments, we have to keep it in our monthly budget.

There are a bunch of stores that are offering 10% bonuses if you use your rebate to purchase gift cards at their store. One such store is King Soopers – now our main grocery story since our move to Colorado. An immediate 10% return on free money is a tough deal to pass up – I just kind of wish it was on gasoline . . . We have decided to invest $1,200 of the money in King Soopers gift cards. We believe that this deal provides the best opportunity for our family.

The plan does not come without pitfalls, however. Here are some concerns:

  1. Our grocery budget strategy is built on the idea of shopping around for the best price. The gift card will tie us to one store. I guess that is the point of gift cards.
  2. With gift cards, as with credit cards, there is a temptation to overspend. In order for our budget to benefit from this investment, Mrs. Rocket will need to treat the gift card dollars just as she treats real money. It is real money – just like credit cards.
  3. There is a suspicion on my part that the grocery store specials will not be quite as good once everyone is locked in with their gift cards.
  4. It is possible that the gift cards might even inflate the current prices at the store. People with gift cards will spend more, thereby increasing demand. . . and you know the rest. . .

Will the 10% bonus cover my concerns? Will we come out ahead in the long run? I’m not sure, but we are going to plunk down our money despite the potential pitfalls. I think the best thing is for Mrs. Rocket to use the gift cards, but continue to comparison shop. If the prices are better at another store, she should plan to leave the gift card in her purse. Furthermore, we will hedge our bet a little by using our Chase Freedom credit card to make the purchase. The Freedom card offers up to 3% cash back on grocery store purchases up to $600, money spent beyond $600 in a single statement period only earns 1%.

Can we can buy $600 worth of cards this month and $600 next month? We are going to try.

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