President Bush and Congress have been working together to put together a stimulus package in the hopes of averting a recession.  Why is the federal government so concerned about avoiding a recession?  Economists fear that if consumer spending drops precipitously, sales and production fall, in turn forcing companies to lay off employees.  The vicious cycle continues with massive job losses, which causes income to fall, affecting sales once again. 

Only time will tell if this stimulus package will work.  Moreover, the package on the table now could change because the bill still has to pass the Senate.  But in its current form, what will you get from it? 

• Tax rebates: Checks of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes, so long as they earned at least $3,000 in 2007.

Families with children would receive an additional $300 per child, while those paying income taxes could receive higher rebates.

The full rebate would be limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less, but a partial rebate would go to individuals earning up to $87,000 and couples earning up to $174,000. The caps are higher for people with children.

• Business tax write-offs: Spurring business investments with so-called bonus depreciation and more generous expensing rules.
• Housing rescue: Allow more subprime mortgage holders to refinance into federally insured loans by raising the limit on Federal Housing Administration loans from $362,000 to as high as $729,750 in expensive areas. Increase the availability of mortgages by providing a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

If you are in line to receive an individual tax rebate ($600.00), the prudent thing to do would be to apply it to your credit card debt.  However, if you are credit card debt-free, why not use this windfall to treat yourself to a few luxuries and help support the economy?  Here are a few ideas, courtesy of my friend Moneypenny:

• Snatch up that New Coach Heritage Strip Tote for $358.00 at www.coach.com that you have been eyeing for months.

• Rent a stretch hummer, stock it full of sushi and champagne and take your girlfriends for a night on the town

• Satisfy your craving for premium coffee by getting a tall Starbucks latte everyday for the next 5 months or $1.00 drip coffee plus free refills for the next year and a half.

• Plan a romantic weekend with your significant other by reserving a luxury suite at the Ritz-Carlton or traveling to your favorite B&B

• Spif up your business look by snagging a sterling silver business card case for $275.00 at www.tiffany.com 

• Indulge in something you normally would never buy, like a Juicy Couture fleece track suit for $300.00 at www.nordstrom.com

 A lot of other financial bloggers and experts will tell you to save the money in your rainy day fund or invest it.  However, if you already pay your debts and manage your money prudently, why not treat this rebate for what it is: Free Money.  How often in life does $600.00 fall into your lap?  Have a little fun with it and remember, by spending the money instead of stuffing it under your mattress, you are keeping in spirit with why the money has been doled out to you in the first place - supporting the U.S. economy.