How will you spend your rebate - checks go out Monday

http://www.chron.com/disp/story.mpl/front/5750277.html

Some who don't use stimulus payment will lose it

By SHANNON BUGGS
Copyright 2008 Houston Chronicle



Turns out the very poor among us may not be able to save their stimulus payments.

Not because they lack the desire or discipline to save, but because federal rules discourage them from doing so.

It's not just patriotic propaganda creating out-of-control consumerism. Federal policy also plays a part.

Many of our nation's poor make ends meet with federal funds they receive through programs that restrict benefits to the most economically disadvantaged.

Who is most needy is determined through means testing, a process that checks applicants' income and assets to determine if their resources are under or over the eligibility limits.

Some of the federal means-tested programs include:

• Temporary Assistance for Needy Families (TANF)

• Medicaid

• State Children's Health Insurance Program (SCHIP)

• Housing Choice Vouchers

• Public Housing

• Food Stamps

• Women, Infants and Children Nutrition (WIC)

• Supplemental Security Income



Two months to spend

With all these programs, there is a limit as to how much money an individual or family can earn and keep in savings accounts and still remain eligible for benefits.

The stimulus payments won't be counted as income for a short period for people who participate in means-tested programs.

But after that window — two months after the month the stimulus payment is received — any leftover money from that payment will be counted as income and has the potential to lower the amount of the other benefits.

So, if a person who gets food stamps receives a stimulus payment in June and does not spend all that money by Sept. 1, then the remaining stimulus money could be used as a reason to cut the food stamp allocation.

"Give with one hand and take it away with another," said Martha Orozco, a staff attorney for Lone Star Legal Aid in Houston. "If they don't spend the money within 60 days, then it will count against them."

Catherine Williams, vice president of financial literacy with Money Management International, said, "Sadly, this policy hurts people, because they did the right thing and that is save money."

Ways around it
But even though the federal government wants the poorest of the poor to shop to save the economy, that doesn't mean they should.

Orozco recommends using the stimulus payment to pay down credit card debt, which is increasing for seniors on fixed incomes who often charge their prescriptions because their stipends don't stretch far enough to pay for medications.

Williams offers these other uses for the stimulus payments that recipients of means-tested benefits should consider:

• Purchase car insurance or pay premiums for the year.

• Stock up on prescription medications.

• Get current on your utility bills, such as electricity, gas and cell phone.

• Buy food staples with long shelf lives that will help food stamps go further, such as evaporated milk, flour and rice.

• Complete simple repairs on your car and replace tires.

• Share 10 percent with your church or a charity.

"Giving part of your 'found money' is a good example for children and makes the giver feel a part of a community," Williams said, "and it may help someone who is even needier than the giver."

Some won't get anything
There are some means-tested program beneficiaries who will not be getting stimulus payments.

"When you are living only on SSI, you are living close to the poverty line," said John Johnston, a spokesman for the Social Security Administration, which manages the supplemental security income program.

"Straight SSI folks do not qualify for a stimulus payment. The only SSI folks who will receive a stimulus payment are those who receive both Social Security and SSI."

And they are only getting $300, he said.