Concerns over the state of the economy have led to the approval of an economic stimulus package. If you are one of the 116 million Americans that meet the criteria, then you should have a check coming your way.

The criteria and amounts, as they stand today, are:

Individuals who pay income tax would get up to $600, working couples would receive $1,200, and those with kids could get an additional $300 per child. Also, workers who make more than $3,000 a year, but not enough to pay income taxes, would get a check for $300. Individuals and couples making between $75,000-$87,000 and $150,000-$174,000, respectively would receive only partial rebates. Having children does raise the limits. Those earning more than the limits get nothing. The checks will start being sent in May and most people should have them by the end of July.

The time to allocate your rebate check, if you’re getting one, is now. Why? Because as of a few days ago, you weren’t expecting a check and now you are. As time goes by, the check will seem like less of a windfall and more of something you planned on getting. Like I said in my short post on ignoring raises, if you could survive before it, then you can survive without spending it.

So what should you do with your check? If you have credit card debt, the check is a great way to pay that down. If you need more money to fully consolidate your debt, then a person-to-person loan from Lending Club can make it happen. For those of you who are debt-free, or have limited bad debt, earmark your rebate check to create, or add to, a person-to-person loan portfolio on Lending Club. How many people want to invest, but use the excuse that that don’t have any extra money to do so? These checks eliminate that excuse.

Spending your economic stimulus rebate check may bring you enjoyment, but it is likely to be fleeting. Do you even remember what you did with the last bonus or tax refund check that you spent? Using this unexpected money to pay down debt or begin a loan investment portfolio with Lending Club will help you improve your financial situation.

The Congressional Budget Office recently released updated data on the effective tax rates of various income levels from 2004 to 2005. Also included in the report are the average incomes for each fifth of the American population. The data shows that, while all incomes increased, those of the most affluent Americans increased by the largest percentage.

The numbers were presented in both pre-tax and post-tax amounts. As each income group has significantly different tax rates (25.5% for the top fifth and 4.3% for the bottom fifth), the post-tax numbers yield the most accurate comparison. Data from 2004 was inflation adjusted to be equivalent to 2005 dollars, so the reported amounts show the true value gain.

It is interesting to note that most Americans saw roughly the same percentage increase. The poorest 20%, who are in the most need of increases, saw an increase greater than the next 60%. The richest 20% saw their incomes increase much more significantly than any other group. This increase comes despite their huge tax burden. The average American in the top 20% paid nearly 4 times more in taxes ($59,100) than the lowest 20% earned ($15,900 pre-tax).

While people with different political views will interpret the data differently, one thing should be clear: the top 20% are clearly doing something better with their money. Their increases must be coming from more then just rising wages or the percentage increase would be more consistent across other groups. It’s safe to say that investments are playing a large role in the increases of the top 20%.

Despite where you fall on the chart, you too can make better use of your money. You don’t have to be rich to get access to investment opportunities with very healthy returns. For as little as $500, you can start a person-to-person loan portfolio that Lending Club’s matching technology creates for you. With annual portfolio performance currently above 12%, there are not likely to be many comparable investments with similar risk.

In my first post, we determined that your financial life is in fact a system. Maybe a system in disarray, but we’ll look at that in the future. For now, let’s look at what makes up an “average” financial system. Here is what I’m assuming as a backdrop to this discussion: generating income of around $60,000 per year with the goal of retiring with $1.5 Million, and then putting that amount into a very safe investment generating 5% per year to produce approximately $75,000 per year in retirement. To see how to achieve that goal, let’s start by looking at the “processes” in everybody’s financial life.

Processes - You can think of processes as any type of movement of money, assets or liabilities. The processes of an average financial system are:

Money Inflow – Some examples include depositing a paycheck, receiving interest earned from a person-to-person loan on Lending Club, cashing a tax refund check, and having a friend return the $20 she borrowed. Money flowing into the system, coming to us, is part of this Inflow process.

• Ongoing – There is no 100% guaranteed ongoing income, but some things come close. Your salary is one example, where although you might lose it with one job, you can still find other employment, and the income is pretty stable. Other ongoing income can be interest earned on an investment that goes on for years.

• Limited – This could be that bonus that you got at the end of the year or the valuable baseball card you sold on eBay. Anything that happens infrequently and in an unpredictable manner falls into this category.

Money Outflow - Buying coffee, paying rent, having taxes taken out of your paycheck, paying for a parking ticket, investing in a mutual fund or letting a friend borrow some cash are all part of the Outflow process. This process encompasses any money that is going away from you.

• Ongoing – There are certain outflows of money that you can’t stop, including paying taxes, buying groceries, paying your power and gas bills, and so forth.

• Limited – Limited money outflows are expenses that can be stopped. Paying off the car stops the car payment. Other limited outflows include buying a computer or paying off a loan. Another example is lending out some money in p2p loan portfolios on Lending Club or making other types of investments.

Realizing that the flow of money in and out of your life is where you have the most control, it makes sense to break this process down, analyze it and change it if needed. In this way, you can make sure you keep as much money as possible.

Next, we’ll look at assets and liabilities as part of the financial system.

A recent article at American Chronicle describes the pros and cons of using credit cards to finance a home business. The writer concluded that using a person-to-person loan is something that should be strongly considered before financing a new business with credit card debt.

When new businesses start up, they are somewhat limited in their choices for financing. Many use personal savings or assets as a funding source. Others try to get things going without any money. They do this out of necessity because the owners have little or no savings or don’t have the business history to secure a business loan, yet they still believe that their potential for business success is worth the risk.

That risk, of course, is that these businesses won’t be as successful as their owners imagine. Having a dedicated credit card for your business does allow you to keep your business purchases separate from your personal ones. Introductory 0% offers may also seem enticing. However, as I said in my post “What 0% Really Costs You”, all consumers need to be careful with such offers.

The American Chronicle article goes on to point out that many new business owners can only be approved for cards using their personal credit history. That ties business setbacks directly to one’s personal financial well-being. Mounting debt, and the interest and fees that go along with it, can add to the already large amount of stress that new business owners feel. When this stress interferes with the potential success of the business, a negative cycle is started that can be difficult to break.

Unlike a credit card, which will likely have a higher credit limit than you need, a person-to-person loan from Lending Club gives you a fixed amount of money. Many businesses find this useful in helping to control their spending. It’s much easier to curtail expenditures when you see your limited money dwindling than when credit card debt is ballooning. Such debt is often too abstract to really focus on. Business owners may be lulled into thinking that they can always just pay the minimum on credit card debt and things will get better in the future. Such thinking, while occasionally true, is likely to be the downfall in the majority of cases. It isn’t hard to imagine a hiccup in the business’ cash flow causing a missed payment, leading in turn to a sharply increased interest rate.

If you are starting a new business, do yourself a favor. Forgo the lure of credit cards and finance your venture with a low rate fixed-term P2P loan from Lending Club. As all new businesses are only a few mistakes away from failure, be sure to get yours started by making a smart decision right from the start.

For some more information on this subject, see my post “Small Business Funding Sources”.

Have you always had an interest in finance?

First, thank you for the opportunity to work with you on this interview. I don't know if I can say I was interested in finance, because I was so young. I guess it's more accurate to say I was a little kid who wanted to have a lot of money. My first business was a BBS system (this was prior to the Web as we know it), and that didn't make any money. I also tried a couple of investments, which turned out to be get rich quick schemes. I honestly didn't learn proper money management and investing until after college.

What made you decide to start a personal finance blog?

I started Moolanomy in July of last year. I knew my wife would be staying at home for a few months after she gives birth. At that point, I started Moolanomy to focus more on my finance, and to build an alternative income stream to make up for my wife's income. I felt that personal finance is a good niche for me to focus on because I have done fairly well financially and felt that I have something valuable to share.

You mention that you’ve been investing for over 10 years. How old were you when you first starting investing? How did your first investments go?

You probably got the decade number from my post, "12 Investing Mistakes I’ve Made, and How You Can Learn From Them." I didn't start investing until 1996, or about 11 years ago. I wish I had learned about investing and the stock market sooner, but my situation wasn't conducive to an early start. Neither one of my parents invests in the stock market, nor was money management part of education, so I was on my own.

I don't remember how it all started, but I remember that I had an account with Dean Witter and did very well with my Staples shares. After investing with them for about a year, I felt I was paying too much fees so I switched to Charles Schwab. I did badly on my own for about two years and things got better from there.

Any advice you would give first time investors?

Sure. For new investor, my advice is pay off your debt and start investing as early as you can -- a decade can make a huge difference due to compounding. If you're brand new at it, forget about individual stocks for a while and ignore hot stock picks and tips from the media. Instead, invest in low-cost ETFs to create globally diversified portfolio of investment in various asset classes. Also, try to maximize the use of tax-sheltered accounts like IRA and 401k.

What has been your experience so far with peer-to-peer investing or borrowing?

Well, my experience has been good so far, but it's also very limited. I am strictly a lender on these networks. Right now, I have 3 active loans on Prosper and 2 on LendingClub.com. I feel that both have their pluses and minuses, but I have nothing negative to say about them at the moment.

As a growing industry, do you think P2P investments should fit into an investor's portfolio?

In term of having P2P investments as a standard part of an investor's portfolio, I think it's certainly feasible but I don't think we are quite there yet. For instance:

• I would like to see these online networks become more established as business entities. My money is committed for 3 years when I lend it out. I understand that there is no guarantee that I would get my money back if my borrowers default. However, I want some kinds of guarantee that Prosper and LendingClub.com can't simply shut down their web sites one day and walk away.
• Also, there should be a way for a lender to early terminate his contracts either by selling them back to the network or to other lenders. Without this ability, P2P investment will not be as attractive as it could be.

Tell us one thing about yourself that you’ve never shared on your blog!

I am already sharing a few things I never told anyone on the blog before, but you have to be a regular reader to figure what they are.

Personal finance blogs have really come into their own the last year or two. Why do you think that is?

I am sorry to say that I've never follow any personal finance blog before I started Moolanomy. It wasn't until I started that I realized how many personal finance blogs are out there already. I was surprised by the size and quality of content found on some of these blogs. They were simply beyond expectation.

What is the M-network?

The M-network is a network of personal finance bloggers that I established about a month after I started Moolanomy. Back then, I was looking for ways to increase the reach and readership of my blog. One of the ideas that came to me was to work with a group personal finance blogs with similar size and age to help promote and grow each other -- and that's how the M-network was formed. Currently, our membership includes:

• Being Frugal
• Cash Money Life
• Gather Little By Little
• I’ve Paid For This Twice Already…
• Moolanomy
• My Two Dollars
• Plonkee Money
• Single Guy Money
• The Dough Roller

They are all excellent blogs and I highly recommend them.

If you could only share one money tip, what would it be and why?

Automate as many things as you can, and do them little by little. This way you don't have to waste your time doing the same thing over and over again, and you don't have to worry about coming up with a big chunk o f money at any given time.

What do you do when you’re not blogging?

I probably spend too much time blogging right now. Otherwise, it's either working at my job, or helping my wife to take care of the baby. One thing I want to do is to get myself motivated enough to go ride my bicycle around the neighborhood more; especially during the summer time. I used to ride over a thousand miles each summer before I got married. I haven't been as motivated since. I should be riding more to improve my health.

Any famous last words?

Hasta la vista baby? Actually, I would love to see your readers come over to Moolanomy and see what's there. I believe I have a lot of good financial information to offer, and would like the opportunity to exchange thoughts and ideas with them.