Support increasing to extend first time home owner’s tax credit.

By now, almost everyone has heard about the first time home owner’s tax credit.  According to CNNMoney.com, a report by the IRS states that 1.4 million Americans have already taken advantage of the credit.   The credit is equal to 10% of the new home purchase, up to $8000.  If you have been haggling with the thought of purchasing a new home, the availability of this credit is something that you should definitely factor into your decision making.  To take advantage of the credit, you would have to close on your new home by December 1, 2009.  Homeownership is a good tool for rebuilding your credit after bankruptcy.  Even though the “title” of this program references first time home owners, anyone who has not owned a home within the last three years is eligible—which makes this program especially luring to post-bankruptcy consumers.

But before you sign the dotted line, keep this program in perspective and understand its purpose:  it is first and foremost a stimulus plan.  Everyone knows the program was designed to help an ailing housing market.  But the stimulus component does not end there.  Lobbyists justify continuation of the program in that it stimulates the rest of the economy.  Jerry Howard, president of NAHB, argues that the program stimulates spending because when people buy a new home, they also head to the stores to buy new things for their home.

Spending sprees can be fun, especially when you finally got into a new home after bankruptcy.  However, don’t forget how your spending habits contributed to your original bankruptcy filing.  Avoid the same mistakes by taking more time to plan purchases for your new home.  Instead of heading strait to the Pottery Barn catalog or the new IKEA store, compare prices and consider alternatives before you make major purchases.  Craigslist and Freecyle are excellent sources to look for freebies or cheapies before you max out a new card or spend funds that you don’t really have.  Many web sites are now dedicated to craft and do-it-yourself home improvement projects like making your own curtains and accessories.  Remember, that thriftiness is the new vogue.  It’s also the best way for you to avoid slipping back into another spiraling cycle of debt.   Enjoy your new freedom from debt after bankruptcy.  Enjoy your new home.  Protect that freedom with good budgeting and planning.