For the lucky American taxpayers who qualified to receive a stimulus check, some of the checks are already headed to a bank. Thanks to the beauty of direct deposit, the first checks were automatically deposited Monday. 

But before you head out on a buying binge, you should know it may not be in your best interest to spend your stimulus check, especially if you have debt. Here are a few tips from financial experts on what you can do to make the most of Uncle Sam's generosity.

Dealing with debt?

If you’re in debt, the last thing you want to do is spend your stimulus check. Experts say the best thing to do is to put some money down on your highest interest credit cards--a good way to get in the habit of paying them down.

“You want to pay down the credit card that’s charging you the most interest and then if you’ve paid off all your credit cards, go to your home equity loans or other lines of credit,” said Alice Magos, a certified financial planner and the senior writer for  the Financial Planning Toolkit, a Chicago-based Web site run by CCH Incorporated, a business, legal and tax information software provider.

“If you pay twice the minimum on the credit card bill, it will get you out of debt in about 3 years--that’s the rule of thumb for the average debtor,” Magos added. But if you just pay the minimum that will compound the problem.”

Robert Brokamp is a retirement expert for the Motley Fool, an investment advice and financial information publication, and he agrees with Magos.

“Certainly if you have high interest credit card debt you want to get rid of that first,” Brokamp said. “Line up all your loans and figure out which has to go first.”

Even if you don’t have high-interest loan debt, you can always use this money to throw in a little extra on this month’s student loan or mortgage payment. The experts say this isn’t a huge priority, since this is typically low interest debt and the interest is tax deductible, but Magos said it’s not a bad idea to pay off all of your debt as soon as you can.

Breaking even?

If you don’t have any debt, you should still consider saving the stimulus payment.  Financial planners suggest you keep enough money in savings to cover your living expenses for three to six months.

“If you don’t have a cash reserve you should put this toward your cash reserve needs,” said Dan Candura, a CFP from Braintree, Massachusetts. “It’s good to have a reserve as an emergency fund--or to have the extra cash so you can take advantage of any opportunities that come along.”

All of the experts agreed that it’s important to have cash that’s easily accessible to weather a period of unemployment. Leah Childers, a budget consultant and author of How to Fix Being Broke, suggests making the emergency fund your first priority.

“We know that money disappears, so give your money a job,” Childers said. “Open up a new savings account and put this money aside into that account and make sure it’s not linked to your checking account so you can’t spend it--there are banks that are federally insured on the internet that will give you higher interest.”
 
Retirement approaching?

Even if you don’t have any debt and you’ve got an emergency fund built up, you can still use this money to save a little more for retirement. 

“The vast majority of people are just not saving enough,” said Brokamp, of the Motley Fool. “If you have only $50,000 saved for retirement, and you’re in your 50ss or your 40s, you need to step it up or you’re never going to retire.”

There are different ways to contribute to retirement; Candura suggests opening a Roth IRA.

“The idea that you can grow and invest money tax free is a good thing and here’s an opportunity with a rebate check to open a Roth IRA--and for someone who’s able to leave it for more than 5 years it’s definitely a good option,” said Candura.

Candura also suggested using your check to pay the first couple of month’s premium on a life insurance policy so that your family is protected from loss.

If you still want to spend…

You may think it’s your duty to spend this money, since it’s intended to stimulate the economy, but experts disagree.

“As much as people want to say it’s patriotic to spend, it won’t really do anything for anyone,” Brokamp said.  “Your priority is to take care of your finances and your families finances first.”

If you must spend your stimulus check, Magos recommends spending it at local businesses where it will benefit your community.

“If I go down and buy something from a local business, all that sales tax is going to stay in my county or my little community, and every dime is less property taxes you’ll have to pay,” Magos said. “It’s a good idea instead of running to some shopping mall.”

Magos said using this money to buy an appliance that will help reduce your energy costs or take on a small home improvement project isn’t a bad way to spend if you’re not planning to sell your house any time soon.

Candura emphasized the importance of prioritizing your needs and said this should give people a good chance to reassess their financial situation and decide to spend or save thoughtfully.

“It’s a tax rebate check--it’s really just an advance on next year’s tax return,” Candura said. “It’s your money, coming to you sooner and it’s in a chunk and it’s good for people to consider where it will do the most good.”