What To Do With Your Stimulus Payment
If you use direct deposit, you should have already received your stimulus payment of up to to 1200 dollars per person and 500 dollars per child. Those of you electing to receive it by paper check should get it soon.
For many, what to use the money for is a no brainer, they need to use it to live. For others though, the purpose of the check may be less clear. If you have not been impacted, you might not need the money to live. In fact, because you may be saving money by working at home, you might be doing better than ever.
So, what should you do with that big check from the government? We have some ideas for you.
What Is A Stimulus Check?
By now, you should be well familiar with the CARES act. The Coronavirus Aid, Relief, and Economic Security Act among other things, set aside money for direct payments to individuals.
With this act you can get 1200 dollars per adult and 500 dollars per child for those who qualify. Qualifications are based on income with benefits decreasing with an increase in income.
What Should You Use Your Check For?
If you have been impacted by Coronavirus, you should obviously use the money for living. Pay your bills and put food on the table. Be sure to take advantage of every possible program to minimize your monthly bills and cut household expenses. This includes deferring as many payments as you can, such as credit card and auto loan payments.
If you have not been impacted, you have far more choices. Here are some places that you can put the money.
Just because you have not been impacted does not mean that you will not be in the future. Companies are losing money and looking for any way that they can to cut costs. You could be included in the next waive of layoffs, so be prepared.
Place your money into your long term savings account. If you do not have one, now is the time to set one up. Choose an online savings such as Capital One 360 or Marcus by Goldman Sachs. They pay higher interest than your local bank will and being online they will be easier to separate from your normal checking.
2) Credit Cards
If you are carrying a heavy load from credit card debt, now is the opportunity to relieve the burden. Take your money and pay down those balances.
If you received the full 1200 dollars and place it all on credit card debt, you can save 200 dollars or more in interest charges over the course of the next year. If you are a couple and if you have kids, you can pay off even more debt and save even more in interest.
If you are not impacted and do not expect to be impacted, donating to charity may be the right thing to do. This is especially true if you already have a sizable savings account.
Choose a charity that is helping out people right now. Covid related charities like the United Way are in desperate need right now due to the demand. While you are at it, consider donating blood to the Red Cross. Blood is desperately in need right now because people are not going out to give.
Donating to charity can do a lot of good in these times and it will also give you a nice tax deduction at the end of the year.
4) Supporting A Local Business
The fact is that a lot of businesses will go out of business because of this crisis. If you feel the need to spend your stimulus check, why not support some local businesses.
Amazon does not need your money like that corner bistro does. Order some take out food and help them make it through.
5) Improve Yourself
You probably have a lot of free time at the moment. Why not spend it improving yourself. Use your money to invest in a learning language program or to take an online college course.
Spending some of the money on yourself would have the advantage of giving you something to occupy your time with during the era of the lockdown. In addition, the improvements that you make could lead to a higher salary down the road as you make yourself more valuable to employers.
6) Set Aside Money For A Home
If you are renting, you could use this money as a part of a down payment for a home.A home is one of the best ways to build wealth. As home prices rise, so does your equity, making a home effectively a long term savings account
A 200,000 dollar home on an FHA loan would have a required down payment of 7000 dollars. A family of 5 could receive up to 3900 dollars in stimulus money. That is if you get the full 1200 per adult and get 500 dollars per child. This is 55 percent of your potential down payment.
Investing is a much riskier thing to do with your money, but the market is down. If you want to take the chance that the economy will rebound quickly, investing in stocks could be a very rewarding activity.