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What to Do With Your
Stimulus Check
Hotep (Peace) G&G Readers,
Keep an eye on your bank account – because you could be getting a check from the government in the next few weeks. The government is purportedly doing everything it can to support the economy. Last month, Trump signed a historic $2 trillion stimulus bill to try and contain the economic devastation caused by COVID-19.
But many lawmakers think $2 trillion may not be enough. There's talk of a new assistance package that House Speaker Nancy Pelosi said could "easily" cost more than $1 trillion. In the end, though, total spending could be much more than $3 trillion.
It's clear that the federal government is willing to spend whatever it takes to keep this from becoming a depression. Now, I could debate the government's actions for days. But that's a topic for another time... And I imagine countless books and shows on Netflix will cover its response to the pandemic in the years to come.
Today, I want to talk about your personal finances.
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Because despite all of the government's efforts, many households are struggling. With at least a quarter of the U.S. economy idle during this shutdown, nearly 17 million people have filed for unemployment in the last three weeks.
Mortgage forbearance requests skyrocketed nearly 2,000% in the last half of March. And according to a recent survey by market research company YouGov, 11% of U.S. adults said they couldn't pay their rent or mortgage for April. Seven percent said they were unsure if they could.Think about how many folks won't be able to afford their May payments.
Thankfully, there is some relief on the way. (I emphasize "some" because out of the $2 trillion in the stimulus package, $500 billion goes straight to big corporations.) According to Larry Kudlow, director of the U.S. National Economic Council, an estimated 175 million Americans will start receiving stimulus checks with the first round of payments. Some may have gotten their checks already.
The check amounts will vary depending on your income, but they are worth up to $1,200 per adult, plus an additional $500 per child. So a household of four could receive a check of $3,400.
To see if you qualify for an economic impact payment – and to find other helpful information regarding the checks – visit this IRS page: Economic impact payments: What you need to know.
I also mentioned earlier that lawmakers are currently in talks for another stimulus bill... which could mean another round of checks to taxpayers. So there's a chance you may receive more than $1,200 over the coming months. The goal of these checks is for folks to get back out and start spending again... But that doesn't mean you need to spend yours right away.
I want to give you some ideas about what to do with these checks. It really depends on your situation...
- If you are out of work or have reduced hours:
Use your stimulus check to help cover your essential expenses over the next couple months. Try to avoid tapping into your savings or taking out additional loans if you can. Also, if you lost your job or were furloughed because of the coronavirus, you will likely qualify for unemployment payments. But the payout varies by state.
Try and use the money from the stimulus check and from unemployment insurance to cover your expenses. And if you can't cover all of your monthly payments, look into deferring loan payments. You can defer payments on federal student loans, and some lenders are flexible about payments on mortgages, car loans, and other debts that you may have. Check with your lender and see what your options are.
But the main thing is to be smart with the money you do have. Many news outlets are telling you that this hardship will last one more month, maybe two. But, I want you to be prepared in the event that it lasts multiple months. Cutting expenses and setting money aside for an emergency is the best thing you can do right now.
- If you are still working:
If you're like the 40% of Americans who can't even cover an unexpected $400 expense, you don't have much saved. So my advice is to put the money you receive from your stimulus check into a savings account or money market fund. Build up your emergency fund. While it's tempting to use that check to buy a new couch or new TV, we don't know how long the shutdown will last. You may be employed now, but who knows what other businesses will be forced to cut their work staff in the coming months. Save your money and make sure you're prepared to cover your family's expenses if things take a turn for the worse.
Even if you followed my advice and do have a fully stocked emergency fund, it won't hurt to stash another month's worth of expenses away. Again, it's anyone's guess how long this crisis will last. We don't know if COVID-19 will return in the fall or next year. It's always better to be over prepared.
Now, if you do have a big emergency fund, this is a good time to start getting ahead on your debts. Consider using your stimulus check to make an additional payment to your mortgage or toward your credit-card debt. You could also sock away that money for your child's or grandchild's college fund.
In short, just because the stimulus checks are meant to get folks spending again, it doesn't mean you need to be bamboozled or pressured into buying worthless new things. Take care of your financial well-being first. Make sure you are prepared to survive this economic shutdown, and put yourself in a position to handle whatever crisis may come next.
Here’s to Good Health, Wealth and Retirement!
Ankh Uja Snb (Life, Health & Strength)
Asar Maa Ra Gray
Tax & Financial Consultant
G&G Associates
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“Philosophers aren’t psychics … they are good historians. Knowing your history will allow you to interpret and understand the present … Knowing how to interpret the present, will allow you to predict the future.” Dr. Kaba Kamene
LEGAL NOTICE: This work is based on what I’ve learned as a financial researcher and analyst based SEC filings, current events, interviews, investment reports, corporate press releases and what I've learned as a financial consultant. It may contain errors and you should not base investment decisions solely on what you read here. It’s your money and your responsibility. Nothing herein should be considered personalized investment advice.
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