Last week millions of Americans received a stimulus direct deposit payment of $1,200 per person or $2,400 per couple. Millions more will receive that payment in the near future. Exact amounts may vary based on taxable income and tax status. Is this free money? What is the best way to spend those funds? Is any more coming? If you have not yet received your stimulus payment you can check on the status here. Yes, this is free money. Taxpayers will not be required to repay this stimulus payment in the future. The government is trying to provide assistance during this pandemic. We all know this assistance is much needed. But what is the best way to spend the money? It’s largely a personal decision but here are some ideas 🙂
Immediate Necessities and Essential Bills
For anyone that is out of work, this is a real lifeline. The money may need to be used for essentials like food, shelter, and electricity. However, please remember that many companies and businesses are also extending help to those that have lost work. So before using all the money for bills, contact them first to find out if there is an extension available or the minimum that must be paid.
Pay Down Certain Debt
Why certain debt and not just debt? Well if you owe $50,000 in student loans, paying $1,000 towards it right now may not be the best use of your money. However, if you have a few small store cards or another high-interest account, maybe even a payday loan, now is the time to knock that out. The goal is to decrease your overhead budget – your minimum fixed amount due overall each month. For example, you have a few store cards that each has about $500 or less total due, but when you add up all of your minimum payments they average to $200 each month. Using the stimulus money to pay off those balances just saved you money in your monthly budget.
Savings
If you are among the fortunate ones that have not been majorly affected by COVID-19, then saving the funds can be a major step for the future. The economy will take time to bounce back from this and recession is on the horizon. Keeping the emergency fund well funded is always a good idea.
Invest
If your savings account is already in good shape and you’ve been curious about investing now is a good time. Market prices are low and it’s a prime opportunity to get in the game. Of course, do your research and only use reputable brokerage firms.
Self Improvement
Speaking of investing, now is a perfect time to invest in yourself! Is there a certification you’ve been putting off? Is there an online class you would like to take? Is there a business membership you would like to join? Using the additional cash to increase your skillset is a great idea. As we push forward in these uncertain times we may all need ways to create additional streams of income.
Currently, there are no additional funds scheduled for issuance by the federal government. A bill was just proposed to provide additional assistance but the final outcome remains to be seen. Until then what are some effective ways we can budget what we have? How can we make budgeting easy and seamless? The next article will explain.
Until next time, Crystal
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