You can put that stimulus check to good use with a spending or saving strategy.
6 Smart Uses for Coronavirus Stimulus Checks
On March 27, President Trump signed a $2 trillion congressional economic relief package that includes direct payments of $1,200 for individuals with an adjusted gross income (AGI) of $75,000 or less or $2,400 for you and your spouse. The package also includes an additional $500 payment per child in the household.
While it may be tempting to relieve COVID-19 stress and anxiety with online purchases or use the money for a new recliner while stuck at home, there are better ways to spend or save your stimulus money.
Click or swipe for 6 smart uses of your coronavirus stimulus check.
1. Pay for basic survival needs
Lots of people who lost their jobs or were laid off wouldn’t be able to pay rent, make the mortgage payment or buy food without the emergency stimulus checks.
If you don’t have emergency savings or lost your job, the highest priority for stimulus funds should be essentials like housing, food, utilities and other expenses necessary for you and your family’s survival.
2. Open an emergency savings account
Have you put off starting an emergency fund for unexpected expenses or to help you get by in case of job loss, illness or injury? If so, think about depositing that $1,200 or $2,400 in a bank account designated specifically for emergencies.
Even if you already have emergency savings, you can bump up the balance significantly by depositing some – or all – of your stimulus check for added security in uncertain times.
3. Pay extra on your student loan
Now that the U.S. government has placed a temporary waive on federal student loan interest, paying extra on your student loan or making a large, lump-sum payment can knock the balance down significantly faster.
Under the stimulus package bill, federal student loan borrowers could suspend payments through September 30, 2020, with no interest. However, if you don’t need the stimulus check to pay monthly bills, consider applying it to your student loan debt.
4. Make a lump sum mortgage payment
One way to pay off your mortgage sooner is to make at least one lump sum payment directly to the principal annually. You can also pay a little every month directly to the principal to pay the mortgage off faster. Some people use yearly bonuses or other large checks to make a lump sum mortgage payment. Now you’ll have a big check, too.
If you don’t need the stimulus money for basic survival needs, consider making a lump sum payment in addition to your regular monthly payment. Or, if you worry you could be unable to make your mortgage payment later, use the stimulus money to pay one month ahead.
5. Pay off credit card debt
The last thing you need right now is credit card debt hanging over your head and keeping you awake at night. High credit card debt is always worrisome, especially when you could lose your job in troubled times. You could also get sick and have to pay medical bills with that same credit card, increasing the balance to a dangerously high amount.
If you have emergency savings and can pay off – or at least pay down – credit card debt, why not eliminate those credit card monthly payments now while you have extra money?
6. Pay it forward
Are you fortunate enough to still have a job and/or plenty of money in savings or an emergency fund to get through the COVID-19 crisis without needing the stimulus money? If so, there are plenty of others who need it, so consider passing along some of that money.
You can give money directly to friends or family who’ve lost their jobs. Maybe help out some of those baristas at your coffee shop, your hairdresser or someone else whose income is lower or nonexistent right now. Donate to local charities to help those in need of food, toiletries, utility payment and other necessities.
This article by Deb Hipp was originally published on Debt.com.
Published by Debt.com, LLC