March 9, 2021
As I’m writing this blog, lawmakers are gathering together and hammering out the details of another round of direct stimulus payments to Americans. In general, the eligibility requirements are very similar to those of the first round. As of today, it appears that individuals making $75,000 or less, or couples making less than $150,000 will be in line for the full payment. If you are in that category, you can reasonably expect $1,400 per adult. One of the biggest differences in this round of payments is the likely inclusion of $1,400 per qualified dependent. Payments would be reduced for individuals making up to $80,000 and couples making $160,000 before phasing out completely. This is all subject to change of course.
While stimulus payments are generally meant to inject money into the economy, many Americans have decided to use these funds to stimulate their financial plan. If you are wondering what to do with your check, here are a few ideas to help you make the most of it…
1. Catch up on bills– If you are behind, use this as an opportunity to get caught up. Late fees and interest can pile up and make it even harder to get back to even. Don’t squander an opportunity to dig out of a hole and make some progress!
2. Establish an emergency fund– Surveys consistently show that somewhere around 60% of U.S. households do not have enough in savings to cover a $1,000 emergency. An established emergency fund will reduce the likelihood of going further in debt when an unexpected expense pops up.
3. Pay off debt– Here’s where you can really make up some ground. When will you have another chance to throw thousands of dollars at credit cards, student loans, and upside down car payments? If you are currently in debt payoff mode, your stimulus check could put you ahead of schedule.
4. Stop putting off insurance– If you’ve never gotten around to putting life insurance in place, this is a great opportunity to take finally action. Term insurance is cheap, and is a mustif you have debt and/ or a family that depends on you. Disability insurance is often overlooked and should be considered as well.
5. Start a Roth IRA– If you are in the income range that allows you to receive a stimulus check in the first place, you should be eligible to contribute to a Roth IRA. Like life insurance, a Roth IRA is probably on your list of things to do that you haven’t gotten around to yet.
6. Fund a 529– Most parents want to help their children save and pay for college. If you have/ had student loan debt, you probably want better for your children. This is usually further down the list of financial priorities than getting out of debt and saving for retirement.
7. Support a charity– Use this as an opportunity to give to a charity that you support. The last year has been difficult for many churches and non-profits who do commendable work. If you are in good shape, consider paying it forward!
Whatever you decide to do, don’t go about it without a plan. You have a chance to make a lasting impact on your financial well-being, so make it count. Fight the urge to buy the latest iPhone or Play Station 5 and stimulate your own financial plan!