Stimulus checks are arriving. The Internal Revenue Service (IRS) has distributed $157.9 billion through 88 million stimulus payments, according to Andrew Keshner of MarketWatch.
If you have recently lost a job, or you’re having difficulty paying bills, your check may already be spent. However, if you’re still working, or remain financially comfortable, think carefully about how you want to spend your checks. The money could be used to improve your long-term financial outlook or provide support to people in need. For instance, you could:
Contribute to an emergency fund. It’s a sound idea to have savings equal to three to six months of expenses in a rainy-day fund in case something unexpected happens, such as a coronavirus quarantine.
In 2019, the Board of Governors of the Federal Reserve reported just 61 percent of adults had enough savings set aside to cover a $400 unexpected expense. The report stated, “During 2018, one-fifth of adults had major, unexpected medical bills to pay, with the median expense between $1,000 and $4,999. Among those with medical expenses, 4 in 10 have unpaid debt from those bills.”
Pay off high-interest rate debt. If your income is secure, using your check to reduce high interest rate debt may be a good choice.
In early April, the average interest rate assessed on credit cards accounts with unpaid balances was 16.61 percent. Reducing your balance, could significantly reduce the amount of interest you pay. In addition, if something unexpected happens, having a higher level of available credit could be beneficial.
Donate the amount. If you are confident you will not need the money, consider making a donation. A donation can take many forms. You could help a loved one pay bills or provide support to a church or charity.
“…many charities and nonprofits are still struggling. Donations to some churches have plummeted, and many charities have had to cancel crucial fundraising events such as galas, bike races, and walkathons,” reported the Associated Press.
What are you planning to do with your stimulus check?
-Kevin Theissen, HWC Financial
