by Jeffrey McKinney
The U.S. government will provide individual American adults with $1,200 and married couples with $2,400. Parents will get an extra $500 for each child they have under 17. Those making over $75,000 will pocket lower amounts. Singles making $99,000 or more and married couples with children making $198,000 will get zero.
Many observers are asking when will we see the money? A Treasury Department proposal called for the checks to be issued beginning April 6, and another wave in mid-May. The checks are part of the $2 trillion coronavirus economic stimulus package that became law in late March. Yet some financial experts claim the money might not arrive until May.
The $2 trillion measure is the largest economic package in U.S. history. It’s aimed to help people who have lost jobs from the coronavirus’ colossal blow to the economy pay essential bills, including mortgages, rent and utilities. For those working and still getting a stimulus check, one question looms: will they use the money to pay debts, save, invest, or help the economy and small businesses where they live?
While there are all kinds of ways people could use the dough, here are some tips from experts on how to consider spending the money wisely and to enhance your personal finances.
1. Establish an emergency savings fund
Experts often suggest having enough cash to cover living expenses for three to six months. Be sure to keep the money in an interest-bearing savings account. One big plus is It could help you pay for unexpected expenses. Consider opening a interest-bearing savings account at a different bank or credit union, making it harder to take money out of the fund.
2. Pay down credit card debt—if you can
If you do that, be certain to pay off higher interest rate cards first. But before making that move, examine if you can pay necessary bills. Experts say many major credit card issuers, utility companies, and mortgage lenders are offering special hardship programs and will work with people given the coronavirus crisis. Check to see what relief programs debtors may have available now.
3. Erase recurring household bills
That may mean paying your next mortgage payment, allowing you to build equity in your home and cutting the interest amount of over the life of the loan. Or pay other costs that pop up monthly, including rent, student loans, childcare, or prescriptions.
4. Get rid of pesky medical bills
Those costs can cause major financial difficulties for many Americans and their families. According to a CreditCards.com poll, 62% of Americans say they could face financial hardship of faced with a serious illness.
5. Build a college fund
If your financial situation is solid in the near term, open or contribute to a 529 Plan for your child. Experts report the plans will allow your $1,200 to grow on a tax-deferred basis. Plus, the distributions for qualifying college-related costs are entirely tax-free.
6. Invest in stocks and employer retirement plans
Believe it or not, now might be a good time to look at investing in stocks. That’s particularly true if you’re good with covering upcoming necessary expenses and have an emergency savings fund. While the coronavirus has battered Wall Street, that pounding also has made many stocks more affordable.
Further, consider maxing out your employer’s retirement account matching program. Multiple employers will match a percentage of your annual retirement contributions up to a certain limit.
7. Make home improvements
Consider spending some of –or all–the money to make home upgrades, allowing you to perhaps get a good return on your investment. HGTV reports small improvements like replacing old faucets, lighting, doors, and electrical outlets may improve your home’s value.
8. Support your local economy and small businesses
Purchase a gift card at a local restaurant or another small business that has been forced to shut down or cut back due to the coronavirus. That will provide the business with a much-needed cash infusion during the closure. It also allows you to use the gift card to do something nice for yourself, like getting a nice meal out or a massage, when social distancing or stay-at-home practices end.