By this time many of you may have had your stimulus check hit your bank account. For anyone who has not, don’t panic, you’re not alone! Go to the IRS website and check to make sure it’s on its way. For some folks there may be extra steps to be done in order to get your funds. It’s definitely worth a read over to make sure you are good to go.
Even if you don’t have the money in had yet it’s never too late to make a plan for how you will use it. I know for us, any money left sitting in an account will eventually get spent. So creating a plan before we had it was extremely important!
Covid-19 has left so many without jobs and even if you’re still working it’s not without worry for the future. The $1,200 stimulus might be just what you needed or it may be not quite enough. No matter where you land in the spectrum I have some thoughts on how this stimulus check can support you.
Take care of your four walls first!
First thing, if this situation has ripped your income out from under you and you haven’t been able to regain balance, your stimulus options are limited. Now is the time to really assess what you’re spending money on and start dropping anything extra.
It sucks, trust me, I was there in the 2008-2009 recession and it was miserable. You know what though, I pulled through and you will too. So hang in there on the misery and suckiness and know you will come back strong!
Focus your energy on keeping a roof over your head, the lights on, water running, and your belly full. Make use of every resource around you! If you’re struggling with rent, reach out to your landlord. Talk to the power company, call up any accounts you were paying on. Make your situation known so you get access to any help available to you.
There are so many people and businesses looking to help out the people around them. This is what neighbors do. It’s time to take the help and circle your wagons to weather this storm.
Fully fund your emergency fund
For those who have maintained financial stability through this, how is your emergency fund looking? Did you have the $1,000 Dave Ramsey recommends? Maybe you were like me in 2008 and you had nothing saved.
No matter where you were with savings before Covid-19 now is a great time to reflect on how much emergency fund you need on hand. The first step to paying off debt is creating the designated funds to cover an emergency. Using your stimulus check to kick start your fund is an excellent excuse to start paying off debt.
Less debt means greater stability in a future that is just a little off kilter for all of us these days.
Put it in a high-yield savings account
If your income is stable and the basic $1,000 emergency fund is in place, don’t worry. You can still save more! Kidding… but also not kidding.
I talk a lot about the savings number that is right for you and how much you should save to provide security. If you feel that your job could be impacted in the future, at all, it’s a good idea to increase what you’re saving.
I keep any additional savings and sinking funds in a high-yield interest account through Marcus by Goldman Sachs. It helps offset the 2% you lose on inflation each year and it usually takes about 24-48 hours for a transfer to go through. Easier access to your money but not so easy it spends fast. Once all this settles back in you can always withdraw the money and put it towards debt or some other goal (like maybe your sinking funds).
Invest in learning a new trade or skill
Take the money that is now extra and use it to invest in your future ability to earn and build wealth. Maybe you were already in the market for something new before all this happened. Maybe you are about to enter the workforce and want to make sure you’re marketable. Either way, it’s a great time to polish up some new skills.
Have you always imagined yourself in IT? Maybe it’s time to study up for a CompTIA certification to kick off our computer support job options. Have you always wanted to start your own Etsy shop? YouTube is full of teaching videos to help you master crochet, painting, woodwork, you name it!! Maybe you’re just a little rusty on how to use the Microsoft Suite and want to boost your resume, check out Udemy.com they have a class for everything.
There are so many unconventional ways to learn and so many learning mediums at our disposal! Never, EVER, stay stuck in a job that you don’t like when you can pick up a new skill whenever you choose.
Open a 529 for your kids
If you haven’t started a 529 plan for your kids future education costs, here’s an easy way to start. I personally haven’t started a 529, so I don’t have a ton of detail to give you here BUT if we did have them in place I would have added $500 to each kid.
Each state has their own take on the 529 and the financial benefits of opening one can vary greatly. Most financial planning companies have virtual meeting options, so any questions you have can be answered directly. The future of education seems like it is up for some changes, and rightly so! However, starting the basis for your child’s higher education future and financial security (by starting life with minimal student loans) is definitely never going out of style.
Pay off your highest monthly payment debt
Oh hey, you knew this was going to be my favorite option right? If you have some annoying debt hanging around, this is the option for you! Have you mapped a plan for debt pay down? Were you paying off debt before this happened? Either way you go, find the next thing in your snowball and vanquish it!
For those who haven’t been paying off debt and now find themselves in a position where there is more money coming in than usual, congrats! I’ve heard it’s happened to some of those who qualified, and good for you! Now is a great time to use this as a foundation you spring board off of. Take some time to map your current debts and get a jump on them. Then refer back to the skills development line item (maybe you can use this time to career pivot and keep this money coming in).
Shop local businesses
Surprise, this one is about spending money for mostly no other reason than the fact that it’s fun. I deeply, deeply believe that your budget should bring you joy. If you live your life in constant deprivation it’s stressful and miserable and it SUCKS! So, don’t do that! Also, don’t let your spending undermine your future goals. Today’s pursuit of fun should never destroy tomorrow’s options.
Keeping that in mind… we are in a unique point in history and we are seeing so many small business owners around us scramble and flounder. If you find that shopping online and grabbing food today is helping you mentally get through quarantine. Then try to keep that in the family and spend that money around to small businesses who need it so much more right now! It’s not always possible but when it is I always shop local!
Open a high interest CD
If you’re tucking this extra cash into savings and know your won’t be needing it for six months to a year, consider a Certificate of Deposit. This can give you a higher interest rate than just using a high yield savings account. Not only will you earn a better rate but it can also protect you from the temptation to spend it on anything else. Almost any bank can open a CD and it can happen online, that’s definitely an easy win!
Catch up on Home and Car Maintenance
If you have some work that you’ve been putting off doing on your car or your home take the time to get it done! Now that we’re sitting in our homes day after day those small fixes we’ve avoided may be starting to seem less than small. They may seem HUGELY annoying.
You might have some extra time on your hands and together with a little extra cash it’s the perfect time to knock out a project or two. Especially if it’s a project that will raise the value of your home, bring you peace of mind, OR prevent future expensive repairs. We’re stuck here anyway, might as well do some stuff.
Start paying off student loans early
Ah yes, this topic is so close and so dear to my heart. Hang out long enough and you will eventually hear me ranting about how I’m paying off my student loans. It’s been six months so far of my hung-ho launch into the student loan pay off goal! I can’t wait to kiss those interest rates, monthly payments, and headaches good-bye.
Were you paying off loans before this? If you weren’t it’s a good time to start looking at what you can pay off and how long it might take you. Even if you’re still in school you can start making some payments ahead of time. Right now while interest rates on Federal Student Loans are frozen you can get ahead and knock a chunk off of principal you wouldn’t otherwise get to touch. So, if you’ve wondered “Should I pay off my student loans during quarantine?” the answer is a mega huge YES!!!! (but only if you’re secure in all other necessities).
We’ve all waited and watched for this stimulus check to come through. Whether you’re depending on it for bill pay or it’s going straight to your emergency fund, make sure you have a plan! The easiest way to accidentally blow through money is to keep it in your account without a plan. Don’t do that to yourself! This is exactly the way you wake up owning a baby tiger. exactly.the.way.