The corona virus has had a major impact on the lives of people around the globe. There's no denying it. Our economy has slowed, paychecks have stopped, and some states have even froze the hiring of state employees. But do you know what hasn't stopped?
Rent, mortgage, internet, phone, heating, air conditioning, car, insurance...all bills that can't wait for the shut down of our country to subside. That is why the stimulus package in America has granted most American adults a payment of $1,200 to be deposited in their accounts by the IRS, and most Americans will be using the money to stay afloat.
But what if you're someone who is still working, and doesn't necessarily need the money? Your paycheck hasn't changed, your hours have not been cut, you are still employed, and all bills are current. What should you do with your money?
Below are some suggestions on how you can spend your money on things other than essential bills.
This seems like the most obvious option, but you’d be surprised how many people don’t think about this option. If they do, it’ll be for but a fleeting moment.
In truth, you should have enough money in savings to sustain yourself and your family for about 2 months. Personally, I’d recommend 4 months as you never know what extra expenses may occur, so it’s better to be safe than sorry. Most Americans, especially millennials and younger, can’t say they have this. Why? Mostly because of the recession in 2008-2009 coupled with inflation and the fact that wages haven’t really increased that much to keep up with it all.
If you’re someone who isn’t in desperate need of anything right now in this moment, the best thing you could do is save this money. Put it towards a retirement account, savings account, or your ROTH IRA if you have one.
Student Loan Payments
Student loans have been the bane of many borrowers existence. My own student loan payment is about $260/mo. I still have about 3.5 years left to pay it, too. My monthly payment has never been consolidated nor lowered ever, either.
This is why this is the perfect time to pay your loans. Why? Well, most people with student loans aren’t making a dent in their principal amount because they’re too busy paying the interest. That’s why your friend Mary started with a principal amount of $38,000 in December 2015, and her current payoff is $39,500 as of April 2020, despite making timely payments every month.
As of March 13th, 2020, student loan companies have entered federal student loans into a state of forbearance. Basically, this means that you don’t have to pay your federal student loans until after September 30th, 2020. This also means that your federal loans are not accruing interest during this time, so not paying will not hurt you.
But if you’re someone who is struggling with student loan payoffs, you may want to keep paying. Whatever payments you make now will apply to your principal balance of your federal loans. This means that pesky interest that has been dragging you down for years can’t touch you. Your payment is immune to its poisonous grasp.
As of right now, private loans still need to be paid. However, if you have any federal loans, consider continuing your payment. It’ll help you in the end.
Invest in the Stock Market
This option requires you to be informed and savvy on the stock market, which I am not. However, stocks for certain businesses are cheaper than they have been in years, and it’s definitely a buyers market right now.
Only choose this option if you know what you are doing. There are some stocks worth buying right now, say Procter and Gamble, while others could cost you even more money, which is not what you want right now (or ever, if we’re being honest). But if you’re looking to make an investment decision to pay off in the future, explore this option. Just make sure that you do your research, first.
Small Business Startup
Have you always wanted your own bakery? Did you want to become a YouTuber, but you don’t have the proper equipment? Is photography your calling, but you can’t afford that brand new professional camera?
I’m not sure what your passion is, but that $1,200 could help you get started in building your own small business. Most people don’t start their own business for many reasons: too much responsibility, too expensive, unsure of the future, etc. But if you’re someone who truly wants to start working for yourself, and you’re ready to take the jump, start by investing your $1,200 in equipment for your business.
Pay off a Meaningful Bill
First, unless you have one that is interest free for a certain amount of months, a credit card is not a meaningful bill.
Why? Because credit card debt, for the majority of Americans, is not going to go away any time soon. Therefore, it’d be a waste of money to apply the $1,200 to a credit card payment. According to TheStreet.com, the average credit card debt per person is $5,331.00. That’s over 4 times the amount of your base stimulus check, not including the extra $500 parents receive per child in the house. Even if this debt is spread out among multiple cards, odds are you will probably swipe that card again sometime in the near future. This is why credit card debt is so difficult to get out of once you’re in it. It’s better just to make the correct monthly payments on the card and pay in cash for items when you can so you can avoid swiping the card. This is the easiest way to pay off a credit card.
So what are meaningful bills?
A meaningful bill, as used in this article, is a bill that, basically, isn’t permanent, and it has little to no chance of increasing. In other words, it’s a bill that can be paid off easily and quickly. These bills include, but are not limited to, car loans, mortgage payments, interest free credit cards, child support, medical bills, etc. Basically, put the money towards something that’ll get you more out of debt and help raise your credit score.
Treat Yo Self
If you’re in a good spot financially with plenty of savings, then there’s nothing wrong with treating yourself to something. Maybe you’ve always wanted a Nintendo Switch or a trip to the beach in the future. Maybe there were certain center pieces for your wedding you wanted, but they were too expensive. Whatever it is, there’s nothing wrong with using the check for these purposes. Just make sure you absolutely do not need it for anything else, and you are financially stable. Otherwise, you will severely regret it.
I know, I know…some people are raising an eyebrow right now. Odds are, your family all received some sort of check. Regardless, sometimes that may not be enough. What if you’re still working as is your partner, and you all jointly received $2,400? Great! But what if, hypothetically, your father is a diabetic, lost his job, and still has to pay for insulin? Most likely, his check won’t go very far.
Doesn’t he deserve your check? Hell no.
What, you thought I was going to say yes? Facts are facts. The check is yours, and it was given to you. You paid into the taxes that entitled you to the check, and you can spend it however you like. No one deserves any part of your stimulus check except maybe your kids. But if you are someone who truly doesn’t need it, but you know a family member who does, there’s nothing wrong with helping them. My parents did not qualify for the check because of their income. However, if they needed it, I would give them mine since I’m still working full time from home.
This option is more for parents than anyone. If you have a child, and you want them to have the option to go to college, this would be a good place to put money from your stimulus check. College funds are great because they don’t necessarily have to be used for college. My own parents started a college fund for my siblings and me, and we ended up having about $15,000 each to our names by the time we entered college.
My brother, sister, and I chose to go to college, so most of the money went there. However, it can also just be given as a gift to your child when they get older. Most college funds and savings accounts allow for the money to gain interest and grow over time. That means whatever you put in now will probably increase by the time it is withdrawn. So even if your child doesn’t go to college or a technical school, it’s still money to get them on their feet upon graduation.
Hopefully there's something on this list that is a viable option for you. If not, feel free to share the suggestions to others as food for thought.
What other things can you do with your stimulus check?