Stimulus Check Requirements and Best Way to Spend it
Holy smokes, Batman! What a time to be alive! By now you know that the world has been turned upside down. The U.S. Government agrees with the previous statement and has passed a historic bipartisan $2 Trillion stimulus package which is supposed to shock the economy back to life. This stimulus package includes cash directly into the hands of 9 out of 10 American households.
I honestly never thought I’d see this happen in my lifetime, but here we are. Here are the questions you’re probably asking yourself:
•Who qualifies for this money?
•How do I receive this money?
•When will I receive this money?
•Is there more money coming?
•What do I do with this money?
We’ll discuss all of your options and what to do with the money in 3 specific financial situations.
According to the New York Times:
Who qualifies for this check?
“Most adults will get $1,200, although some would get less. For every qualifying child age 16 or under, the payment will be an additional $500.”
These amounts are based on your 2019 tax return. “If you haven’t prepared a tax return yet, you can use your 2018 return. If you haven’t filed that yet, you can use a 2019 Social Security statement showing your income to see what an employer reported to the I.R.S.”
Single adults with Social Security numbers who have an adjusted gross income of $75,000 or less will get the full amount.
Married couples with no children earning $150,000 or less will receive a total of $2,400.
Taxpayers filing as head of household will get the full payment if they earned $112,500 or less.
The benefit would start decreasing at a rate of $5 for every additional $100 in income. The phaseout starts at $75,000 in adjusted gross income for singles, $112,500 for heads of household, and $150,000 for married couples filing jointly; it would phase out entirely by $99,000 for singles and $198,000 for couples (with no children).
How do I receive this check?
The money is expected to be delivered via direct deposit. If you have outdated information, “On March 30, the I.R.S. said on its website that it would build a portal where people can update their information “in the coming weeks.
When will I receive this money?
There will be one payment, scheduled for the middle of April. “Secretary Steven Mnuchin has said he expected most people to get their payments by April 17. Presumably those people using the new portal would not get money until a few weeks after they are first able to provide their information. The I.R.S. has not said when those receiving paper checks would get them.”
Is there more money coming?
There may be future bills for future relief money in the same fashion, but that is not set in stone
What do I do when I get the money?
1. Financially unstable
If you are financially unstable you can’t make ends meet. You have been laid off or are experiencing extreme hour reduction due to current events.
You may think that because I run a personal finance YouTube that I am impervious to this type of situation. You are wrong my friends! Jayme just took a pay cut and we are following these steps as I say these words. No one is immune to unplanned circumstances and we truly do practice what I preach on here.
Since we are experiencing a $20,000 pay cut, we are having to see ourselves in this category.
You do not know if you can pay rent, get groceries, or maintain the lifestyle that you had previous to the pandemic.
If you are in this position, here are four things you need to consider when you receive your relief money.
For those of you who do not know, the ‘4 walls’ refer to housing, food, transportation and utilities. These are the most important part of your budget. They are the necessities to keep life going in your household.
These four categories need to be met first in any budget. This is especially true in a financial crisis or emergency situation. If you are financially unstable, this is where you need to put the stimulus check first. Pay rent if you can, get groceries, fill up your gas tank and make sure the lights are on and the wifi is connected.
Immediate needs first and foremost.
How have you lowered your bills?
Before you even get the stimulus check, you should negotiate or open dialogue with your service providers. Here’s a list to consider:
•Have you contacted your landlord or rental property? Can they work with you? What are your options?
•Have you contacted your cell phone provider? Can they work with you? What are your options?
•Have you contacted your utility companies? Can they work with you? What are your options?
•Insurance? Car loan company? Can they work with you? What are your options?
Contact everyone you can to try to lower your monthly obligations. Companies are willing to work with their customers due to Coronavirus– Be specific that your hardship is directly due to Covid-19. Once they hear these keywords, they will direct you to relief programs and/or assistance services.
Cut anything that isn’t an immediate need
Remember: This is an emergency situation and it will not stay this way– things will get better and this is a temporary solution to an immediate threat.
Consider cutting all subscription services, cable, and streaming services. Only purchase what you need from the store and limit your outings to conserve gas. This shouldn’t be difficult since we’re not supposed to be traveling or going out.
Think of this budget as your bare bones budget. This is what you need to survive and nothing else.
Get Caught Up
If your 4 walls are met, you have negotiated your monthly bills that you can and you have cut items from your budget, go ahead and use the rest of the stimulus check money to get caught up on any payments you are behind on.
2. Financially stable
If you are financially stable you are able to meet your basic needs. You may experience reduced hours due to Coronavirus or you may fear being laid off in the future due to the uncertainty surrounding the economy, but currently, you are weathering the storm.
If you are in this position, here’s what you need to consider when you receive your relief money.
How is your savings account doing?
If you are able to meet your four walls but have still been affected by Coronavirus, put your relief money into a savings account. While you are able to work from home, spend as little money as you possibly can and horde the rest.
You may not like to think about it, but ‘stockpiling’ money now could help you if Covid-19 affects you more than it already is.
If you have debt, keep up with the minimum payments until you can no longer do so. Do not put anything extra on debt, don’t worry about your debt snowball or debt avalanche right now– redirect your financial power to your emergency savings account.
If you experience any more hourly loss or you are laid off later on, follow the path of financially unstable households.
3. Financially free
If you are financially free, you have little to no debt. You are not affected by a lay off or a reduction in hours. Your needs are met and you are able to continue your way of life – sans gatherings of 10 people or more.
In other words, you’re going to be fine financially.
How is your savings account doing?
Make sure that your emergency fund is funded for six months to a year. If it’s not, divert income to your savings account until it is fully funded.
Can you afford to help others?
If you are in a position to help others who are financially unstable right now or have the potential to become financially stable, can you help them by monetary means?
How is your portfolio looking?
Now that the market is down people are freaking out about their retirement but please don’t panic or sell your shares. The market will recover and now is a great time to get “discounted” shares. M1 Finance is a great way to open or fund an IRA, buy ETFs and individual stocks.
Ways I save money:
Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:
• Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s it. Really. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries.
Just scan your receipts and get gift cards from retailers like Amazon, Starbucks, Target, Ulta, Applebees. Use code QHKBH to earn 2,000 points ($2)!
• CIT Bank offers high interest savings accounts and CDs to provide a safe, secure way to earn money grow your savings.
• Gabi is a full-service, online advisor who compares all your insurance options to find you the right policy, all in under two minutes.
• M1 Finance is an easy to use brokerage platform that allows you to invest in Fractional Shares and auto reinvest!
• Webull Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1400).
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