About 85% of Americans will be getting another check from Uncle Sam to offset the impact of the pandemic.
This one looks to be about $1,400.
So, what should you do with that check?
Let me offer a few prudent ideas:
- Pay down credit card debt (if you have any). Chances are your credit card company is charging upwards of 20% a year in interest. The easiest way to make 20% is to cut your debt.
- Add it to your cash reserves. I typically recommend most people set aside six months of living expenses in cash to serve as an emergency fund. The reason so many people have credit card debt is a lack of savings.
- Invest it. This money can be invested in a tax-free vehicle like a Roth-IRA IF you qualify. Note: You must have wage income to be eligible for a Roth.
- Send it back: Okay, hear me out on this one. Send it back in the form of a tax estimate, assuming you typically owe taxes when you file. Nothing hurts more than getting penalized by the IRS for not paying enough before the filing date.
- Use for your daily expenses. If you are having difficulty making ends meet in this economy, that check will help you. Assess your priorities, cut wasteful spending, and apply this stimulus check to meet your daily needs.
So what if none of the above apply to you? Then go out and buy something you always wanted but could never pull the trigger on. Just be sure not to spend more than the size of the check. Any purchase is a stimulus to the economy.
$1,000 shoes? Expensive wine? A puppy? But first, consider the five options above.
If you’d like to learn how we counsel people on what to do with their discretionary income, click here or call 513-563-PLAN (7526) to schedule a brief call.
Regards,
Nikki Earley, CFP®
