What You Should Do With Your Coronavirus Stimulus Check
This is possibly the strangest time we’ve known in recent memory. The world has mostly shut down, and it’s discouraging. People are doing their best to keep their spirits up and to encourage and help others though. Neighbors in Italy suffering from cabin fever made world headlines recently when they leaned out their windows and joined in a spontaneous sing-along of a patriotic Italian song. I wonder if it would’ve been more appropriate to sing the chorus from a Hamilton song: “The world turned upside down…”. I hope your finances haven’t been turned upside down. If you’re struggling a bit, help is on the way.
According to the IRS’ website, economic impact payments (also known as “Coronavirus stimulus checks”) will begin in April. If you filed taxes for either 2018 or 2019, you’re eligible to receive a payment for up to $1,200 for individuals or $2,400 for married couples. You’ll also receive $500 for each qualifying child. You’ll receive the full payment if you make less than $75,000 for individuals or less than $150,000 for married couples. If you make more than that, the amount you receive will be reduced. If you make more than $99,000 (individual) or $198,000 (joint filers), then you will not receive a stimulus check. For complete details, go to www.irs.gov and click on “Economic Impact Payment”. Since we don’t know how long this crisis will last, or which jobs are really secure, you’ve got to use this money wisely. If you are blessed to still have your job and can pay all your bills just as before, the best thing you can do with this money is to either establish or beef up your emergency fund. Many people struggle to establish an emergency fund. It’s easy to be intimidated by the amount of money you’d need to pay all your bills for 3-6 months. Many people give up before they begin, saying, “I can’t save up that much money.” Well, guess what? Now, you don’t have to. One day soon you’ll wake up and you’ll have an emergency fund, courtesy of millions of other U.S. taxpayers! To be sure that you use this money for your emergency fund only, I recommend you open a new, separate checking account with 100% of the money. And leave it there. Then, when your next emergency shows up, you can handle it without borrowing any money. Again, this advice is only for people who still have their job and their paycheck. If you’ve been laid off or lost your job as a result of the virus, then you will of course need to use that money to pay your bills. And for those of you in a comfortable situation- your job and paycheck are secure, and you already have a beefed-up emergency fund (3-6 months of expenses)- you’ve got other options. You could use it to pay down debt, or start or add to your retirement savings. Hopefully, we’ll receive our economic impact payments soon. Start planning what you’ll do with yours now so that you’ll use the money wisely.