A stimulus package designed to provide critical support to Americans affected by the COVID-19 pandemic is on the way. The “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” provides wide-ranging solutions in response to the global pandemic, and it contains a record $2.1 trillion in relief spending. The CARES Act also expands the Small Business Administration’s (SBA) 7(a) loan program to include $350 billion for a small business program called the Payroll Protection Program.
There have been millions of Americans impacted by the coronavirus, as 6.6 million people have applied for unemployment in the past few days. In order to at least somewhat alleviate the difficulties brought upon by this virus, the government will be issuing these stimulus checks worth $1,200 per person and $500 per child in the coming weeks. There is much debate as to whether or not this sum of money will be enough to take care of immediate needs, and certain families and adults may not qualify based on their yearly income.
If you are eligible for a stimulus check and are expecting to receive this money, how you use it can prove to be very important. Here are some suggestions as to what the best course of action is when it comes to receiving a stimulus check during a pandemic.
Take Care of Immediate Needs –
Your immediate needs should serve as your priority. This includes groceries, water, utilities, clothing, and anything that helps promote your survival during this time. Bills are also something that you may want to consider paying off with this CARES act lifeline. However, you may want to also consider the fact that many banks, utility companies, and other essential service providers are offering mortgage, rent, and utility bill relief because of these difficult times.
Therefore, you should take advantage of these savings and allocate your funds as appropriate. Contact your loan and credit providers and see what benefits they may offer. Many happen to be refinancing their homes and are getting better fixed rates.
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Pay Your Taxes –
The original April 15th deadline for filing your income taxes has now been pushed to July 15th by the Treasury Department and Internal Revenue Service. Taxpayers can also defer federal income tax payments originally due on April 15th to July 15th without any penalties or interest, regardless of the amount owed. However, if you know that you are going to owe a decent amount of money to the IRS, it might be a wise decision to save this stimulus money and put it towards paying your taxes. Owing back payments to the government for taxes is something you NEVER want to do. The choice is up to you, but it’s definitely something to think about.
Set up an Emergency Fund –
Times like these show that it is very useful and prudent to have an emergency fund handy. You shouldn’t wait for a pandemic to ravage the world to start an emergency fund, but if you haven’t, this check can be a great way to start. You should find savings accounts that have high interest rates, and place money in there. This money should not be touched at all and should only be used in case of a real emergency.
The current outbreak of the coronavirus shows that the world around you can change in the blink of an eye. Ideally, you will want to have enough funds to cover at least 3 to 6 months’ worth of expenses at one time. Use this money as a starting point, and continue to add gradually as you are able. A little bit each week goes a long way.
Reduce Your Debt –
This funding provided by the CARES act can also serve as a great way to reduce your debt. Reducing your debt is one of the pillars of securing your financial future, and a significant payment made to pay off any debt that you have now will pay off in the long run. This will also reduce the amount of overall interest that you pay on the life of the debt. You’ll have more available money for yourself as you make larger payments. However, just like with rent and mortgage payments, many credit card companies are offering waived interest and deferred payments at this time. Read the fine print and see if you qualify. Give your creditors a call and try to work something out with them. Contact a nonprofit credit counseling agency for free assistance and help.
Give to Charity –
If you happen to be doing better than others financially or fortunately still have a stable form of employment during this time, you should consider giving a portion of your stimulus check to those less fortunate. Hospitals are in consistent need of ventilators and PPE (personal protective equipment), while food banks are exhausting many resources. Consider making a donation to these worthy causes to ease their burden. You can also help out family and friends who you know have been hit harder than most. Remember, we’re all in this together!