What do you think people should do with their Stimulus Payment?

Signed by curious Georgianna

Damon Says:

When this question was originally posed to me, I decided to table it thinking that most people had already spent the Stimulus Payment.  Now that there’s another Stimulus Bill on the table dubbed “HEROES Act” or Health and Economic Recovery Omnibus Emergency Solutions Act, which includes a second round of direct payments, I thought it will be a good time to revisit this question.  

The change to this new Bill when comparing the Last Stimulus Payment and the Stimulus Payment proposed in this Bill revolves around “dependents”.  Dependents are eligible for up to $1,200 per dependent instead of $500 and all dependents are eligible regardless of age.  The cutoff on age in the last Bill was 16. The other detail remains the same.  Maximum Amount household will be eligible for is $6,000.   (New Bill hasn't been fully approved as of yet)

Whether we’re talking about the last Stimulus Payment which many people have not received – or if we’re talking about this Stimulus Payment, my answer to the question is the same.  

It depends on your current financial situation.

Some people are struggling.  Some people are barely getting by. Some people have been slowed down but they’re still moving forward.  Some people have not been impacted at all – financially speaking

First thing first….. This pandemic is real!  Life as we know it is different! Pause, breathe, think.  This is a high-pressure situation that can be very stressful.  It can cause you to panic and make an emotional decision instead of a rational decision. Know that – this is a temporary situation.  This too shall pass….How long before it passes? I have no clue.   Spanish Flu lasted from spring of 1918 to summer of 1919.  That was 15-months. Dr. Fauci has been quoted as saying vaccination will take somewhere in the neighborhood of 18-months to develop.  My guess – Somewhere in the middle – 16-months..Fact is, I’m doing what we do in finance – I’m extrapolating and guessing based on known data. Again, I repeat.  I have no clue.  

What do you do with the Stimulus Payment?

Struggling to make ends meet? Heed the language of the land – “only essential” items need to be paid – assuming that’s all you can do.  Essential meaning food, housing (rent/mortgage), utilities, and transportation.  If this is all you have enough for, this is all that gets paid.  What about the rest of your bills?  Deal with that when your income is back to somewhat normal…

Barely making it? Good thing is. You’re making it.  Might be a struggle but you’re getting by. Use the Stimulus Payment to stimulate your emergency fund. Emergency funds are to be tapped only for unexpected events and unexpected expenses. Everything about this Pandemic is unexpected.  So expect some unexpected things to come your way.  A little cushion called an emergency fund can help soften the blow.

Slowed down but still getting by?   You’ve been mindful of potentially bad things happening. You knew to live on less than you make. The journey will not be as hard for you.  You know how to do without.  Nonetheless, buzz word for you is to conserve.  You too should stimulate the emergency fund.  Yep. conserve and pile up some cash. After this thing pass, resume with investing in your debt or putting that savings on STEROIDS

Not Impacted at all – Lucky You!  Job still paying you. Debt Free.  Money in the bank. You’re wondering what all the fuss is about. It’s serious out here in these streets.  People are dying or going broke.  You’re in position to help someone less fortunate.  Consider using your Stimulus Payment to help those less fortunate.  This is about giving a “hand-up” not a “hand-out”.  You know a family, friend or someone who is experiencing hard luck because of this pandemic – reach out and touch somebody’s hand.  Make this world a better place – since you can! Make sure you’re wearing gloves.  But blessed them with something that they may need and you’re able to provide.

Do you have a question for Damon? Email me or message me on FB. I will answer all questions as time permit. If I use your question in my “Ask Damon” E-Newsletter, I will provide more detail. Do not fret, your identity will remain secret.

Disclaimer: The advice given in “Ask Damon” is based on facts presented within the question asked. In a Comprehensive Financial Planning environment advise is based on a more wholistic approach taking into consideration all pertinent facts and information gathered.
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Damon Carr
Money Coach and Personal Finance Columnist