Updated: Jan 25, 2021
Your Second Stimulus Payment and Making It Work For You
Everyone is buzzing about the $600 stimulus payment going out to Americans. Many argue that $600 is simply not enough to help relieve the financial burden everyone is in. The good news is Friday, January 15th, was the last day for the IRS to send out the second stimulus payments. Even though this stimulus is half of what you received before there are several ways to make this money work for you,
First things first, you should take care of your most immediate needs. This would include things like rent, lights, food, etc. The good news is there are lots of programs out there to help assist you in some of the immediate needs. If you can find access to such aid it would allow you to allocate your stimulus funds to other important things.
If you have credit card debt, you can use the new stimulus to pay off some of the high interest that has collected based on the amount you owe. Because many cards come with interest rates of 20% or more making a large payment towards your credit card debt will give you an instant return.
If you have been able to keep your credit card debt under control another thing you can consider is adding the money to your emergency fund. Although it may seem impossible right now, the rule of thumb is to have 3 to 6 months of your basic needs saved up in an online savings account. Why online? Many suggest online because this money is easily accessible at all times. Due to COVID-19 we advise that people strive to save up even more, up to 12 months if possible.
We are not saying that you have to put all the money towards on thing. You can split this money and make it useful in more than one place. An example of this could be putting so much to credit card debt, another amount back towards your emergency fund, use the rest for daily expenses.
For our clients who are business owners, another option would be to invest the money into your retirement fund.
For those who don't want to do any of the above and you have decided to treat yourself with the money, there is still a smart way to do it. We advise you put the money aside and wait until the item goes on sale.
We know there is word that another stimulus worth $1400 is possible, but for now we advise you make the money that is guaranteed work for you now. The talk of a third stimulus check is just that at the moment, talk. Even if the bill is created it could be mid-February or March before it becomes law. From there it could be the end of February or March before they start to send out the checks or direct deposits.
We understand there are so many financial decisions that have to be made. We are here to help you not just with your stimulus check decisions but with all your bookkeeping and accounting needs. Feel free to contact us for more information on how we can help.