The 7 worst things people do with their stimulus checks
The 7 Worst Things People Do With Their Stimulus Checks
Congress is working to get you a third direct payment to alleviate the financial woes of COVID-19 and give the mediocre economy another stimulus.
If the final pandemic relief bill passes, Americans will receive a $ 1,400 stimulus check, direct deposit, or debit card - possibly before the end of March.
Are you going to use the new money on staples like groceries and bills, or do you have other plans? Here are seven options that you absolutely want to avoid: the worst way people use their stimulus checks.
1. Go shopping
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While it may be tempting to burn that "free cash" on something you've always wanted, think twice before getting a fancy new TV and stack of Blu-ray box sets for your Relieve boredom in quarantine.
Even if you don't currently need your stimulus money to cover your monthly expenses, you'll want you to put some of it aside if your financial situation changes.
Most financial advisors recommend that you have enough cash on hand to cover at least six months of your essential expenses. If you don't currently have an emergency fund, the stimulus check is a great excuse to start one.
The smartest place to keep your emergency savings is in a high yield savings account, so your money earns the highest interest and grows without you spending or investing.
And if you want to buy yourself a little treat, use a free browser add-on that can help you find better prices online.
2. Put it straight towards debt
If you have a lot of debt, you may see the stimulus check as an opportunity to repay a large portion. Normally that would be a smart move, but building emergency savings is more practical right now.
You have other options for dealing with your debt.
For example, the government has cut federal student loan rates to 0% and allows borrowers to skip payments through September 30th.
But if you got your student loan through a commercial lender, you probably had to make your payments all along. You may be able to reduce the amount you owe and refinance your loan by a few years.
There are companies out there that can let you compare refinancing options for free to easily find a better interest rate that can save you thousands of dollars in interest.
3. Invest carelessly
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The stock exchange has been taking investors with it since the beginning of the pandemic. While using your stimulus check to snap up discounted stocks is not a bad idea, trying to "terminate" the market for quick gains could cost you.
If you discover a rundown stock, there is no guarantee it will recover anytime soon. During this time of instability, government movements, business decisions or increasing cases of coronavirus can cause the market to collapse again at any time.
If you want to invest part of your relief payment, use an account that will automatically make changes to your portfolio to respond to changes on Wall Street.
A popular investment app helps you invest your change and offers five different automated investment portfolios with different levels of risk so you can find one that works best for your financial goals.
You can add to your account using a debit card linked to the app. Every purchase made with the card is rounded up and this "change" is thrown into your balance - to increase your investment.
4. Think only of the here and now
It is true that we live in a particularly frightening time, but future worries are not waiting for anyone.
A few years ago the Government Accountability Office reported that half of American households aged 55 and over had no retirement savings. Many others almost don't have enough.
If you are still of working age, it pays off later in life if you invest even 10% of your auxiliary payment in a pension fund, possibly a 401 (k) or an IRA
Not sure where to start? Contact a company that can connect you to a certified financial planner online or over the phone. You can also use social distancing to prepare for your golden years.
Your CFP expert will create a personalized plan based on your financial goals and tell you exactly what to do if you want to retire in comfort.
5. Use the money as an excuse to sit back and relax
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Extra money in the bank can lull you into a false sense of security. The hard truth is, anything can happen during a global health crisis like this - and even a hundred stimulus checks wouldn't cause a family to lose a breadwinner.
The easiest way to protect your loved ones is to get life insurance. Many people think that getting insurance is a complicated process, but it can be as simple as booking a hotel online.
In just 90 seconds, you can find multiple life insurance plans tailored to your family's needs. Depending on how old you are and where you live, you can get $ 1 million in insurance coverage for as little as $ 1 a day.
That's a small price to pay for security.
6. Blow up everything in chain stores
While big box stores are the easiest place to do your shopping during the pandemic, your stimulus check will make a bigger difference if you shop at local businesses instead.
You can save a few dollars on a chain, but failure to support your local economy during this critical time can have long-term ramifications.
If you want shops and restaurants near you to survive the lockdown, you'll need to make every effort to support them as much as possible.
Buy your groceries at independent markets - and use a money-back app to simply snap a photo of your receipt. Order takeaway from various locations near you. And if possible, donate a portion of your aid payment to local organizations that help individuals and businesses.
7. Get hold of useless supplies
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Panic buying is a natural response, but using your stimulus check to hoard things you don't need is expensive and wasteful.
For example, there was a time last year when people stored bottled water. The water in your tap is treated and completely drinkable.
Instead, make sure you have an adequate supply of essentials in case you are exposed to the coronavirus and need to be quarantined. Be sure to grab:
Non perishable food for you and your pet.
Prescription and over-the-counter drugs.
Household cleaning agents for disinfecting your living space.
If you want to buy these items online, download a free tool that you can use to instantly search thousands of sellers to find the better deals for you.
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