How To Spend Your $1,200 Stimulus Check

Photo by Bryan Steffy/Getty Images for Crazy Horse 3

 

By Nick Ellis, Editor at The Water Coolest

The Water Coolest is a daily business news and financial advice email newsletter… with a hearty helping of unfiltered commentary (see below).

Sign up now to get the latest news and commentary delivered to your inbox every weekday at 6 AM EST.

The House proposed a new round of coronavirus relief on Tuesday, and a portion of that potential $3T package is another round of $1.2k for citizens of the good ol US of A.

This would be on top of last month’s stimulus package, where the government handed out the first round of $1,200 checks to everyone as a way to help deal with the economic hardships from furloughs and layoffs due to the coronavirus. And apparently, according to Treasury Secretary Steven Mnuchin, that $1,200 is supposed to last some 10 weeks… on the dollar menu, maybe.

There are many of us out there that needed the $1,200 (and then some) and will use it to pay rent or help supplement income lost from a layoff. Combined with an unemployment benefits increase, hopefully, that is enough to weather the storm until things return to normal and everyone gets back up on their feet.

But for others who are more fortunate, this $1,200 (or potentially less) is a nice Q1 bonus, and would most likely just go straight in their bank account and sit there.

So, if you’re in the latter situation, what should you do with your thousand+? Let’s look at a few of your options.

Pay down debt

Student loans, credit cards, car payments. These are all common sources of debt that typically have higher interest rates and could use some attention. Yes, the government did suspend student loan payments and interest until September 30, but there are roughly 7.2M former “academics” that were excluded from that suspension since their student loans are held through private companies.

And it’d feel great not to have that cloud of credit card debt hanging over your head every time you go to pay off this month’s balance. Because while paying the minimum balance is certainly great, being debt-free and all the freedoms that come with it are better.

A high yield savings

If this sudden recession has taught us anything, it’s that the good times can end in an instant, and it’s imperative to have excess cash stored away for a rainy day. A high yield savings account is a great vehicle for that, as there’s no risk in losing the money, like investing in stonks, and it provides liquidity when needed, unlike a certificate of deposit. Rates certainly have dropped since the Fed decreased interest rates to near-zero levels, but there are still options out there where you can earn 1%+ just for your money to sit there. What does your mattress pay out?

The local economy

You know that slightly more expensive entrée you’ve wanted from the local Italian place down the street? How about the three breweries in midtown that just released their new summer small-batch IPA? Why not treat yourself on a Friday, while simultaneously supporting the local economy… That way both sides win, and hopefully, those businesses can stay afloat longer to get through this.

Invest it

The stock market lately has been, interesting, to say the least lately. Unemployment numbers are reported in the millions, BOOM, stock market spikes 300 points. And in the Wolf of Wall Street, Matthew McConaughey said: “nobody knows if the stock market is going to go up or down. I don’t care if you’re Warren Buffett or Jimmy Buffet.” But certainly, it’s an attractive option, as investment returns average roughly 8% annually, and could be even larger during this time if you can somehow time it right.

Donate

Last but not least: donation. Did you know that the average person donates 3-5% of their adjusted gross income? Does that seem high to you? It certainly does to me, which makes me think that I, and probably a lot of others out there, are bad people can do better. Small local nonprofits depend on corporate donations and Giving Tuesday in November as streams of income to help keep their businesses afloat. But both corporations and citizens have less excess income than usual, considering many companies, even if they’re not laying people off, are decreasing benefits or percentages of income for a few months. So, why not reach into your pocket, pull out a few bucks, and give to a good cause. *Sarah McLachlan comes on the tv*

Want more content from The Water Coolest? Sign up now to get the latest news and commentary delivered to your inbox every weekday at 6 AM EST.