What Should I Do With My Stimulus Money?
Although this post is a few weeks past the time many Americans received their stimulus money, there is rumor that another round, or several, could be coming. Depending on your employment situation and your progress in your debt-free journey, what you should do with that money differs.
If you are financially struggling due to a job loss or furlough, use the money to cover the 4 walls - shelter, food, utilities, transportation, and clothing.
If you are financially stable and plugging along as normal and are not concerned about that changing, and are working on eliminating your debt by paying off credit cards and student and car loans, use the money towards debt.
If you are financially stable and plugging along as normal, but are concerned that might change in the near future, put the money aside in another account. If you need it for the 4 walls, it is available, but if not, it is there to put towards debt when you comfortable doing so.
Those are some basic guidelines, but I do have a few other suggestions.
As I’ve stated on my website and in posts, 78% of people live paycheck-to-paycheck, which means that they likely don’t have any emergency fund. This is the first step in the debt-free journey… at least $1,000 in an emergency fund (I recommend $1,500 - $2,000 because every emergency I have had costs more than $1,000). Why not use your stimulus check to fast track that emergency fund?
If you are living paycheck-to-paycheck, you likely struggle with managing money, so another great option is to use the stimulus money to educate yourself and learn a plan to reach your goals. You can do this yourself or by using a financial coach.
Dave Ramsey is currently offering his Financial Peace University free for 14 days. It’s normally $129.99 and there is such a great user community, that many people purchase the subscription after the trial. His plan gives you a framework for reaching your financial goals on your own.
Another option is to hire a financial coach. Although I am a financial coach, I am not here to plug my services, but the services of all financial coaches. Just like a coach in any field, we are here to provide a plan specifically for you, and the accountability to create habits to keep you on track. There are hundreds around the country and we all have a passion for helping people eliminate debt stress and reach their goals.
If none of these scenarios apply to your situation, maybe you are already debt-free, and really don’t need the money, give it to someone who does!
In all situations, it’s important to always stick to a budget and live below your means.
