Millions of Americans have already received their Economic Impact Payments authorized by the CARES Act. Whether your direct deposit has arrived or not, you need to have a plan for that money especially in uncertain times. Here are some tips and suggestions once you receive your stimulus money.
Take Care of the "Four Walls"
Your four walls are food, shelter, utilities, and transportation. In any economy, good or bad, these are what you take care of first. Always make sure you have a place to live with electricity, food in the refrigerator and a way to get around. These needs should trump savings and debt repayment, again, in any economy.
Pause Your Debt-Snowball
If you follow Dave Ramsey and are on Baby Step 2, you will want to consider hitting "pause" on your debt-snowball. Instead of paying extra on your debt, considering making the minimum payments then stockpiling cash. This should be the protocol if your income has been negatively affected meaning you have been laid off, furloughed, or the future of your employment is highly uncertain. Once the dust settles, you can always then apply the extra cash to your debt-snowball
Look For Part Time Job(s)
Regardless of the status of your stimulus check, now might be the time to look for some extra employment. Companies are hiring! A great place to search for jobs in your area is www.indeed.com. Now, this job likely isn't your dream job or career. But, a little extra money will help you weather this storm.
Do NOT Dip Into Your 401(k)
It's NEVER a good time to cash out your 401(k) early. Your 401(k) is a long-term investment for your retirement, not emergencies. This advice holds true in any economy, but especially now. Dave Ramsey says the only time you would even consider dipping into your 401(k) is if your house is on the verge of being taken away from you and it's a complete last-resort option.
Ignore Forbearance Plans
Forbearance does not mean forgiveness. If a company is willing to forgo three months of payments, it is likely they will expect those payments made in-full on the fourth month. So, be very aware of these terms and the expectation of forbearance plans.
Do NOT Start Borrowing Money
Accumulating debt is dangerous. Accumulating debt in the midst of a financial crisis is extremely dangerous. It is concerning when I hear of people having credit cards "in case of an emergency". Ironically, the worst time to go into debt is during an emergency. It is NOT the time to be borrowing against your home, taking on consumer debt, or buying things you cannot afford.
If you need help with your personal economy through these difficult times, you can email me directly at firstname.lastname@example.org.