So, you’ve received $1,200 from the government: what should you do with it?
- Support yourself and your family. This is the whole reason you received this stimulus check in the first place. When bad times come around, the government wants to make sure everyone stays afloat and makes it through it. The $1,200 is sent on a need’s basis. If you filed as Single for your 2019 taxes and your Adjusted Gross Income(AGI) was below $75,000, you will receive the total $1,200. The amount is reduced by $10 for every $100 your AGI was over $75,000 until it completely phases out at $99,000. You can simply double the calculation if you filed Married for 2019 taxes.
- Build up your emergency savings. If your one of the fortunate ones, your income may not be affected by the recent COVID-19. If this is the case and you received an extra $1,200 from the government, you should make some smart money moves with it. It’s not like you can go out and blow this around town in a weekend with everything temporarily shut down anyways! One of the smartest moves you can make with your stimulus check would be to start an emergency fund or add to your current one. The rule of thumb is that you should have 3-6 months of living expenses saved. Now is a great time to do some spring cleaning on your financial situation. You may not be so fortunate to receive an income through the next economic downturn.
- Payoff debt. Have you looked lately how much your paying in interest on that credit card balance your carrying? The average credit card rate is around 19.02%! That TV you bought last year could easily cost you double if you only pay the minimum payment until it’s paid off. Use this time to check on any outstanding debt you have and if it makes sense for you, put the stimulus check you received towards paying it off. Always pay the most towards your card with the highest interest rate.
- Invest. As of 4/6/2020, the S&P 500 Index is down roughly 13% for the year. History shows that times like these offer great buying opportunities in the market. One thing I will note, you should not be investing your stimulus check until all of the first 3 steps are taken care of. Investing is for achieving long-term goals and not for making a quick buck, that’s called “speculation”. Investing is the best way to build wealth over a long-time horizon. But first, you need to have an idea of what your investing for e.g. retirement, home purchase, child’s college expense, etc. If you don’t know where to start, call us. We’ll partner with you to help get you on track to achieve your financial goals.
- Most importantly, stay safe. We will all make it through this together.
Steven Dengler, CFP®
Financial Advisor / Director of Planning
Your local Towson Financial Advisors
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.