2nd Round of Stimulus Money – What Should You Do with It?
Will we get $2,000? $600? $0? Who knows until the check is received or the money is deposited in our accounts? What we can agree on is that any amount received will be a great help for those affected from coronavirus.
This article is written as of December 23rd, 2020 and you can find coronavirus updates here.
There are four places we suggest using relief money:
Balances charging interest
The most expensive part of being past due on accounts is the interest you are being charged. By only making minimum payments, you could easily pay twice the amount you have borrowed. Interest rates on credit cards can be as much as 22% or higher which can trigger interest-only payments. We see value in making a chunk payment to save you money going towards interest and helping you get control of your accounts.
Past due expenses
Get current with your four walls. What I mean by four walls is pay past due expenses on your rent, car payments, utility bills, etc. Many mortgage companies are currently offering a forbearance option which you could investigate with your lender. I have learned that communicating with your lenders (bank financing your vehicle or cc’s) or landlords can be the most effective way to find a solution. Do not be scared to call them! Bluntly, they want your money and would love to talk about how to get something compared to nothing.
Stashing in an emergency fund
A general rule of thumb is to have 4-6 months of expenses in a separate (emergency) account. How many times have we tried to put money in our savings account that is linked to our checking account? How many times does that money disappear when a new sale comes out or we confuse a “want” with a “need? We like to keep our money “out of sight and out mind.” A high yield savings account or money market account can be an effective way to save and grow an emergency fund.
Save towards future goals
Not many people have had a lot of success financially during coronavirus. Most of us have experienced reduced hours and reduced income. The point is, we cannot prevent the unexpected from happening; however, we can plan for the unexpected. Putting money in a long-term savings account can provide income later in life or be used when an investment opportunity arises. Raft MKE specializes in this area and can provide information for you through our website www.raftmke.com or by reaching out to us.
Respectfully,
Jordon Klein
Financial Services Professional
Raft MKE, Owner
Not all mortgages companies are currently offering forbearance and may not have that option for you to delay payments that are due. Not all minimum-payments on credit cards are going solely to interest. Not all lenders, including but not limited to mortgage companies, credit card companies, banks, and vehicle lenders are required to provide payment options or negotiate plans to assist in coming current on your account. Opening a high yield savings account or money market account may not keep up with inflation and should not used as a sole option for long-terms savings and retirement. Nothing in this article should be construed to be an offer, solicitation of an offer, or recommendation to buy or sell any retirement account of financial option.