A second coronavirus stimulus check may be coming your way soon thanks to the Heath, Economic Assistance, Liability Protection and Schools Act (HEALS Act). If the HEALS Act is passed, many Americans could find themselves the recipient of another $1,200.
Back in March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed. The $2.2 trillion economic relief package gave many families and workers immediate relief by providing a stimulus check in an amount based on income. For many, that check was in the amount of $1,200.
The pandemic has had a huge impact on our finances. For many, that’s meant either changing your spending habits or creating a budget. Thinking about our savings accounts and creating emergency funds has become a priority.
Coronavirus financial relief
In addition to the CARES Act IRS stimulus payment, auto insurance companies have issued refunds to help their customers. They have also waived fees and expanded coverage for essential workers.
If you have a federally backed mortgage, homeowners can request a pause on payments for up to 180 days. Homeowners will also not be foreclosed on during this time. Your relief options will vary depending on the type of loan you have.
Private mortgage lenders are also offering similar relief efforts to their customers. For example, Wells Fargo will let customers request a temporary pause on their loan payments as well as waive fees and not report late payments to credit reporting agencies. Be sure to contact your lender for specifics.
Automakers are also rolling out options to help those affected by the coronavirus. Whether you are having trouble making your current auto payments or need to buy a new car right now, assistance is coming in the form of deferred payments and extremely low interest rates.
How to use your IRS stimulus check
A second stimulus check could arrive in August or September pending government approval. If you receive another stimulus check, it’s tempting to spend it on everything you have saved in your Amazon shopping cart. But you and I both know there’s a better way to use that money.
If you are fortunate enough that your budget can cover your basic needs (food, utilities), here are smart ways to use your stimulus check funds.
1. Reduce credit card debt
The average IRS stimulus check amount is $1,200. Using that money to pay down or pay off a credit card is a great idea. If you have more than one credit card with a balance on it, either pay off the credit card with the highest interest rate first or the one with the lowest balance first.
2. Pay your auto insurance in full
Auto insurance isn’t something most of us like to deal with, but it’s a bill all of us have to pay. If your auto insurance policy is up for renewal, consider paying your policy in full. Most auto insurance companies will offer a discount for a paid-in-full policy. If they don’t, it could be a great time to shop for new auto insurance.
3. Start an emergency fund
If you have your necessities like food and utilities covered, consider starting an emergency fund (or boosting your current fund). Whether you deposit your stimulus money (or at least part of it) into a savings or money market account, you won’t regret it. From an unexpected healthcare expense or a broken appliance, you’ll be happy to have even the tiniest savings cushion in these situations. Check out some of the best savings accounts from Nerdwallet.
4. Use it at the grocery store
As more states begin to re-open and shelter-in-place restrictions are lifted, it’s tempting to head to your favorite local restaurant. The Bureau of Labor Statistics reports that the average American spends $3,459 on dining out a year. Instead of spending your money at bars and restaurants, head to your local grocery store for serious money savings.
5. Add it to your retirement savings
Thinking of retiring early? Adding any extra funds to your retirement savings accounts is a great way to meet this goal. Consult your financial advisor as to the best use of your stimulus check money whether it’s for your 401(k) or an IRA.
6. Donate to charity
In the wake of the coronavirus pandemic, there is no shortage of charitable organizations asking for donations. Some charities are looking for very specific donations, such as non-perishable food or baby items. But most organizations are more than happy to accept any cash donation as well. Charity Navigator helps you vet nonprofits to ensure your money is going to a reputable organization and good cause.