COVID-19 has not only impacted the health of thousands of Americans but has also created economic uncertainty for millions. More than 10 million Americans filed for unemployment during the last two weeks of March. On March 27, 2020, the historic CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law in response to the pandemic.
The CARES Act brings economic relief in many ways, but the most notable part of the bill is the stimulus payments for the American public. Individuals are eligible for a one-time payment of $1,200. Married couples filing jointly will receive $2,400. Parents with children age 16 and under will get $500 per child, as well. The stimulus begins to phase out at $75,000 for single filers and $150,000 for joint.
Some will begin to see their stimulus payments as early as this week, but it could take longer for others. For those out of work, these payments will be a great relief for paying living expenses such as your mortgage, rent, utilities, and groceries. If you do still have work, you may be wondering what to do with your payment. For more information on Stimulus Payments refer to the irs.gov/coronarvirus/economic-impact-payments.
- Tackle Your Debt
If you are fortunate enough to have a steady income during this crisis, your stimulus payments can help you pay down debt. Some types of debt, including federal student loans, have suspended interest during this time. Your stimulus payments could make a bigger impact on your principal loan amount if you pay it now.
Even if interest is not suspended for your debt, an extra payment of $1,200 can get you ahead on your repayment plan. The less debt you have, the closer you are to financial freedom. Using all or part of your stimulus payment towards any existing debt is a wise move.
- Save It
Another financially savvy way to use your CARES Act Payment is to save it. Increasing your savings is always a smart move but is especially so during times of economic uncertainty. Surveys show that about 70% of Americans have less than $1,000 in their savings accounts.
With unemployment on the rise, increasing your savings is wise. You want to work towards having 3-6 months of expenses in your account in case of an emergency. Saving all or a portion of your stimulus payment can help you move towards a more financially comfortable situation.
- Help the Economy
The CARES Act stimulus payments are also designed to help keep the economy afloat during these uncertain times. If you have paid your bills and feel financially secure, you may choose to use a portion of your payment to support the economy.
Think of the small businesses in your community that you would like to support. You can order takeout from your favorite restaurant or shop at family-owned stores. Many small businesses are struggling and your support can go a long way.
Stay Safe and Be Well
These are uncertain times for all of us, and it is normal to feel anxious or worried. Hopefully, the CARES Act payment helps to relieve some of the financial stress you may be feeling. Remember that Reliant Bank is always here to answer your banking questions. Call us or use our online banking programs to keep socially distant while you work with us. You can rely on us for help during these times.