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Waiting for the Second Stimulus Check? Make These 5 Financial Moves Instead
There’s a lot of chatter in Washington, D.C. right now about a second coronavirus relief bill. The first relief bill included a $1,200 stimulus check for individuals who made less than $75,000 a year and $2,400 for couples earning below $150,000 annually. This money helped address the problems many were facing but didn’t fix them, leaving millions of Americans waiting for lawmakers to approve a second stimulus check.
Recently, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin agreed to resume negotiations on a new economic recovery bill. No timetable has been set, but even if Republicans and Democrats can make a deal, a new stimulus check will only go so far and still won’t be enough relief for many. So, it’s important to proactively take steps now to make a plan that can benefit your long-term financial security.
Here are five financial moves you can make right now while you wait for coronavirus relief.
1. Go over your bills
The most recent data shows U.S. consumer debt is nearly $14 trillion. Chances are you carry some type of debt, whether it’s a mortgage, credit card, student loan or auto loan. Take a look at how much you earn each month and how much you spend. Interest rates are low right now, and refinancing your mortgage could save you hundreds of dollars each month.
[ Read: The Best Online Lenders of 2020 ]
Also, do you have high-interest credit cards? If so, consider paying those down as quickly as possible. If you’re struggling, reach out to your lenders to determine if a deferral or payment reduction plan is an option. Finally, are there unnecessary expenses you can reduce or eliminate? “It’s important to prioritize your needs over your wants during this difficult time,” says R.J. Weiss, CFP. “Shelter, such as your mortgage or rent, as well as utilities and food, are the top priorities.”
2. Flex your savings account (or create one)
Do you have money set aside in a savings account? If so, is that money in a high-yield savings account? A traditional savings account, like the one at your local bank or credit union, probably has an interest rate that is somewhere around 0.06%. High-yield accounts have interest rates that are near or above 1%. These savings accounts can be a great way to save money and work as a regular savings account. Shop around for the best rates and be on the lookout for withdrawal fees or overdraft penalties.
3. Create a realistic budget for these times
The pandemic has caused a lot of stress and anxiety. It can be tempting to spend your way into quick gratification by splurging on a big-ticket item. The trick is to find a happy medium. The Simple Dollar Founder Trent Hamm has some ideas about how this can be done. He suggests you can prioritize your spending by looking at your old bank statements. What have you regularly spent money on in the past? Find the pattern, and chances are you’ll find what’s important to you. Hamm also suggests getting ready for the next financial downturn by starting an emergency fund.
[ From Trent: A Guide to Building an Emergency Fund ]
“For those with an income, you want to prioritize your emergency fund,” adds Weiss. For example, if you’ve been trying to pay off low-interest student loan debt by making extra payments, it may make sense to make the minimum payment and build up your emergency fund to a level where you sleep better at night.”
4. Get rid of hidden fees (if possible)
Fees are big business for different companies like banks and cable providers. A Consumer Reports story from 2018 estimated hidden cable fees could cost the average family of four more than $450 a year. Avoiding these fees or getting them refunded is tough, but not impossible. For starters, take a look at your bills and see if there have been any unexpected charges. If so, contact the company to find out more information. A Consumer Reports survey of 2,000 people who’d been charged hidden fees found more than 60% were able to have the fee refunded or taken off. This can be achieved by simply contacting the company or by filing a complaint with the Attorney General’s Office in your state.
5. Consider a second income stream
What do you like to do? What are you good at? Chances are you can make money either way. The list of side hustles is as long as you want it to be. You could sell crafts on Etsy, be a driver for Uber or Lyft, clean houses, rent out a room in your home on Airbnb or be a virtual tutor. You can even make money by donating plasma. Before you rush out to the nearest clinic, figure out what you’re comfortable doing and how much money you hope to make. Side hustles are an excellent way to help you pay off debt or build wealth, but they shouldn’t be an emotional or physical drain.
Image Credit: treety/ Getty Images