Ten Great Ways to Spend Your Second Stimulus Check
The federal government has started sending out the second round of stimulus checks (more formally called Economic Impact Payments). These may be the final round of payments to go out, so having a plan in place is key.
Previously, we’ve told you about things to ask yourself before you spend your stimulus check, and we’ve given you a decision tree to help you make spending choices that are right for your situation. Now we’re giving you ten ideas for this next – and possibly last – payment.
- Start or add to an emergency fund. Maybe you depleted your rainy day fund back when the pandemic started (totally understandable!) Or maybe you never had an emergency fund in the first place. Either way, the payment could jumpstart your savings.
- Get current on your rent or your mortgage. Many of the CARES act mortgage forbearance provisions expired on December 31, 2020, and some eviction protections have expired as well. Contact your lender or your landlord for further clarification if you can’t make your full payment.
- Pay off debt. If you have racked up a lot of bills over the past few months, and the interest charges are piling up, then maybe you can apply the payment toward those debts. Remember that student loan relief, which froze interest, suspended payments on federal loans, and stopped collections is due to expire on January 31, so loan payments will be resuming soon. PowerPay is a great, free tool to help you figure out the best way to pay down debt.
- Start or add to your retirement fund. Because the stimulus money likely will not be taxed, putting it in a Roth IRA makes it triple tax-free: you won’t pay current taxes on it, it grows tax-free, and you can withdraw it tax-free. Or add to a traditional IRA or your increase in your TSP contributions.
- Start a college fund for your kids. Consider opening a 529 Plan or other tax-advantaged savings vehicle for your children.
- Complete a home improvement project. Since we will likely be stuck at home for the near future, many people are sprucing up their homes and outdoor spaces.
- Shop local. Support local businesses by shopping (many now offer curbside pickup) or buying gift certificates.
- Donate to charity. Consider contributing to a food bank or other charity.
- Tip more. The pandemic has hit the service industry hard. Consider a larger tip when you get groceries delivered or pick up takeout.
- Splurge. Take advantage of sales on travel to buy gift cards or miles for a future trip. Get a gift box subscription. Upgrade your home video/audio set up.
- Written by Lila Quintiliani
- Category: Blog
- Published: 04 January 2021