Stimulus Checks: What Should You Do With It?

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It’s impossible to put into words what we’re all going through right now. The coronavirus is impacting each and every one of us—our loved ones, our relationships, our mental health, our jobs, and lastly our finances.

If you’re struggling to sleep at night, or constantly battling feelings of anxiety and sadness, you’re not alone. We’re all experiencing this together, even though we’re physically separated.

Although these are trying times and unprecedented in our living memory, it’s important to remain focused on how we can all get through this and survive (in more ways than one).

I know it seems like just a small drop in an ocean of uncertainty, but one thing we can all look forward to is some relief from the federal government in the form of stimulus checks.

So I wanted to take some time today and answer some of your top questions regarding the stimulus payments that have already started popping into people’s bank accounts.

Some of you may have already received your checks, and others might still be waiting for that little support we need.

Through smart budgeting and frugal living, we can all make these stimulus checks go further and help keep ourselves financially afloat.

To find out how much you should be expecting, and what you should do with your stimulus check, keep reading.

What is a stimulus check?

The stimulus check you’ll receive is also called an Economic Impact Payment. These payments are the result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was passed by Congress and signed into law on March 27, 2020.

These stimulus checks are intended to help all of us cover basic needs and our fixed monthly expenses during this coronavirus pandemic. It’s a little boost for us in hopes that we can all get through this.

Who qualifies for stimulus checks?

Almost every adult in the United States qualifies for some form of payment.

To start things off easy, let’s tackle the basic requirements for receiving a stimulus check…

You will receive a check if you:

are a U.S. citizen or U.S. resident alien
are NOT a dependent on someone else’s tax return

have a Social Security number
have an adjusted gross income (AGI) below a certain amount
- NOTE: This is based on your tax filing status, as well as the number of children you claim.

In summary, MOST adults and families in the U.S. will receive stimulus checks, but the amount you’ll receive depends on a few factors…

How much money will I receive?

Here’s where things get a liiiiiiiittle bit tricky.

The amount of money you’ll receive depends on a few things, namely your tax filing status, adjusted gross income (AGI), and the number of children/dependents you claim on your taxes.

First, determine if your filing status in 2018 and/or 2019 is single, as the head of household, or as a joint couple. Then, use your AGI from your most recent tax return to find out the specific amount you’ll receive.

For Single Adults:

Adjusted gross income (AGI) is $75,000 or less — You’ll receive the full amount for singles which is $1,200.
AGI is between $75,000 and $99,000 — Calculate how much your AGI is over $75,000. Then, determine what is 5% of that amount. Now subtract that from $1,200, and that is what you’ll receive.
- Example:
  - AGI = $85,000, which is $10,000 over the threshold.
  - 5% of $10,000 is $500.
  - They’ll receive $700.
AGI is $99,000 or more —You will not receive a stimulus check.

For Heads of Households (usually single parents):

AGI is $112,500 or less — You will receive the full amount of $1,200 and an additional $500 for every child/dependent under 17 that you claim.
- PLEASE NOTE: The threshold amounts increases by $10,000 for each qualifying child. For example, if you have an AGI of $122,500 or less and ONE child, then you’ll still receive $1,200 plus $500.
AGI is between $112,500 and $136,500 and you have no children — Calculate how much your AGI is over $112,500. Then, determine what is 5% of that amount. Now subtract that from $1,200, and that is what you’ll receive.
- Example:
  - AGI = $125,000, which is $12,500 over the threshold.
  - 5% of $12,500 is $625.
  - They’ll receive $575.
AGI is $136,500 or more and you have no children — You will not receive a stimulus check.

For Married Couples:

You have no children and earn a combined $150,000 or less — You will receive a total of $2,400.
You HAVE children and have an AGI of $150,000 or less — You will receive $2,400 plus an additional $500 per child (under 17) that you claim.
- PLEASE NOTE: The threshold amounts increases by $10,000 for each qualifying child. For example, if you have an AGI of $160,000 or less and ONE child, then you’ll still receive $2,400 plus $500.

You have no children and earn a combined $198,000 or more — You will not receive a stimulus check.

How will I receive my stimulus check?

If you filed your 2019 tax return, then the IRS will mail you a check to the address listed OR via direct deposit into the bank account you provided. Because direct deposit is faster, the IRS will use that as long as your account information is listed on your return.

If you haven’t filed your 2019 tax return, but you filed in 2018 then the IRS will use the mailing address or bank account information on your 2018 taxes.

If your address, direct deposit information, or filing status has changed since your 2018 tax return, you should file your 2019 taxes immediately!

You can check the status of your stimulus payment using the IRS’ Get My Payment tool. This will also allow you to confirm which method they’ll use to send your payment, as well as enter bank account information if you didn’t use direct deposit on your recent tax returns.

What should I do with my stimulus check?

You’re getting an extra $1,200 or more! Yay!

So…what should you do with the money?

Unfortunately, there isn’t an easy answer here besides BE STRATEGIC.

All of us are at different places on our journey towards financial freedom, so it really depends on your individual circumstances.

However, most of us fall somewhere on the following spectrum. Depending on if you’re at level 1, 2, or 3, I’ve given my recommendation to help you out:

Level 1 — Due to the crisis, you don’t have enough money to cover your fixed monthly expenses (such as rent and utilities) OR to cover food and healthcare expenses for the next few months.
- Recommendation: Use your stimulus check to cover some of these costs FIRST.
Level 2 — You HAVE enough to cover your fixed monthly expenses (rent, utilities, etc.) and food/healthcare costs, but you DON’T have anything in your emergency fund.
- Recommendation: Put some or ALL of your stimulus check into your emergency fund in order to help you out for the next few months.
Level 3 — Your expenses are all covered, you have an emergency fund to help you for the coming months, then what?
- Recommendation: Still put it in your emergency fund! Okay, if you’re completely covered with your savings then put it towards debt.

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Should I use my stimulus check for student loan debt?

Maybe. But first, let’s talk about our federal student loans.

Because of the situation, any federal student loan payments aren’t required and interest is waived until September 30, 2020. This was also stipulated in the CARES Act.

So at this point, don’t use your stimulus money for your federal student loan payments if you have other expenses to cover and savings to build. Your federal loans are covered for now.

If you’re financially okay and covered by your emergency fund, then any payments you make towards your student loans at this time will go straight towards your principal balance!

However, for private student loans the situation is different. Private student loans are NOT covered by the CARES act and you are therefore still responsible for making payments and interest is still accruing.

If you can’t make payments towards your private student loans at this time, here are the two best things you can do:

Call your loan provider. Each loan provider is offering different assistance and often on a case-by-case basis. Call your loan provider and tell them your financial situation. They’ll offer you either payment extensions, forbearance, a lower interest rate temporarily, etc. It doesn’t hurt to call introverts! But I know…ugh.

REFINANCE. This is my advice ANY day but especially now. Interest rates are going down, which means that now is one of the best times to refinance your student loans and get a lower interest rate permanently. Check out Credible, where you can compare interest rates from some of the top student loan providers and apply today.

Should I use my stimulus check to pay my credit card debt?

Before you go off and throw money at your credit cards, there are a few things you should do first.

See what balance transfer offers you have on your credit cards. Many credit cards offer 0% interest on balance transfers, and some cards even waive balance transfer fees. However, ff your card does charge a fee, there may be better offers out there OR paying the fee may be worth it for the 12-18 months of 0% interest.
Research 0% APR credit cards. Research opening new credit cards BUT ONLY IF they are offering 0% introductory rates. Take a look at Nerd Wallet’s list of best 0% APR credit cards. Opening one of these will help you cover monthly expenses and give yourself time to get back on your feet.
If your credit score isn’t good, see what assistance options your company is offering. Many credit card companies are offering payment extensions and waiving interest and fees. Call your credit card company or go to their website to see what assistance you qualify for.

The most important thing to keep in mind, is that you do not want to rely on credit cards too heavily during this period unless you have a plan to pay it off. Using credit cards for expenses is tempting, but you risk going further into debt and should do your best to avoid that.

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Will I receive more stimulus checks?

Unfortunately, I can’t give a definitive answer to this at the moment.

Maybe…Hopefully…

With over 22 million people filing for unemployment in the United States, it’s hard to imagine that more economic relief WON’T be needed. Many experts are predicting that the impact of the coronavirus on the economy and jobs will last for months, if not into 2021.

The most we can do now is utilize our stimulus check money well and hope that more financial support is on the way for those who need it.

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Final Thoughts

You can get through this.

I know the outlook is bleak right now, but we can focus our efforts on effective financial strategies and, now more than ever, frugal living.

Stay focused on creating a budget, if you don’t have one. A budget will ensure that you have a financial plan and execute it.

Cut back on any unnecessary spending and instead put those items on a wishlist for later. It’ll be a nice gift to yourself when we reach the end of the tunnel!

But most importantly, look after yourself and your loved ones.

The best advice I’ve heard recently (and has greatly benefited me) was on NPR’s Life Kit podcast episode “Coronavirus Panic: How to Get Your Thinking Brain Back Online.” The idea is to take “short moments many times.” Stop and take deep breaths throughout the day. Recenter yourself and your mind and try to keep those anxious thoughts away.

There are so many things we can’t control right now, so focus on the things we can, like staying connected to each other, coming up with a financial plan, and finding ways to keep our minds at ease.