The first wave of federal stimulus checks has been deposited, but now there’s the question of what to do with it.
No matter what your tax bracket is, Tiffany Aliche, AKA The Budgetnista, has got sound advice on what to do with the cash. Aliche is an award-winning financial education teacher and expert, and she spoke with In The Know about four ways to make good use of the recent relief aid.
1. If you’re behind, pay your current bills.
“Are you slightly behind because your income has been reduced or eliminated? Well, get caught up as much as you can,” Aliche said.
2. If you’ve got the bills settled, put that money in savings.
“When you’re entering into a recession, it’s important to have a strong cash position,” Aliche advised. “That just means stacking your money. Because if you do lose your job or your job reduces your income, I want you to be able to lean into your savings.”
Try to make sure you have at least six months’ worth of savings.
3. If you’ve got your emergency savings together, pay down federal student loan debt.
Aliche normally doesn’t recommend paying a lot towards debt during a recession. Don’t apply the stimulus check to your credit card debt, but those with federal student loans might want to consider channeling the extra money towards that — this is a very unique opportunity.
“Until September 30, 2020, the federal government — if you have federal student loans — has suspended payments and interest payments on your federal student loans,” she said. “That means if you do decide to pay, all of your money is going to go toward your principal. So if you’re paying a hundred bucks a month, all $100 is going to go towards that debt.”
4. If you’ve got the first three covered, prepare to invest.
“If your bills are caught up, you have enough savings, you don’t really have any student loan debt, then investing is going to be your best friend. Recessions create millionaires,” Aliche said. “Not to say that your $200 is going to turn you into a millionaire, but what it can do is grow larger than it normally would in a normal economy.”
Aliche advises you to prepare to invest by taking classes, opening a brokerage account and reaching out to a financial advisor or planner.
If you liked this story, check out this piece on a woman who found a winning lotto ticket in her purse 4 months later.
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