Many of us should have received a $1,200 federal stimulus check to help us deal with the fallout of COVID-19.
Now, maybe you lost your job because of the coronavirus, and you need every penny of that $1,200 to pay for food and shelter. (You also get $500 per child.)
But maybe you’re still working and earning an income, in which case that money is simply a welcomed bonus in this time of uncertainty. If so, here are a few financially responsible suggestions for what to do with it:
1. Start an Emergency Fund — and Grow It 20x Faster
If you’re one of the millions of Americans who don’t have an emergency fund, now’s a good time to start one. That’s right — save your stimulus payment for a rainy day.
A good way to avoid spending your emergency fund is to separate it from your everyday checking account. Try depositing your stimulus money into an online savings account that pays you better interest than a brick-and-mortar account.
A mobile banking app called Varo is one option. The average savings account pays a paltry .07% APY*, but Varo pays you more than 20 times that. Oh, and there are no monthly fees.
We know opening a new bank account isn’t exactly everyone’s idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
2. Own a Piece of Amazon, Google or Other Companies
Investing your stimulus check in a company now could pay off big-time down the road.
Seriously. Take a look at the Forbes Richest People list, and you’ll notice almost all the billionaires have one thing in common — they own another company.
But if you don’t happen to have millions of dollars lying around, that can sound totally out of reach.
That’s why a lot of people use the app Stash. It lets you be a part of something that’s normally exclusive to the richest of the rich — buying pieces of other companies for as little as $1.1
That’s right — you can invest in pieces of well-known companies, such as Amazon, Google or Apple, for as little as $1. The best part? When these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.
It takes two minutes to sign up, plus Stash will give you a $5 sign-up bonus once you deposit $5 into your account. Subscription plans start at $1 a month2.
3. Boost Your Retirement Savings
All too often, we don’t think about our retirement savings until we’re creeping closer to our 60s. But if you start building your retirement accounts earlier, you’ll benefit more from compound interest.
That’s why it’s smart to funnel some stimulus money into your retirement fund now.
Although you can’t directly deposit your stimulus check into your 401(k), you can increase your paycheck contributions. (Take full advantage of that company match!)
Or you could open an IRA — a retirement account that’s not tied to an employer. You can contribute up to $6,000 to an IRA each year or $7,000 if you’re 50 or older. So your stimulus check will definitely fit.
4. Pay Your Bills and Save Nearly $900/Year
It’s crazy how paying off a large bill actually feels like a gift when you reach adulthood. Earmarking your stimulus money for your annual car insurance bill or another big, once-a-year expense means you won’t have to scramble to get the money together when it’s due.
While you’re paying bills, it’s worth checking to see if you’re still getting the best deal on your unavoidable bills — like auto insurance. How would you feel if you found out you were wasting nearly $900 a year on this?
There’s an app called Jerry, and it can tell you if you’re paying too much on your car insurance. In fact, Jerry says it finds that people, on average, are overpaying by about $887 a year.
Once you’re with Jerry, you’ll never have to worry about shopping around for insurance again. From now on, Jerry will automatically do that for you. Also, it won’t cost you anything — it’s all free.
If you’re worried about ditching your current policy, know that you can back out at any time. By law, insurance companies have to give you a refund for the remaining unused days on your policy. To find out if you’re getting ripped off, fill out the online questionnaire.
This should take less than two minutes, then Jerry will take care of the rest.
5. Get Rid of Your Credit Card Debt
Fact: Credit card debt is the most expensive kind of debt. And the truth is, your credit card company is getting rich off those high interest rates. But a website called Fiona could help you pay off that bill as soon as tomorrow.
Here’s how it works: Fiona can match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.
If your credit score is at least 620, Fiona can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 3.84% and terms from 24 to 84 months.
Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
Once you’ve gotten your credit card debt nice and organized, use your stimulus check to make your first big payment toward becoming debt free.
Before you know it, all that credit card debt — and the anxiety that comes with it — could be gone by tomorrow.
1For Securities priced over $1,000, purchase of fractional shares starts at $0.05.
2You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
The Penny Hoarder is a Paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.