These savings options are excellent ways to put money aside for retirement or medical expenses. Additionally, many taxpayers can make contributions to their company’s 401(k) programs (some even provide company matches). The extension of the federal tax filing and payment deadline to Jalso extends the amount of time to make contributions to IRAs and HSAs for 2019. Finally, if all the above boxes are checked, you might use your stimulus check to fund a retirement plan or a Health Savings Account (HSA), if eligible. Often, you’re paying more interest on your debt than any interest you’d receive in a savings account, so financially speaking paying off debt is often wise.Ĥ. If you've got enough in savings to sustain you through a potential job loss, but you still have higher interest debt such as credit cards or private student loans, your payment would have the most impact paying this down faster.Īnd, even if you have debt with lower interest rates but you have sufficient savings, consider paying off that debt as well. If you have sufficient savings, consider paying down high-interest debt. If you don't have a fully-funded emergency fund (at least 3 – 6 months of expenses, depending on how easy it would be to find work if you're laid off), then consider saving your stimulus payment to possibly offset future expenses.ģ. Lots of people are still able to pay their basic bills for now, but may be worried about a future loss of income if the US heads into a more extended recession. If you're able to pay your essential expenses, then use the payment to boost your emergency fund. It could take a while for everything to get worked out, but you'll want a record of your attempts to follow the rules to avoid future issues.Ģ. If you're not able to get through on the phone, document the attempt and send something in writing. Take a look at all your upcoming bills and figure out which ones would hurt your credit and future finances the most by skipping a payment, and consider using your payment for those bills if you can't get out of it without excessive interest, fees or a balloon payment due later this year.įinally, if you have to skip a payment or make a late payment, make sure you contact the company FIRST. If you're able to take care of your housing payment, but don't have enough to pay all your other bills, then use your payment for other essential expenses such as a car payment or utilities (most local governments are not allowing utilities to shut off service right now, but you'll want to stay caught up if you can). If you’re in financial distress and your mortgage payment is not relieved under the various laws passed, or you are a renter and your landlord is not able to work with you to modify your lease, then the payment may best be used to keep a roof over your head so pay that bill first. Be strategic with which bills you pay, taking into account the temporary relief available for things like federally-backed mortgages (including FHA loans) and federal student loans – you may be able to skip those payments without hurting your credit. If you're in a position where your current income isn't enough to pay your monthly bills including food and medication, then the payment is best used to help with that first. With that in mind, here's how our CPA experts recommend deciding what to do with your payment:ġ. That said, using these funds to help weather this unprecedented economic shutdown with minimal long-term impact to your personal finances as possible will pay dividends in the long run. There are many options Americans can choose to spend the stimulus money that the IRS is getting ready to send eligible taxpayers. (See below for FAQs on the payments.) How to prioritize the use of your stimulus money Here are some suggestions on how to best use the money to protect your financial future. By: Kelley Long, CPA financial planner, Consumer Financial Education Advocate for the American Institute of CPAs.īy now you've hopefully heard that the IRS is getting ready to send out economic impact payments to eligible US taxpayers to help ease the financial burden of the COVID-19 pandemic.
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