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Tips on using your stimulus check

By the end of March, the U.S Congress passed a $2 trillion stimulus bill designed to help businesses and people deal with the fallout from the coronavirus pandemic.  Millions and millions of people lost their jobs in a short amount of time due to companies shutting down, oil prices have tanked due to decreased demand, and many Americans (and citizens from around the world) are left with uncertainty.  As an American, I too received a one-time check from the federal government, something I don’t take granted because not too many people from around the world can receive one from their governments.  Was it enough? Not really.  It’s just a small band-aid to patch up a broken dam that’s spilling from all sides.  But it’s something.  I would rather have something than nothing at this point.  As a traveler, my first (irresponsible) thought was to save this money for a trip sometime in the future.  Nice maybe.  Nothing would feel as good as the South of France right now.  Wine, food, the promenade des Anglais…paradise.  Or maybe I can indulge in a bouchon somewhere in Lyon.  Or relax on the white, sandy beaches of Zanzibar eating fresh seafood.  Ahh the possibilities!  I think we will all need to getaway from our homes for a bit after this pandemic get under control.  Then I had to switch to responsible adult mode for a second.  What about my day-to-day expenses?  My bills are still due.  What about if something happens and I have to go to the hospital?  I have to pay that bill.  There is just too much uncertainty around the covid-19 pandemic that no one knows when we will be able to travel again, let alone step outside of our homes.  So what do I do with my new found fortune 😆?  Here are some few ideas I came up with.  These are merely recommendations that might work for some but not others.  You must assess your own situation and decide on the best course of action for your money.

Guy carrying a bag of debt

⟶ Pay down your bills

Even before the pandemic, many people had high levels of debt.  It was always going to be unsustainable, and this economic downturn just highlighted that.  According to the Federal Reserve, the consumers’ total debt from credit cards exceeded #1 trillion for the first time.  Average households now owe over $8000 in credit card debt, which is sure to skyrocket the longer the pandemic lasts.  If you have credit cards with high interest rates, now would be the perfect time to pay down those travel bills from last year.  Or student loans.  Federal student loan payments are suspended until September 30th.  Pay bills now so you can party in Rio de Janeiro later free of debt, or at least with less.

⟶ Invest in stocks

If you are caught up in bills or have extra money in your savings account, you should have some of that money work for you: invest in stocks, bonds, etc.  It might sound counterintuitive given the extreme volatility in the stock market at the moment, but it is the way of the markets.  They will go down but eventually, they will also go back up.  If you are skeptic about investing, think about the 2008 housing crisis.  The stock market dropped significantly, though not as fast as during this pandemic, but it recovered.  Investing is a long-term bet.  Your $1,000 today could be worth $2000 next year.  Enough money for 2 trips instead of 1 for us budget-travelers!  The difference between a margarita on a Florida beach or sipping champs in Reims, France.  No shade on Florida but I mean…

ps. Like most things, before you invest, know the risks involved.

laptop showing stocks page
Jar with money for fund

⟶ Start a fund for emergencies

Again, you have to make a decision based on your current finances.  Unfortunately, most people cannot afford to save now because they couldn’t even pre-pandemic.  A survey done by the First National Bank of Omaha at the beginning of 2020 stated that nearly 50% of Americans are living paycheck to paycheck, and more than half of those people do not have an emergency fund to last at least 3 months.  The pandemic also means that many people face or will face rising medical expenses.  So after paying your current bills, if you are not sure about investing, put that money into an emergency fund.  Spend it on the essentials only and leave that yurt on Amazon alone, at least for right now.

⟶ Donate

And no I don’t mean to those churches with sleazy pastors on Instagram or Facebook asking people for donations.  That’s just immoral on so many levels.  But if you make enough money and have some savings, you can make a donation to your favorite cause.  There are plenty of people in need.  Or you can invest in that family member or friend who wants to start a business.  You can always be a silent partner 😉.

ps. Donations don’t have to be in cash.  You can also donate food, clothing, blood, your time (but safely).

Money in jar for donations
Coffee mug with word 'begin' written on it

⟶ Invest in yourself

Now is that perfect time to really develop that idea you’ve had for a while.  Again, it might also sound counterintuitive considering the economy, but starting a business is a risky move any time, recession or not.  Start that (travel) blog you’ve been thinking about.  Launch a startup.  Millions of people are stuck in the confines of their houses as the workplace shifts from the office to your home. $1200 might not seem like a lot but it’s something to push you in the right direction.  Time is on your side.  We will move past this at some point and business will continue as usual.  Now is actually the best time to test your idea.  If it can survive an economic downturn such as this, imagine when the economy is booming!

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