As "stimulus checks" begin to arrive in bank accounts and in the mail, The Salvation Army believes the Economic Impact Payment can be a lifeline for Americans if utilized to crisis-proof their budgets. We've prepared some tips to guide Americans making tough spending decisions*:
- Don't spend it before you get it. First, understand if you do not have direct deposit set up for your taxes you may be waiting a few weeks or months to receive your payment. During this time, focus on getting your taxes done to determine if you owe any money that the payment could help offset.
- Pause any debt, prepare for the long haul. Put a pause on creating new debt, adjust your budget, cancel services you can live without, speak with a customer service representative for other services you pay for and ask for lower prices, negotiate lower interest rates on credit cards.
- Catch-up/pre-pay your rent or mortgage. Once you do receive your payment, if you've fallen behind on rent or mortgage, get caught up now! Even though the government may allow for a delay in payments or evictions, it does not mean those payments are forgiven or forgotten. Don't put off paying your mortgage only to owe 3-4 months worth when these challenging times are over. If you're current on your rent or mortgage, consider putting money aside now for the next payment.
- Ensure you have at least two weeks of food in your home for your entire family. Should a member of your household become ill, it may be 2-3 weeks before anyone can get out to buy groceries. Be prepared with enough shelf-stable food to endure that time. Understand that getting more significant quantities of food can be tricky right now. You may have to plan multiple trips for items that stores are limiting large amounts of.
- Pay delinquent bills. Once your basic needs are met like shelter and food, it's time to start chipping away at other bills you may be behind on. Pay on back utilities first to ensure continuity of those essential services.
- Pay off/down high-interest credit cards. Pay off high-interest credit cards first then move to lower interest cards. Negotiate lower rates with lenders.
- Resist impulse buying/sales. Due to the decline in foot traffic in stores, retailers are timing exciting promotions around the economic impact payments. Use wisdom and remind yourself that these are uncertain times that could last much longer than anyone may think.
- Create an emergency fund. If your mortgage/rent is current, your bills are paid off, and your debt is under control, start planning for an emergency. Your first goal should be to build a fund that can pay an entire month's expenses. Once you reach that goal, begin saving for car repairs.
- Invest in activities that lower monthly expenses. Enroll in a defensive driving course that will lower your monthly car insurance payments. Quit smoking, drinking, etc.
- Invest in activities that raise your take-home pay. Enroll in career development or licensing/certification programs.
*This information is meant to be a helpful guide and not meant to take the place of a knowledgeable financial professional. Please consult a professional regarding your personal circumstances and financial decisions for best results.
The Salvation Army's Pathway of Hope
If you're a family receiving public assistance that feels stuck in your situation and is ready to take steps to pull yourself out, consider The Salvation Army's Pathway of Hope program. The Salvation Army's Pathway of Hope initiative provides personal coaching services and referrals to families with children who desire to take action to break the cycle of crisis and vulnerability that repeats generation after generation. It seeks to address the root causes of poverty in addition to The Army's history of compassionate serving. By helping families overcome challenges like unemployment, unstable housing, and lack of education, we are leading families down a path toward increased stability and, ultimately, self-sufficiency.