There’s a lot going on around us right now. The effects of the coronavirus (COVID-19) are in full force and have sent waves across the world. And now it’s hitting us in our daily lives. It’s been a crazy few weeks to say the least. We’re feeling it too.
But know this: We hear you. Your questions about what to do if you’re still paying off debt, your thankfulness for having a plan in place, your real fear about what happens when you’re out of work—We. Hear. You.
And if it feels like there are more questions than answers right now, you’re not alone. What are you supposed to do while you wait out this storm? The government wants to step in to help people out, but will that make a difference? Here’s what you need to know about the coronavirus stimulus plan, plus how to live to fight another day (and not depend on the government to see you through).
What’s the Coronavirus Stimulus Plan, Anyway?
The U.S. government is trying to do something to balance out the amount of hardship that Americans are carrying right now, encourage the economy to spring back, and aid small businesses. The Coronavirus Aid, Relief, and Economic Security Act (CARES) is the government’s answer to these needs. But it doesn’t come cheap. Nope. The bill for the economic stimulus package is estimated to be about $2 trillion. Of that, $300 billion would go to Americans, $350 billion in loans to small businesses, and $500 billion in relief to other businesses. That’s a lot of money.
So how much of it would you actually see? Here’s how it all breaks down given what we know now (but remember, things are changing fast, and the final details may shift).
We’re about to throw a lot of numbers and dollars signs at you. Ready? Here we go: In the proposed bill, individuals who filed taxes in 2018 or 2019 would receive $1,200 for each adult and $500 for each child. If you’re a household of two adults and two children, your amount would be $3,400.
To qualify for full aid, your adjusted gross income (your income before taxes) would need to be under $75,000 for each individual, $112,500 for head of household, or less than $150,000 for each married couple filing jointly.
If you make more than those limits, the check amount would be $5 less for every $100 that your income goes over the limit. So yes, there’d be some folks who would get very small amounts in their checks, and taxpayers with incomes more than $99,000 (individual) or $198,000 (married) wouldn’t be eligible at all.1
With 78% of Americans living paycheck to paycheck, this coronavirus stimulus could help keep food on the table and the lights on—but at the end of the day, if you’re out of work, $1,200 isn’t going to go that far for that long.2
The government’s goal is to get checks into the hands of Americans within three weeks of the bill passing and then again another six weeks later—if we’re still under a national emergency then. The bill also provides some relief to those who’ve had the virus (or are unable to work or find childcare because of the virus) and want to draw from their 401(k) account. They can now do it without being slapped with a 10% early withdrawal penalty—the fee is completely waived.
Keep in mind that the exact amounts, details, and things needed to qualify could change. There are still a lot of unknowns here that are being ironed out. But stimulus or not—either way, you’re still going to need to have a plan.
What Should I Do With the Stimulus Money?
If you're household income has been impacted by all of this, you can use this money to protect your Four Walls:
If you’re having trouble keeping food on the table right now, use some of that stimulus money to keep the mouths in your home fed. After that, make sure you can keep the lights and water on. And on a lighter note, if you have kids currently out of school, your sanity will appreciate having the ability to turn on the DVD player too.
After that comes your home. Whether you’re paying rent or a mortgage, make sure some of this money covers the roof over your head. Right now, the U.S. Department of Housing and Urban Development (HUD) has said that all foreclosures and evictions are suspended through the end of April 2020, so you don’t have to have that hanging over your head.3
Maybe all the jobs in your household are safe and you feel like it’ll stay that way throughout this corona chaos. First, thank the Lord for that blessing, and then go ahead and save the money. Sit on it until this whole storm passes over and becomes just a weird dream we all had. Then, regroup and focus on attacking whatever Baby Step you were on.
Don’t Wait on a Check From the Government to Bail You Out
Everyone likes the idea of money falling from the sky—in theory. And if you’re really in a bind right now, then this money might be a huge answer to prayer. But don’t wait around on the government (who’s already in debt!) to bail you out. It’ll be weeks before you’d see that money. So don’t rely on that. There are things you can do right now to make it through these crazy days.
Let’s be honest, social distancing can do a lot of good for your budget. After all, no one is strolling the mall right now, hanging out in a crowded theater, or going bowling. A lot of places that could tempt you into spending are actually closed right now, and that’s a good thing for your wallet.
Be proactive and see where else you can cut back. Pause subscriptions, buy only essential items and live off of the staple groceries in your pantry.
If you don’t know where to begin when it comes to figuring out what to cut, you need a budget, my friend. And it’s not complicated to do. You can get started right now with SmartDollar and the included access to our budgeting tool, EveryDollar.
Think About Your Situation
If you’re on Baby Steps 1–3 and you’ve lost your job or know a job loss is coming—pause and focus on saving up as much cash as possible right now. Stop making extra payments on your debt (but continuing making the minimum payments so nothing goes into default). We know it really stinks to bring all your momentum to a standstill, but you’ve made great progress, and now it’s time to put things on hold and pile up cash until this passes.
If your household jobs are all stable, keep going forward. You don’t need to pause your debt snowball. Just keep working the steps like you normally would.
If you’re on Baby Steps 4–7, continue right on with your investing. Do not—we repeat—do not pull out your investments! You won’t feel any of these “losses” on your investments unless you cash out the money. So don’t listen to what some news reporter or that guy in line at the grocery store told you to do. Just keep a level head, stay on that investing roller coaster, and reach out to your investment professional if you need to talk things out. And most of all, be glad you’re in a less shaky place than others right now. You have peace of mind from sitting on an emergency fund, but what about everyone else you know around you? What ways can you bless them in this time of crisis? Look for ways you can be generous in the midst of these uncertain times.
Maybe you’re thinking, What the heck? I have no idea what kind of “baby step” I’m on or where I’m at with my money right now. You’re not alone in that. Log in to SmartDollar and check out the Baby Steps Overview.
Adjust Your Budget
Between having the kids home for meals and stocking up on beans and rice, it’s safe to say your grocery budget is going to look a lot different this month. And that’s okay! You might want to move any money that would normally go toward eating out, entertainment or special activities over to your food budget for the time being. The most important thing is that you keep your family fed and then go from there with the Four Walls. Adjust your budget as you need to right now.
Bottom line here? Don’t wait around for the government to cut you a check. You can get started on taking matters into your own capable hands right now! The truth is, the money from the coronavirus stimulus isn’t going to be enough to fix everything. It’ll sure help, but it won’t solve all your problems. You’ve got to get your income up, and that’s possible—even in these weird times we’re living in.
Keep Your Spirit Up
It’s easy to feel like we’re all living in the middle of some science fiction novel right about now. Things are weird. We all see it. We all feel it. But don’t let that drive you to make poor decisions in an already heated time. Run as far as you can from anyone trying to get you to take on a personal loan or reach for a credit card. You don’t want to make a rough situation even worse here.
They might have closed your business for a while, cut your hours, or quarantined you, but do you know one thing that no one can take away from you? Your spirit. The human spirit is resilient, and it shines like none other during trying times of chaos, times like these. So get off social media, turn off the news, and tap into things that bring you joy and hope. Feed your spirit. Be a beacon of light to everyone you come into contact with—but stand at least 6 feet apart.
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