What to do with your stimulus package check?

By Karen Ramsey

After much talk and anticipation, here come those stimulus package checks!

Beginning this week the first of 130 million taxpayers will begin receiving their checks in the mail. Single taxpayers making less than $75,000 will see payments of up to $600 and couples making less than $150,000 will get upwards of $1,200. And don’t forget the value of those little ones; parents will get $300 per child.

You may have already earmarked this cash for paying bills, adding to savings, or for paying for that really big Cinco de Mayo fiesta you hosted! In that case, ¡Espero que usted disfrutara del partido! (I hope you enjoyed the party!)

If you don’t yet have any plans for those welcome little bonuses; here are a few ideas to make the most of them:

Add to a contingency fund
A contingency fund is cash you save for emergencies, so you don’t have to use high interest credit or other cash sources to cover immediate emergency needs. I recommend saving three to six months worth of living expenses (see my blog article for more info on Contingency Funds). Your stimulus check may not come close to three to six months living expenses, but it is a great way to get the fund started.

Pay off some debt
If you’ve already been stimulating the economy with your credit cards and you are carrying a balance, consider the economy stimulated. Send the sum you receive from the government directly to the credit card company and pay off some of that high interest credit card balance. It may seem like a drop in the debt bucket, but every drop counts!

Save for retirement
Consider this an opportunity to stimulate the economy of the distant future. Setup an IRA and invest your stimulus check for your future retirement needs. If you’re concerned about investing in these erratic times, you can still invest conservatively. Just try and take advantage of the great retirement benefits of an IRA.

Save for a upcoming purchase
If you have your eye on something bigger than what your stimulus check will afford you, consider this an opportunity to start saving for it. Stick your cash in a savings account. Don’t fritter it away on impulse items. You’ll stimulate the economy; but do it on your terms when the time is right.

Saving and paying off debt may not be as much fun as a $1,200 fiesta, but you will be in a bit better financial position. That’s muy bueno (very good)!

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