If all goes according to plan, you might see a $1,200 deposit in your bank account sometime in the next few weeks. The 3 million people who’ve recently filed for unemployment will get an extra $600 a month, and people with kids will get even more money.
It’s all part of the economic stimulus plan that Congress and the Trump administration have been negotiating for the last couple weeks in response to the coronavirus pandemic. It passed the House and Senate late last week.
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Now, whether you’re unemployed or not, knowing how to make that extra money last can be a challenge. The point of the direct stimulus is to get people spending, but Milwaukee-based financial analyst Tony Drake says there are a few things that he hopes people do.
"First and foremost, it's that emergency fund," says Drake. "That three to six months reserve, so just sit down and think about budget. Think about if you had no income coming in, what does it take to make your world float."
Debt is the next thing Drake says stimulus money should go toward.
"Especially if you are talking about credit card debt, with those double-digit interest rates. It's really hard to save long-term if you are paying that kind of interest on debt," says Drake.
Not all debt is created equal. The interest rate on debt is the key to what you should pay off first, according to Drake. Debt like a mortgage can have low, single-digit interest rates, while credit card debt can have much higher interest rates.
If you are struggling to pay bills or rent during this time, don't hide. Drake says, "The best thing you can do is contact people directly. Generally, through these types of volatile periods and substantial market corrections, most banks or lenders are going to do something. They don't want to see you foreclose."
