Your $1,200 Paycheck and Student Loan Payments
Last Friday, March 27, 2020, the federal government passed a $2 trillion stimulus package in an effort to alleviate the financial burden on Americans do to COVID-19.
What is a stimulus?
The economic definition of stimulus is “an attempt by governments or government agencies to financially boost an economy. An economic stimulus is the use of monetary or fiscal policy changes to kick-start growth during a recession. Governments can accomplish this by using tactics such as lowering interest rates, increasing government spending, and quantitative easing, to name a few."
Why is this necessary?
COVID-19 has had a significant impact on our economy, businesses have closed their doors, people are out of jobs, and industries completely disrupted. Unemployed and even cautious employed individuals are less likely to spend money during this time of uncertainty. This bill has specific items that will directly add money to your wallet.
First up: $1,200 Cash Paycheck
The maximum amount you can receive is as an individual filer is $1,200, or if married filing jointly, $2,400 per couple if your gross income was under $75,000 in 2019. If you made between $75,000-$99,000, you only receive a portion of this and any thing more than $99,000, means that you don’t qualify to receive a paycheck. For every dependent, you will receive $500.
Of course, I’ve already been thinking about where I can allocate these funds and I’m sure that you probably have too. So I thought I’d share my ideas for way to spend it.
Add to your emergency fund - Is your emergency fund fully funded? This means that you have at least three months of living expenses, and ideally six months. If not, make sure that you prioritize this!
Build your personal/professional development skills - Have you been putting off meeting with career coach for a career transition? Could you benefit from the LinkedIn Premium account? This is the perfect time to get the tools you need for the job you want. But first make sure that they isn’t a free way to learn this online, for example, LinkedIn’s Lynda is free with a NYC library card.
Support Local Businesses - It’s probably likely that your local salon or bakery struggling to get by during this time. Find out if you can prepay for a service or buy a gift card for future use. If you love the service/product and know that you will use it when things improve, why not support them right now when the need it most?
Check on Your Friends - Do you have friends that have been affected by this personally, either by being laid off or dealing with a sick family member? Surprise them by treating them to takeout via Venmo. Trust me, this will put an immediate smile on their face.
Donate to local charities - Are their charities whose mission you love? It could very well be that their fundraising events have been cancelled and they need a little more cash than usual to help them do their work.
Treat yourself - This is not an excuse to buy everything you ever wanted. Maybe it’s candle to make your working from home more enjoyable? Or weights to help you keep your workout routine?
Spread it out your spending and saving, it’ll make that the thrill of this incoming money last longer.
Now onto the Student Loans Front
The federal government has done a few things to support students and graduates with federal student loans payments.
Option to stop paying your federal student loans through September 30, 2020 - While the government is giving you the option to stop your payments, if you still have the financial means to make payments, keep it going. But if you’re already strapped on cash, use this extra hundred bucks to create a security buffer for you.
No interest through September 30, 2020 - It's probably the best time to pay considering all your payments will be going directly towards your principal because no interest will accrue on your federal student loans until this date too.
No collections during this time - The government will stop calling you for the money during this time period.
Will not negatively impact you student loan forgiveness payments - If you choose to not make payments during this period, it will not have a negative impact on your status in the program.
Again, it is important to remind you that this only apply for federal student loans. If you have any private loans this doesn't change anything and you must still make those payments. If you can’t due to COVID-19, call them immediately and ask if there is anything that they can do for you.
Let me know how you end up spending your stimulus money and what you decide to do with your student loan payments!