What to Spend the Second Stimulus Check On When It Gets Here

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Lucy Lazarony
October 6, 2020

House Democrats have a revised stimulus bill that includes $1,200 per adult stimulus checks for middle and low income families. The bill is called the HEROES Act, which stands for Health and Economic Recovery Omnibus Emergency Solutions Act. Democrats will be negotiating with Treasury Secretary Steven Mnuchin and Republican lawmakers about the bill’s passage.

The bill includes $1,200 stimulus checks for individual taxpayers with income of up to $75,000 and $2,400 stimulus checks for married taxpayers with income up to $150,000. In addition, families would receive $500 for each dependent regardless of age.

When will the checks arrive? The first of the second stimulus checks could start to be deposited within two weeks of the legislation passing. That is how quickly the checks started arriving with the first stimulus bill. When will the legislation pass? That remains uncertain but the two sides are negotiating.

What should you spend the money on when it does arrive? If you need new auto insurance, consider buying for the year to get the biggest price break. Or, invest in health insurance with the pandemic still looming indefinitely. Bundle your home insurance with your auto and be sure to compare rates for the best deals on all your insurance needs.

You may have some money in your pocket but you want to spend it wisely. Here are 30 other savvy choices for your stimulus check money.

1. Pay Down Credit Card Debt

It is not glamorous or exciting but if you have credit card debt, using your stimulus money to pay down credit cards is a smart financial move. Just think of the money you will be saving in finance charges.

2. Pay Off Taxes

Are you still paying last year’s taxes or the year before? Now is a great time to take a chunk out of your tax bill and maybe even pay it off.

3. Pay Down Student Loans

Are you struggling with student loan debt? Paying off your student loans with your stimulus check will give you some much needed breathing room.

4. Open an IRA

Is everything going just fine financially? Plan for the future by opening an individual retirement account. Your stimulus check will give you a nice opening deposit. With a traditional IRA, you are able to contribute pre-tax dollars to a retirement account where your investment will grow tax-deferred until you make a withdrawal in retirement. Upon retirement, your IRA withdrawals are taxed at your current tax rate.

5. Open an Emergency Fund

Tired of not having any savings? Now you’ve got some. Open a small savings account and deposit your stimulus check into it. You now have a much needed savings cushion. Financial emergencies won’t feel so stressful when you have some money in the bank.

6. Catch Up on Your Mortgage

Did you fall behind on your mortgage payments? Use your stimulus check to catch back up. You’re not off the hook, so use the money for this important bill.

7. Make Some Home Improvements

Been waiting for some extra cash to make some much needed home improvements? That stimulus cash will do the job. Just make sure to update your home insurance to reflect the new value of the home. And keep receipts in your inventory.

8. Make a Down Payment for a House

Saving for a downpayment for a house can be a struggle. That stimulus check may help you work towards one.

9. Make a Down Payment for a Car

Do you have your eye on a new car? Now you’ve got money for the down payment with a stimulus check.

10. Down Payment for an Apartment

First, last and a security’s deposit is a lot to save. Your stimulus test will go a long way in helping you get there.

11. Buy a New Laptop

Is your laptop on its last legs? Now is the time to get a new laptop that is Zoom-friendly with a good camera and microphone.

12. Buy a New Smartphone

Here’s the chance to upgrade from that budget phone you’ve been using, you want to be able to Zoom with the rest of them and you need a good phone to get there.

13. Pay for School Supplies

College is back in session and textbooks and other supplies are still needed for remote classes. A stimulus check will cover this semester’s supplies and then some.

14. Buy Furniture

Have you moved into a new home or apartment? Use the stimulus check to pay for some of the furniture that you need.

15. Buy Baby Supplies

Are you expecting a little one? You’ll need supplies, a crib, a stroller, a car seat, all those bottles of formula. Put that stimulus money to good use and tuck the rest into savings.

16. Pay Tuition

Whether it is for a private grade school, middle school or high school or private or public college, they all charge tuition and that stimulus check money will help pay that tuition bill.

17. Pay for Moving Expenses

Relocating to a new house, condo or apartment? Pay for the moving expenses with your stimulus check money.

18. Buy New Appliances

Are your home’s older appliances on the fritz? Buy new ones with the stimulus money. A stove, a dishwasher, a microwave, a refrigerator, take your pick.

19. Buy New Car Tires

They keep you safe on the road. Having a good set of car tires is good investment for your car and for you as a driver.

20. Pay for Wedding Expenses

Getting married? Use the stimulus check to pay for your wedding expenses. The check will help make a dent in your expenses for the big day and maybe pay for the whole thing if you are having a scaled down occasion.

21. Catch Up on Rent

Did you fall behind on your rent payments this spring and summer? Get all the way caught up with your stimulus check.

22. Get Help for Your Yard and Garden

Rather than struggling to make things grow and keep the yard tidy, hire a lawn maintenance crew to come do it. If only

you had the money, you would. Now you have the money to spend to make your yard look great.

23. Spruce Up Your Home Office

You’re working at home now might as well make the place look nice. Do you need a new desk? A more comfortable chair? Make it as comfortable as possible. How’s the lighting in the room? Do you need an upgrade?

24. Pay Ahead on Car Insurance

Forget about making monthly auto insurance payments. If you pay the full, yearly amount instead you will be charged a lower premium. And you’ll free up more money in your monthly budget. So tackle that auto insurance bill and save money.

25. Pay ahead for College Tuition

Get a jump on future college expenses by opening up a prepaid tuition plan. A prepaid college tuition plan lets you purchase college credits at today’s prices to be used by your child in the future. Use your stimulus check to make headway on your child’s future college tuition.

26. Invest in an Index Fund

Want to be in the stock market? An index fund is a great way to go. An index fund gives you a low-cost way to track popular stock bond market indexes. Index funds often outperform the majority actively of managed mutual funds. So use all or part of your stimulus check to get started in the market with an index fund.

27. Fund a Roth IRA

Here is another way to use that stimulus check to save money for retirement. Open a Roth IRA. A Roth IRA is a retirement savings account that allows you to withdraw your money tax-free upon retirement. Roth IRAs are funded with after-tax dollars so contributions to Roth IRAs are not tax deductible. But once you start making withdrawals from a Roth IRA, the money is tax-free.

28. Invest in U.S. Treasury Notes and Bonds

Seems strange to give the stimulus money right back to the government but these are good investment vehicles. The yields on U.S. Treasury notes and bonds are higher than what you would get from a certificate of deposit or a money market account. U.S. Treasury securities can be purchased through TreasuryDirect.go

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29. Increase Your 401(k) Plan and 403(b) Plan Contributions

That stimulus check is the opportunity to boost your 401(k) plan and 403(b) plan contributions. Take the opportunity to increase your savings.

30. Catch Up For Retirement

Are you 50 and up? Use your stimulus check to fund a catch up contribution to a retirement account. You can make a catch up contribution of as much as $6,500 to a 401(k) plan or 403(b) plan and as much as $1,000 to a Roth or traditional IRA.

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