6 smart ways to use the check Uncle Sam is sending you

The federal government soon will send you a check. A new coronavirus stimulus law enacted on March 27 will pay most American adults $1,200 each — plus an extra $500 per child in their family.

As we reported, the rebate will start phasing out for people with incomes of more than $75,000 to $150,000, depending on their tax-filing status. That means people who make more than those amounts will receive less money from Uncle Sam.

While you wait for your money, the following is a slew of smart options for what you can do with the check once it finally arrives.

1. Use it to live
Hopefully this is obvious: If you need the money now — to pay rent or utilities, or simply to buy groceries — take what the government has given you and spend it.

Perhaps there are ways to avoid this option. Several banks have said they are willing to work out plans that give customers a little financial breathing room with their bills. For example, customers who have an auto loan or mortgage with Ally may be able to defer payments for 120 days.

So, if you can work out something like this with lenders, it might be worth doing. That way, you can keep the government cash in savings in case you need it later.

But if you need to spend the check right now, do so.

2. Put it into an emergency fund
You would be hard-pressed to find an event that better defines “emergency” than the spread of COVID-19, the disease caused by the new coronavirus. If you already have an emergency fund — or simply want to start one now — putting your government check into such a “rainy day” account might be a wise move.

It’s true that we are in the midst of a “rainy day” right now, but it still can make sense to add to the emergency fund in case things get worse. After all, this downpour soon could turn into a monsoon — with some experts predicting the unemployment rate could hit 30%.

Wondering where to store that money? Check out “The 3 Best Places to Keep Your Emergency Fund.”

3. Pay down debt
Whenever possible — even in good times — you want to avoid carrying debt. But debt is especially dangerous when times turn tough.

So, if you already have a fat emergency fund and feel comfortable that you can use it to ride out a lengthy downturn, you could use the money you get from the government to pay down credit card debt. Or, you can even make an extra payment on your mortgage or auto loan.

Just remember that staying flexible is key during tough times. If you don’t have a lot of savings already, it might make more sense to skip paying down debt with that government cash and to put the money in an emergency fund until the crisis has passed.

And if you are deeply in debt, stop by Money Talks News’ Solutions Center and search for free expert debt help.

4. Invest it
This probably is not what the government has in mind as it sends out checks. But if you have plenty of savings and truly don’t need this money, you could take it and put it into the stock market.

The market has been in free fall for weeks now. The old adage is “buy low, sell high.” And without question, we are now sitting squarely — and uncomfortably — in a time when the first half of that phrase is relevant.

For Money Talks News founder Stacy Johnson’s latest take on the matter, check out “Here’s When the Stock Market Will Stop Falling and It’ll Be Time to Buy.” And if you are looking for trustworthy advice, stop by the Solutions Center and search for the right financial adviser.

5. Blow it on fun stuff
Spending what is supposed to be an emergency check on something fun sounds like a stupid idea. And for millions of people, it clearly would be a boneheaded move.

But again, if you already have money to burn and want to spend a little on something nonessential to take your mind off troubled times, be our guest. In fact, the government probably would see you as a team player, since spending that money will help keep the economy afloat as it sails through very rough seas.

6. Donate it
Finally, these are sad, scary days. But we’ve seen worse.

For instance, while this coronavirus is genuinely dangerous, most would agree that it doesn’t hold a candle to the threat the nation faced during World War II.

We don’t need to recite the litany of historical challenges America has overcome, many of which were more difficult than the moment we face now. It is our ability to unite and to help our neighbors that has gotten us through countless crises before, and that will do so again this time.

So, if you don’t need the money, give it to a good cause. Consider the donation your contribution as a foot soldier to the wider war effort. When we finally lay this virus to rest, you’ll know you did your part to help.

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