On Sunday, 20 December 2020, the US Congress announced a second stimulus checks for the people of America. The second stimulus comes in as we enter 2021, 9 months into the pandemic. And here, we shall try to answer some of the significant questions about the same.
Is it enough?
Who are the ones that will benefit from this stimulus package?
What is the best way to utilize this government relief?
Who qualifies to receive the stimulus check?
Congress has secured votes from both houses and announced a second stimulus package worth $900 billion. The announcement comes after weeks of allegation games between the republicans and democrats on who would close-out a deal, whether or not such a deal would altogether collapse.
The stimulus package will be available to people below a certain income level and eligibility will be determined based on Adjusted Gross Income of individuals as filed under taxes in the year 2019. And, if you qualify for the stimulus package, the IRS will directly send you the amount through your checking account or physically by check in your mail.
For detailed information on qualifying groups also check out:
Is a $600 stimulus package enough for American families?
Eligible Americans will receive a long-awaited second stimulus check. Individuals who earned below $75,000 in 2019 will receive $600, whereas couples who earned below 150,000 will receive $1,200.
During the first round of stimulus from the government of $1,200, bank balances took on an average – 6 and a half months to return to normal fund levels – as per Fintech app ‘Earnin’ an app that allows you to access your paycheck before the money from your salary hits your checking account. This means that on an average, one can expect that a $600 package will last people about 3 months.
There are people who were able to delay payments on their overdrafts and debts in the first few months of the pandemic, but that will not be the case here, and these dues will start catching up to the people. Also, people with barely savings in their accounts, would probably spend the stimulus money faster – as per various financial analysts.
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So what is the best way to make use of this stimulus package, and how can the people of America ensure that the money is utilized most efficiently, since, although people could have done with more than just a $600 stimulus, we do not see a fresh stimulus package anytime soon.
What should I do with my $600 stimulus check?
- Pay-off any and all credit card dues – According to Kevin O’Leary of Shark Tank fame, you should use your stimulus package to pay-off your credit card debts if you have any. Credit cards carry high interest rates, and maybe even more difficult to pay because of the compounding effect on the dues. Ellevest CEO gives similar advice and backs the advice that paying-off any credit card dues is the wise decision since data from the Federal Reserve shows that annual interest charges can be well above 10% and rise upto 30% depending on an individual’s credit score.
- Buy essentials – Essentials like food, rations, electricity and water bills must be paid next.
- Savings, savings , savings – Do not overspend, and definitely do not think of it as ‘free money’ and buy the Playstation 5 or anything like that. Save the money. You never know how long this pandemic is going to last. A new strain of virus has already been detected, and has now crossed UK borders. Reports suggest that this strain of the virus spreads easier and more rapidly. After paying-off credit-card debts and any other outstanding dues and stocking up on essentials, saving should be on top of your priority list.
With the recently announced stimulus package, economists agree that $600 is not going to be enough to cover up all the missed rent payments and bills from past months. Dallas Mavericks owner Mark Cuban would even come up with his own plan and suggest a $1000 stimulus to people irrespective of their income levels every week for 2 months. Donald Trump asked for a $2000 stimulus package, and many other experts voiced their concerns over the insufficiency of the stimulus package.