What to do with that stimulus check?

January 13, 2021
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By Rob Schulz

Mansfield Record

This has been a trying era for most Americans but at the same time, there have been and continue to be windfall opportunities in the way of government programs like PPP, expanded unemployment and stimulus. For those who are struggling without a job or in business decline, these funds are a lifeline to the other side of the COVID abyss we find ourselves navigating. For others, it’s extra money we weren’t expecting or counting on. Either way, it’s important to use these resources wisely.

Here in the midst of a second stimulus check mailing and PPP program, you may find yourself in a different situation than where you were at the beginning of the pandemic. With vaccinations rolling out across the country, the end is in sight. But what is in store for us on the other shore? There are still many uncertainties about what lies ahead. Global trade, how and where we work, and what people will do in their leisure time are just some of the changes we should expect to persist on a more permanent basis.

When there is uncertainty, our best defense is cold, hard cash. Cash is what allows us to live when there are threats to our livelihood. If your cash reserves are not adequate, then any windfalls should be stashed away and preserved. With cash savings, you can weather short-term storms without having to cash in long-term assets like your retirement funds or having to go into debt.

Another important thing to remember with regard to uncertainty is that it always creates opportunities. As things continue to shift and change, keep your head up and your eyes open for opportunities. Many times opportunities require you to have readily available funds to take advantage of them. So again, preserving any and all funds you can as cash makes a lot of sense.

Generally speaking, most people should maintain at least six months of living expenses as cash savings, especially now. If you have adequate cash savings, then the next thing you should do with any extra money is to pay down debt. Reducing debt is one of the easiest ways to lower your monthly cost of living. The lower your living expenses, the easier it is to adjust to unforeseen circumstances.

For those who already have adequate cash savings AND have little to no debt, congratulations, you’re in the catbird seat. You can use any extra funds you receive to create opportunities for growth. I believe these opportunities can and will be found in various places going forward.

Rob Schulz is a local Certified Financial Planner and author of “Thoughts on Things Financial: Your Guide to a Chaotic Money World.” He can be reached at rob.schulz@schulzwealth.com. Buy his book here: https://www.schulzwealth.com/book/

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