Floridians have slowly started receiving their stimulus checks, just like so many other Americans. These checks are coming at a time when many people are also receiving their tax refunds, which will definitely bring some relief to many families that have been struggling throughout the pandemic. The first thought people may have when they receive this influx of cash is what they should do with it.
However, while you probably have many thoughts of what you want to do with the newfound cash, you should also consider what you should not do with it. If you can avoid the biggest mistakes made with stimulus checks and tax refunds, you may be able to avoid financial struggle for you and your family down the road. Below are some of the top ways you should not spend your stimulus check, and some of them may surprise you.
Avoid Ongoing Expenses
It is not uncommon for people to buy big-ticket items when they suddenly have more cash. Families may purchase something such as a big-screen TV just for fun, or individuals may make necessary purchases, including refrigerators and washing machines. Regardless of the item, it is critical that you ask yourself if you really need it, or if you just want it and it seems like an opportune time to make the purchase. If you do not need it, reconsider your decision to buy it.
Even when you do need to make a big-ticket purchase, carefully consider how you do it. Many retailers will offer a payment plan so you do not have to make the payment in one lump sum, but you can spread it over several months, or sometimes even years. Retailers also know that it is at this time of year when people feel as though their pockets are lined a little more heavily and so, they are more likely to make a big purchase.
Retailers use this knowledge to attach big fees and high interest rates to payment plans, knowing that shoppers are going to be a little less prudent. They may even try to convince you to make additional big purchases. If you need a big-ticket essential item, try to pay for it outright, or at least put a deposit on it that is as much as you can afford right now. This will help you avoid ongoing expenses, and ensure your stimulus check is spent wisely.
Also look for other ongoing expenses that you may be able to avoid. As the pandemic pushed more people into their homes and onto their couches, the demand for streaming services has greatly increased. Before you think about using your stimulus check to purchase a streaming service, consider that as an expense you will pay for in the future, as well. Do this with every item you are considering purchasing and ask yourself if it will become a recurring expense. If it will, you may want to spend your stimulus check on something else.
Focus on Savings, Not Investments
Many people use investments as a way to save money, and it is not typically a bad idea since you can get your money to work for you. However, you may want to think twice about putting your stimulus check into the stock market or another type of investment, particularly if you do not yet have as much as you would like in savings.
Too many people learned just how important an emergency fund is during the pandemic, because they were left without one. At a time when unemployment was rampant, businesses were closing, and people started facing eviction or foreclosure, they wished they had an emergency fund to fall back on.
It is important to ensure this does not happen to you, particularly if you have been in that situation once already. If you do not yet have any savings, or do not have enough in savings, start putting your money away before you place it into an investment. While a good investment can help you financially over time, it is never a guarantee. A savings account that you control is, so create one before becoming an investor.
Consider Paying Down Debt
Notice that this does not say “Pay Down All of Your Debt,” because you really need to consider your debt and then consider which you are going to pay down, or if you are going to pay it down at all. That may sound crazy, since paying down your debt can help you avoid consequences such as lawsuits, wage garnishment, and more. However, now is a very unique time and paying down your debt may not actually be the wisest choice.
The pandemic has caused many people to suffer financial hardship, and there are many programs that have been created that may help if you are suffering from a large amount of debt. Creditors are also starting to offer more flexibility with repayment plans and are even forgiving significant portions of debt.
Before you spend your entire stimulus check on paying back debt, at least consider negotiating with your creditors. You may find they are more willing to work with you, and that you may not have to repay the entire amount. That can help you keep a portion of your stimulus check so you can use it for other essentials you need at this time.
Our Debt Defense Lawyers in Florida Can Help if You Are Being Sued
While some creditors and debt collectors are starting to become more flexible during this difficult time, many are still aggressively pursuing the debt they are owed. If a debt collector has taken legal action against you, or you fear they are about to, our debt defense lawyers in South Florida are here to help. At Loan Lawyers, we know the defenses available in these lawsuits and will use them to give you the best chance of a favorable outcome. Call us today at 954-807-1361 or fill out our online form to schedule a free consultation.