As many Americans were finishing up the Netflix Original Series Tiger King in their strange, new, shelter-in-place existence, The US Congress passed a monumentally HUGE $2 trillion economic stimulus package which was signed into effect by President Trump in late March.
This mammoth package, better known as, The Coronavirus Stimulus is being touted as the best way Congress knows how to spur economic activity in our country during this unprecedented health crisis.
What does spur economic activity mean?
Well…to be quite blunt, if money doesn’t start changing hands again soon, (goods purchased, services rendered) the American business-scape is going to have an extremely different look to it in a few months.
Many Americans are asking when to expect these stimulus checks. The checks are scheduled to arrive in American taxpayer bank accounts (if you e-file) mid-April. Those Americans who snail mail their taxes to the IRS can expect stimulus funds later in the month or early May.
Do stimulus checks work?
The over-arching answer is-Yes, these moneys can help stimulate economic activity.
But, before getting into how to spend these economic stimulus dollars, it is important for us to look at why we should do it.
Historically, these packages do not always result in the “Silver-Bullet” effectiveness Congress had hoped.
The 2008 Economic Stimulus Act, which was a $168 billion stimulus package, was passed and signed by President George W. Bush as a result of a lagging economy and bank lending housing bubble (houses were losing value forcing mortgages to be significantly higher than the actual value of the properties.)
2008 Results: Only 20% of Americans spent the money. About 50% paid down debt and the rest saved it. NOT VERY STIMULATING!
The 2009 American Recovery and Reinvestment Act, which was $831 billion stimulus passed by Congress and signed by President Obama was enacted to save and create jobs in America as a result of the Great Recession of 2008. There were no checks issued to Americans. The stimulus dollars were in the way of tax credits and deductions in a variety of areas.
2009 Results: The recession ended 5 months after the package was initiated. Millions of jobs were created (3-11 million by 2012.) However, because of the vastness of this package, most Americans were unsure if it beneficially impacted them or not.
So with all of this economic stimulus water under the bridge….
How should you safely spend your money to help the Coronavirus Stimulus work for you and AMERICA?
6 Safe Safe Ways to Spend your Stimulus Money.
- Pay your monthly bills-FIRST. FOOD, HOUSING including utilities, TRANSPORTATION, CLOTHING. If you have credit card debt, ONLY PAY the minimum payments, right now.
- Pay your taxes. Go see a tax professional (or, call them) and get these taken care of ASAP. You do not want a bill from the IRS in August!
- Give in your local community. Your neighbors/business owners are hurting. Buy your food locally, donate some to a food bank, give to a church or charity in need. Our communities need us more than ever, right now.
- Power up your EMERGENCY FUND. You need to have, at least, $1, 000 in your savings for any future needs that may arise.
- Invest in the stock market. Yes, the old adage of ” Buy low, sell high” is of the utmost importance. Stocks are ALL on sale, right now.
- Create an IRA (Individual Retirement Account) or 529 College Savings Plan for your children. (Remember, for each eligible child, you will be receiving $500.) This is a gift they will be forever thankful for in about 50-60 years because of a beautiful thing called compound interest.
As you contemplate how to spend your government stimulus funds in the next months, my hope for you and your loved ones is, above all, safety and security. Talk your spending over with your spouse, a close friend, or a parent. Seeking wise counsel in times of uncertainty can bring much clarity to a troubling situation.
All I ask, in all of your quarantine boredom and additional time for self-discovery, is you DO NOT go and order yourself a mail-order TIGER…. 😉 Stay safe my friend!
American Economic Review. “Did the 2008 Tax Rebates Stimulate Spending? page 375.