Here’s what experts recommend you to do with it
By Deborah Jeanne Sergeant
If you haven’t received it already, you’ll likely receive up to $2,400 per couple of stimulus money, thanks to President Trump’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. Whether directly deposited or mailed as a check or debit card, the windfall could be used in a variety of ways. Local financial experts offered a few ideas.
Tips from Scott Klatt, certified financial planner and partner at NorthLanding Financial Partners, LLC in Rochester:
- Reduce debt. “Look at high interest credit card debt. I’m not a big believer in paying off the mortgage. Most aren’t at a high rate of interest. It becomes a dead asset — it doesn’t do anything for you. Go after credit cards or high interest debt first.”
- Help the grandchildren. “If you don’t need the money, possibly open a 529 account for your grandchild. You can write it off on your New York state taxes for about $600. You put in a dollar amount and any time you ‘find’ money you should deposit it.”
- Support charities. “You have to be a little careful with that. We have strategies about bunching contributions. When they changed the tax rule, most people aren’t able to itemize anymore. Their charitable contributions don’t count from a financial standpoint.”
Tips from George Conboy, chairman at Brighton Securities in Rochester:
- Catch up on bills. “If you’re behind on monthly bills, rather than paying bills 1 and 2 but ignoring 3, pay a little to each. Let all the creditors know you’re in a jam. Pay more when you’re back to work. No creditor will like to get paid less than full but they’d rather receive a partial payment than receiving nothing and hearing nothing.”
- Treat yourself. “Maybe take $200 or $400 and splurge on a décor item or a bucket list thing. That leaves you with $1,000 to $2,000 to get serious and do the prudent thing. But you don’t have to be all prudent. Treat yourself modestly.”
Tips from Ken Burke, CPA and personal financial specialist and president and CFO of High Falls Advisors in Rochester:
- Set aside some cash. “If someone is running paycheck to paycheck, this is a good starting point for building a rainy-day fund so when the water heater goes, they don’t have to put that on a charge card. Look at the debt profile and pay down consumer debt if you have cash reserves. Why not take some debt off the personal balance sheet and reduce that obligation?”
- Invest. “As odd as it may sound, we feel like now is a good time to be investing in the stock market, even though there will be volatility. Now is a good time to begin investing in that. Maybe not put it all in Apple stock but find a diversified trade exchange traded fund, or EFT. We’re all familiar with mutual funds. These are an alternative to mutual funds. We use them extensively. Many ETFs are index-based. You’re able to buy a broad market index with exchange traded funds as with mutual funds. The one advantage as ETFs are traded intraday like a stock. You can get an update throughout the day. Mutual funds are traded at the end of the day. They’re more tax efficient than mutual funds.”
No Stimulus Check Yet
Anyone who filed their taxes requesting a paper check (not automatic deposit) may not get the Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus check until the end of August. Some older adults who are uncomfortable with handing out their banking information may be more inclined to go with a physical tax refund.