After so many months, another stimulus bill has finally been passed. It’s in its final stages of being completely finished, but it’s safe to say it will go through. This bill will include stimulus checks for everyone making under $75,000 and couples earning $150,000 or less. They will all receive $1,400 in the mail starting within 2 weeks.
We’ve waited so long for another bill to pass and now It looks like your prayers have been answered. But with unemployment rates dropping, do we need this money? Of course, who doesn’t need an extra $1,400? What a stupid question, Mister Budget.
So, once we get this money, what should we do with it? There are several things you should look into first before splurging or throwing it all away. For me, it’s going straight into the stock market. Every little bit helps me get closer to my financial freedom goal.
But what should you do with it? Let’s go through the list.
Get Your Personal Finances in Order
Let’s use this opportunity to straighten out your personal finances. Are you behind on any bills or something in the house need fixing, but you’ve been putting it off because of cost. Whatever the case may be, use this money first with the focus of improving your financial situation.
Use the money for its intended purpose. Get caught up on your monthly bills or whatever else is needed. Don’t blow the money on anything else before you set yourself up for success. $1,400 goes fast, so be smart with how you spend it.
Pay Down Credit Cards
This goes along with the previous step. Knocking out a credit card payment or putting yourself ahead of your debt payments will go a long way. In fact, reducing your debt payoff will benefit you in the future.
The sooner you get rid of debt payments, the sooner you can focus on investing. Once compound interest kicks in, you’ll be inching closer to your goals.
These first 2 steps should be your main priority before looking elsewhere to put your money. Bettering your financial situation should always come first.
Max Out Retirement Account
Your bills are caught up and no more credit card debt? Awesome. Let’s max out that retirement account. Okay, $1,600 won’t max out your retirement account, but it’ll help. That $6,000 IRA limit can be reached sooner rather than later.
Setting yourself up for retirement is everyone’s goal. Nobody wants to work for the rest of their life. Did you know if you start an IRA at the age of 25 and contribute $500 a month to it until retirement, you’d wind up with over $1.2 Million? That would come out to around $50,000 yearly if you follow the 4% withdrawal rate.
So, adding $1,600 to jump start your retirement account or get you closer to your contribution limits is the best move.
Invest
Personal finances are in order and your retirement account is looking good. Where else should your money go? Let’s invest it. We can optimistically grow that money even more by putting in smart investments.
I am willing to bet a large percentage of people will be investing their money into cryptocurrency. It’s everywhere lately, from the news to anytime Michael Saylor speaks. It’s starting to become mainstream.
Now that most people know about it, they are obviously eager to jump in. If you look at any of the charts, you’ll see the massive growth it has year after year. With $1,600 you could possibly even double your money or more.
Last year, after receiving the first stimulus check of $1,200, Coinbase CEO commented they saw a large spike in people buying more Bitcoin and other coins. People have been using their checks to what can be seen as putting an “inflationary currency into a deflationary currency.” Which was quoted by a Reddit user during that time.
If you want to go this route, know you are placing your money into a risky asset, much more so than if you were to invest in some good index funds. But if you were going through with this, I’d recommend buying an entire Ethereum coin.
Right now if you were to buy Bitcoin with $1,400, you’d be owning 0.028 of 1 coin. If Bitcoin eventually does reach the predicted $300,000, you’d have a portfolio worth $8,400. That’s a lot of money and an insane return on your investment.
But if you invested that money into Ethereum and it hit its target goal of $20,000, you’d be walking away with the full amount. There’s a tradeoff to be made. If you wanted to taste both coins in action, then split the money between both coins. You would probably walk away with less returns, but you won’t have any FOMO or regrets with where you invested your money.
Final Thoughts
First and foremost, using this stimulus check for its intended purpose. Get yourself back to a better position financially. Pay off those bills that have been neglected for so long or those credit card payments that seem to never go away.
Use this opportunity to improve your financial situation. If you do that and still have some stimulus money, throw it into an IRA account. Like I said, maxing out an IRA account for 40 years will give you $1.2 Million by retirement. Even if you did it for half that time it would make a difference in your life during retirement.
Otherwise, studies show a lot people will be investing their checks into cryptocurrency. It’s mainstream success has become appealing to most and with some money burning in your pocket, now is the best time to get in according to them.
Be smart with your money and where you invest it. I am a big believer in the future of crypto, but make sure you are putting that money to good use first, before investing.
