The $1,400 stimulus checks should have already dropped into the bank accounts (and via check) of about 159 million eligible households, according to national reports. And depending on one’s household makeup, that could mean multiple payments and ideas on how to use them.
“A $1,400 check would allow nearly 22.6 million adults to pay their expenses for at least four and a half months…assuming that they maintain income from work and unemployment benefits,” according to market research company Morning Consult.
Yet with unemployment numbers falling in the last month (down to 6.3% in January) the economy is still lagging, Forbes reports. About 10.1 million people do not have jobs — Black communities are worse off with unemployment now at 9.2%, higher than other large racial groups. So, the Michigan Chronicle wanted to know –from paying bills and saving to splurging and stunting on social media — what have people done with their stimulus (aka) stimmy?
Some reports state that many people planned to use the stimulus on their needs and not wants. Right before the third stimulus passed about 50% of Black people, and 40% of Hispanics, needed the stimulus to “get by” in comparison to only 22% of white respondents, according to a poll reported to CNBC. Thirty-one percent of Asian-Americans needed the stimulus, too.
Locally, area residents spilled the tea on how they used their stimulus — and a financial expert shared some tips to make it all worthwhile.
Allen Park resident La’Metra Wagner, 39, tucked her stimulus payment away. The wife and mom of two young children said she is saving hers to help her family move later this year.
“I’m saving because I want to purchase a home — something like that (the stimulus) would be helpful and go toward home-buying stuff like a down payment or closing costs,” Wagner said.
The current renter hopes to purchase her first home somewhere still in the downriver area and said she’s been more disciplined when it comes to money these last few years and increased her savings since the pandemic.
To save money, Wagner has cut back and lived more frugal — she’s learned to do her hair and nails, and even cut out “something nice” for herself occasionally like going out to eat and luxury shopping.
“Just because of the uncertainties — I definitely have a small portion of my paycheck (I save),” she said, adding that now that she is in the house more often, she wants to live in a place that is her own. “Being more settled is definitely more important now than anything for me.”
Brendon Tripodo, managing director – TCF Wealth, TCF Bank, said that people who might not be looking (or able) to move — but live in less-than perfect housing conditions — should spend their stimulus wisely.
“Living in a safe and comfortable dwelling is fundamental to many other aspects in life,” he said. “If renting, the stimulus payment may be enough to move to a safer or more comfortable apartment, but the stimulus funds are not a long-term guarantee.”
Similarly, if a homeowner wants to spend their stimulus payment for needed repairs, that’s sensible, too.
“Not only will making improvements help maintain the home value, but it will allow the occupants to better enjoy their surroundings,” he said.
Tripodo said that, however, from a financial advisor’s point of view, the ideal way to use the stimulus payments “would be in a way that better secures a person’s financial circumstances now and in the future.”
“This usually means paying down high interest debt or medical bills and, if possible, funding an emergency reserve for unexpected expenses,” he said, adding that once most of the basic expenses are taken care of, it is fine to “enjoy” some of the stimulus payment now rather than later. “Just make sure you balance current consumption with future security.”
He broke it down and said that for a simple rule of thumb:
- Spend – 25%
- Save/paydown debt – 50%
- Invest long term – 25%
Southfield resident Langston Hughes already invested 100% of his stimulus into his company. Hughes is the founder of a new local tech startup (launching soon) called RemindMe.
“Well with any money that comes into my life I put it towards my company, so the stimulus will be treated as such and go (toward) research and development,” Hughes said, adding that he came upon that decision “pretty easily” because it costs a lot of money to start and run a startup.
Tripodo said that long story short, there is no right way or wrong way to spend the stimulus.
“How one spends his/her money is always a very personal decision which is usually based on one’s beliefs and circumstances,” Tripodo said. “For some, money is about security so they will save money for unforeseen events. Others may need to spend money now on basics, such as food, shelter, and healthcare. While others who have the basics covered, may view money as something to be enjoyed so they will use it for travel, restaurants, and other consumer items.”