How to spend incoming relief

If you’re one of the millions of Americans struggling financially because of the coronavirus pandemic, there’s more relief on the way.

Included in the $ 1.9 trillion stimulus package that is making its way into Congress and is expected to be signed into law in mid-March, there will likely be direct payments of up to $ 1,400, a extension of unemployment controls, more than $ 20 billion in rent assistance and improved food benefits.

The relief package comes about a year after a pandemic that has attacked the finances of many people, costing them work, forcing them to take on debts, delaying the payment of bills and worrying about maintaining eviction notices. out of home.

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Here’s a look at the help that will soon be seen by those who suffer financially badly and how they might think about spending it. (Note that legislators are still negotiating the exact details of these programs and could change them).

As of now, direct stimulus payments of $ 1,400 would go to people with adjusted gross incomes of up to $ 75,000, heads of households up to $ 112,500, and married couples who jointly file up to $ 150,000.

Under the new conditions set by the Senate and agreed by President Joe Biden, payments would decrease when you earn above these thresholds, completely eliminating for people earning $ 80,000, heads of households with $ 120,000, and married couples with $ 160,000.

“Stimulus funds are a unique cash infusion,” said Kristen Holt, president and CEO of Greenpath Financial Wellness.

Holt recommends directing this cash immediately to any essential needs that have been put in the backburner, including medications, groceries, or a car repair.

It looks like unemployment benefits will be extended through Sept. 6, with a $ 300 federal increase in addition to state benefits. The average weekly state check is $ 346.

Your unemployment checks may or may not match what you earned before you lost your job. Experts recommend making a budget with your new income. You may need to reduce your expenses to ensure that you can continue to pay your bills.

If you have any cash left over once the basics are covered, direct it to a savings account, Holt said.

You will be grateful to have done so if you are still unemployed when benefits end or if an unexpected expense arises. (To get the most out of your cash, keep your money in a high-yield savings account. Also make sure the account is insured by FDIC, meaning that up to $ 250,000 of your deposit is protected against losses.)

Once you have a savings pillow, use extra money (if any) to pay off any high-interest credit card debt, Holt said. You don’t want to lose your money on interest payments when your budget is already low.

But no matter how discouraging your credit card debt may be, you don’t want to spend all your cash to get rid of it.

“We would not recommend using the cash resources you need to cover medications and groceries and choose to pay off a credit card, especially when many lenders continue to provide pandemic assistance,” Holt said. “Contact your bank [or] credit union to determine what help is still available and make sure the terms are appropriate. “

According to an analysis by the Center for Budgetary Policies and Priorities, approximately 1 in 5 tenants said they did not recover with income in January. Closer to 36% of black tenants said they were behind.

An increasing amount of federal money that people can spend on their rental arrears will help.

All states have already allocated $ 25 billion in rental aid for the stimulus package approved in December. Now, that $ 1.9 trillion relief bill under construction would set aside another $ 20 billion.

You want to apply for these funds as soon as possible. This way you can use other benefits, such as incentive checks and unemployment benefits, for other bills. People can get financial help for up to 18 months of rent.

The benefits of SNAP or the Supplemental Nutrition Assistance Program can help you with grocery bills and allow you to use other incentive grants for other urgent expenses.

Benefits have increased by 15% for all recipients through June and the latest stimulus package is expected to extend the momentum through September.

Under the new rules, a person could get up to $ 234 a month. A family of four could get up to $ 782 by September. In some states, the maximum benefit is even higher. For example, a family of four in Hawaii can receive a monthly benefit of $ 1,440.

Money will be sent to you each month with an EBT card, which works like a debit card. People usually get the money in less than 30 days, but those with little or no income could get their benefits in a week.

Eligibility rules can be malformed, but it’s not bad to apply them.

Many people lose the benefit because they mistakenly assume they are ineligible or worry about stigma, Carrie R. Welton, policy director for advocacy group The Hope Center for College, Community and Justice, told CNBC in past.

“People will bring their own shame into it, but it’s about resources for taxpayers,” Welton said. “This pandemic is not anyone’s fault.”

Have you recently applied for rental assistance? If you’re willing to comment on your experience for a story, email me at [email protected]