When the United States turns one year after the coronavirus shut down the economy, families receive a new infusion of financial hope as the IRS begins to distribute more than 100 million stimulus checks this week. However, Americans who continue to struggle financially fear that the additional cash may only mark them for a month or two.
The IRS will send a total of $ 422 billion in stimulus checks over the coming weeks, part of President Joe Biden’s remarks $ 1.9 trillion from the rescue plan signed into law earlier this month. It occurs as the U.S. economic recovery diverges between higher-income households that have suffered the crisis intact in large part because of their ability to work safely from home and lower-income families that are more likely to continue to have problems with unemployment or reduced income from services that require them to work directly with the public.
Some middle- and upper-income households that received the checks are likely to put the money into savings, investments, or save a new item, such as a video game console or bicycle. But adults who have been attacked by the pandemic told CBS MoneyWatch that they plan to immediately use the money for basic expenses, such as mortgage coverage, car payments and utilities.
“This will be the lifeline that will be the only thing that will save my home,” said Jamie Pontia, 44, who was fired from her job as a bar manager at a hotel in Pittsburgh on Monday. last year, of stimulus control. “I appreciate the $ 1,400; without that I would drown. It will only help me keep my head on the water for a month.”
He added: “Not everyone goes out to buy TVs.”
Pontia is one in 4 Americans out of ten who continues to experience loss of income compared to the times before the pandemic, according to a survey by financial services firm TransUnion. While this is an improvement from a year ago, when nearly 6 out of 10 adults saw a loss of income, it is still stubbornly high, said Charlie Wise, global head of research and consulting at TransUnion.
Homes that have overcome the pandemic in better financial form should consider a “third-party” approach toward their $ 1,400 checks, said Brittney Castro, a certified financial planner at Mint, a budget and personal finance app.
“One-third goes to immediate bills or high-interest debt, one-third goes to savings and the remaining third goes to investments,” Castro said. “The goal is to help people contribute these funds to various aspects of their financial profile.”
Of course, some people plan to use the money to invest in stocks, a pattern that occurred anecdotally with the second stimulus check in late December, which targeted $ 600 to each eligible adult and was cited as main reason for the GameStop Action Mania Saga. In fact, approximately 17% of those surveyed recently said they would have put part of their $ 1,400 stimulus control into the stock market, according to a new Auto Financial survey.
Still, making money or investing it in the Dow’s record high is not at the top of the list of priorities for most Americans, Self Financial found. The highest priority was to pay off debt, with about a third of respondents allocating money for this purpose, followed by payment for housing, utilities and food. For many homes, that is, the $ 1,400 will simply help them stay afloat.
“Ultimately, at this troubling time, we must do everything we can to make sure our needs are met,” Castro de Mint added.
About 1 in 5 adults is “in the lemon,” which TransUnion defines as people who have lost income and are unsure of how their finances will recover.
“We think there are a lot of people in this group who say,‘ I really need stimulus checks or I need some kind of ongoing support, ’” Wise added. “We’ve seen lower-income workers have been more affected. Many of them tend to work in service industries that have been hardest hit. “
Requested for 225 jobs, and nothing
That’s the case with Pontia, the Pittsburgh bar manager, who said her finances are in turmoil due to both job losses and the loss of the unemployment benefit gap. In mid-March, the Pennsylvania unemployment office informed him that his systems would be upgraded and that he could not file for unemployment until the end of March.
This interruption of payments means you’ll have to use your incentive check to cover your $ 850 mortgage and your $ 360 monthly payment per car, and you don’t expect to be able to save anything.
Pontia said she would like to get another job, but worries about the risks of getting COVID-19, mostly because it helps her 67-year-old mother, who she says has been unable to get a vaccination appointment. From Pontia’s point of view, it hasn’t changed much in a year.
“It’s not easier,” he said.
Unemployment benefits have also been a point of frustration for Ginger Voisine, 39, of Fort Fairfield, Maine. He lost his job a year ago as an executive administrative assistant at Cary Medical Center when businesses stopped working due to the pandemic. He got the extra $ 600 a week pandemic unemployment benefit, but then found a temporary job that allowed him to work remotely – a benefit, since his 10-year-old son is in remote school. once a week.
But when he finished this job, he discovered that he was no longer eligible for the pandemic-related extra pay. “My unemployment is no longer tied to COVID because I took on this temporary job,” Voisine said. “I’m kicking myself because I’ve lost extra COVID payments.”
He estimates that payment for incentives will be extended until mid-May and expects him to find work before then. Meanwhile, Voisine has spent his savings and collected his 401 (k). He doesn’t see how he can leave money aside to rebuild his nest egg without finding another job. Since the beginning of March, he has applied for 225 jobs, but nothing has appeared yet.
Continuous stimulus?
Clyde Bittner, 62, from Greensburg, Pennsylvania, was fired in January from her job at a government supplies factory. Bittner, legally blind, said the stimulus checks will help him and his wife pay the bills for at least two months. His wife suffered a stroke after losing her job and is worried about finding a job due to her disability.
He and his wife have contacted state lawmakers to advocate for more stimulating help for troubled families through a nonprofit organization called WorkMoney, which has more than 1.5 million members belonging to various political parties. Bittner said he hopes the Biden administration can continue with more direct stimulus aid.
“Once you start something, it’s like you have to keep going: it’s a process until the job is done,” he said. “They’ll probably do it a few more times.”