3 MOST Lucrative Ways to Spend your Stimulus Check

Newsflash. You, your neighbor, and your neighbor’s neighbor are getting $1200. Isn’t this a fun idea? Yes. Is it a good idea? It doesn’t matter to me if it kick starts the economy. I just want to show you how to spend your stimulus check and come out on top! 

Today I’ll teach you:

• About this stimulus check – why, when, and how much?
• 3 lucrative ways to spend your stimulus check
  • Plus a fourth one for those in dire straights
• Some common but bad ideas for your stimulus check

Why are they sending money to everyone? 

There are two parts to this answer. 

1 – Hopefully some people will use the relief check to keep paying bills on time.

• Thus helping them avoid bankruptcy or losing their home. 
• I really hope that you’re not in this position right now, but if you are – go straight to tip # 4. 

2 – A stimulus check is supposed to boost the economy. 

• Sending money out like this is called Helicopter money.
• It was a thought experiment by Milton Friedman – the 1960’s Nobel prize-winning economist where he determined that cash injections boost economies. 
• Bush tried it in 2008. It didn’t really work out. 
• I’m not sure if this relief check can boost the economy right now during #covid2020 while everyone’s stuck at their house, but I do know how to help you boost your own financial situation. 

How big is your stimulus check? 

• Every adult in America is getting $1200.
• Unless… You earn over $75,000 – that’s where your check will be reduced. 
• Until… You earn over $99,000 – that’s where you get nothing (but you should still read this.) 
• Except… if you have child dependants. In which case you get a bonus of $500 per kid. Yay!

So your standard-American 4-person family will get a $3400 cash injection in the form of a relief check.

When will I get this? 

Pffff. Who knows! Soon?? They plan to start sending it out on April 9th.

And how should you spend your stimulus check? 

Well, that’s the fun part, isn’t it? With $1200-$3400 you can’t:

• Buy a real estate investment
• Make any impressive stock moves
• Pay off a significant amount of debt. 

You could contribute to those goals but $1200-$3400 is a special range:

• I will show you something that yields A LOT of value!
• Guaranteed payback because volatility is scary right now.
• Something that will keep paying you even after all of this is over. 
• Plus, in the spirit of this bill, we want something that will help the economy, thereby being win-win-win. 

So without further adieu, what are the top 3 ways to spend your stimulus check? Let’s find out. 

1 – Invest in yourself (417%/yr payback)

Use the time you’re stuck at home – and your relief check – to take a course, get a certification, or learn a valuable skill.

Why it’s smart:

• This will help protect your employment situation. If your company plans to make some “personnel changes” in the next few months, adding skills to your resume makes you all the more indispensable. 
• You’ll feel proud of yourself – while everyone else was posting #quarantine selfies, you were proactive and broadened your resume. 
• You might even be able to position yourself for a GREAT job once companies start bringing people back.
• Even if you do get fired, you’re still priming yourself as an eligible bachelor(ette) for your next gig, or just skip all the way to CEO and learn to start your own company! 

Read about my recommended course for getting into real estate! I love real estate! *heart*

The numbers: 

Spending $1200 to earn a $5000/yr raise* later on seems like a savvy investment to me. Heck, that’s a 417%/yr annual return! Beat that S&P 500!
*5% raise on a 100,000 income is an easily achievable jump

While getting a raise is not guaranteed. Being a better employee WILL get you a raise eventually…if you ask properly.

Feel-good points: 

In the spirit of patriotism, you’ll pump money back into the economy by employing your trainer. 

2 – Remodel your basement (176%/yr payback)

You can’t really get into real estate investing with your $1200 check, but it can go pretty far towards a basement reno that you can later rent out. 

Why it’s smart:

• Many houses only need a few thousand dollars to make a rentable basement.
• A standard 4-person family, you will get a $3400 payout. That might cover your entire reno! (Sorry, single homeowners!)
• If this recession is anything like 2008, there will be A LOT more renters looking for a place to live.
• Help them by renting out part of your house.
• Besides, you’ve got time and energy on your hands. Hammer some nails!

The numbers: 

If you can use your family’s $3400 relief check to get an extra $500+ a month, we’re talking a near-guaranteed 176% annual return on investment! 

Feel-good points: 

• Help factories and those workers by buying their goods. 
• You’ll be helping someone find an affordable place to live.
• Plus, if I know anything about renos, it’s that they always bring couples closer together 😛

3 – Mortgage refinance fees (43%/yr payback) 

Lastly, you can use the money to cover the costs of a mortgage refinance. 

Why it’s smart: 

• Rates are low right now, so it’s definitely time for a refinance if you haven’t done one in a while. You could be saving hundreds – if not thousands in fees every month.
• It’s also a guaranteed return (if you don’t move), something you won’t get with a volatile stock market investment.

Related Reading:
Stop reading the news. It just stresses you out.
Refinancing student loans is great too. There are no fees!

The numbers: 

Mortgage refinance fees are usually around 2% of the cost of your home. If you’re the standard-American 4-person family with a $230,000 home, your $3400 relief check will almost cover your refinancing fees ($4600 total).

Taking your interest rate from 5.52% to 4.3% (the average rates people have and could have, links in graphic) could bring your monthly payments down by $167/mo ($2000/yr) and which adds up to $60,000 (30-yr term) return on your money!

That’s an impressive 43% annual return! 

Maybe the stock market will match that one year…maybe. Remortgaging is 30 years straight!

Feel-good points: 

The 43%/yr payback! Helloo.

Also, banks need money too. I guess.

The worst – but possibly mandatory option (25%/yr payback) 

This one involves paying off your high-interest debt like credit cards. I hope that you’re not in this situation, but if you’re unable to pay your bills or you’re living paycheck to paycheck – you have to do this.

It’s not optimal, but for you it’s mandatory. 

Why it’s not optimal:

Even though the interest is high, if you’re paying down $1200 worth of debt, you’re only saving around $25/month. 

Yeah, it’s better than nothing, but I want you to be in a position to do better. 

Being forced to make suboptimal decisions like these is exactly why you have to take care of your finances in the good times. 

Why it’s still smart: 

Hey, by eliminating the interest payments, you’re guaranteeing a decent payback (to the tune of 25%/yr.) 

Erasing your debts also improves your credit – which you might have to dip into again if things don’t improve for you financially. Or help with a refinance.

But most importantly: 

The general recommendation in Personal Finance 101 is to have an emergency fund for times like these to avoid bankruptcy. High-interest debt is the opposite of that. 

You can’t go back in time and create an emergency fund, so do the next best thing now and get rid of that debt. 

This is the time to do it, going bankrupt is not so great.

What’s NOT on the list? 

A family vacation. 

Usually, I would consider it. Right now, it’s an obvious no go. 

“Vacation” down to your basement and renovate it. Call it a bonding experience. 

A sweet entertainment system. 

Yeah, it’s kind of tempting to plonk your kids in front of the TV with a decked-out subscription of Netflix and Disney Plus to get some things accomplished. But when this is all done, you won’t be able to pat yourself on the back for using your money to come out on top. 

You won’t even get to pat yourself on the back for bonding with your family with #quarantineSelfies. 

A home gym. 

I know, having one of those would be pretty sweet while you’re couped up at the house. 

Even when all of this is over, can it save money? Yes. Can it save time? Hell yes. 

For now, I’ll do some pushups with a toddler on my back. (Which is way too hard, by the way.) Gym-based child minding services are practically free, so not going to a gym is basically a losing proposition.

TL;DR – Spend Stimulus Check Ideas

• There are some special ways to spend your stimulus check that are way better than just investing it.
• The relief check is supposed to help the economy so you should at least try to do that with it.
• Invest in yourself, a rentable basement, or refinance your mortgage
• Or if you are in money trouble, pay down debt for some short term aid.

Enjoy your money, and let me know what you’re doing with it to come out on top. 

PS – stay safe, stay sane, and I’ll see you on the FIREescape.