Don’t Make These Mistakes With Your Stimulus Money – Newsletter April

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

OMAHA, Neb. (CAF) — How to spend your stimulus check.By Sam Hohman Posted: Wed 11:30 AM, Apr 15, 2020 

As much as $1,200 is about to hit your ‘mailbox.”   Do you have a plan on how to spend it?

An approved $2 trillion stimulus package that includes, among other provisions, a one-time $1,200 payment for qualifying adults whose income falls below a certain threshold. You need to know how to put that money to good use. Here is Credit Advisors Inc recommended top four areas to focus on  during this crisis.

1. No prioritization? – Pay for housing

Housing is often your greatest monthly expense, so it’s not surprising to see that 28.4% of people intend to use their stimulus funds to cover their rent or mortgage. That said, mortgage lenders are issuing programs to allow borrowers to delay payments and some landlords are giving tenants extra time to pay. If you’re truly cash-strapped, it is important to see what options are available to you, especially if you need the money to buy immediate necessities like food and medicine.  But understand that the roof over your head, and a plan to keep it there, should be among your highest priorities.

2. No plan? – Pay Down Debt

If you have your necessities covered; housing, food, medication, etc.   It’s time think about putting that stimulus to work for you.  Although it might seem strange to talk about using your stimulus check to pay off debt, it’s a great idea.   No matter what kind of deferment or forebearance deals the creditors are offering, they are not going to pay down your debts.  And those debts are impacting your credit scores.

Paying off debt is almost never a bad financial move. But think carefully about how to prioritize your debt payments. Even in these uncertain times, it’s usually a good idea to pay off the highest-interest debt first, such as credit card debt. Also, look at your options for forbearance or payment deferrals.  That may help you determine who to pay.

3. Treating Yourself? – Create or Add to Emergency Savings

If you have no debt (or your debts are manageable) and you don’t have an adequate cash emergency fund in the bank, you may want to put some or all of your stimulus check into an emergency fund. In times of uncertainty, many people feel an extra sense of calm and confidence by having cash in the bank.  The difference between living pay check to pay check and homelessness has been proven again and again to be access to an emergency fund.  Even $500 can save you from ruin.  Peace of mind may be the greatest way to treat yourself.

If you are married with two children, you could potentially receive $3,400 from this stimulus program ($1,200 per adult and $500 per child). That is a decent chunk of money to add to an emergency savings fund, even if you have to divert some of the money to immediate expenses and bills.

If you don’t have any immediate bills that are in danger of going unpaid, you may want to just put your stimulus check in a high-yield online savings account and let it earn interest for now.

4. Treating Others? – Add to Savings

For 42.3%, a stimulus check is a great opportunity to cushion your savings. Having some savings is a good thing – the more money you have on hand for unexpected expenses or to get through the tough times, like COVID-19, the better.  If you don’t need the cash for immediate bills, it pays to stick it in the bank.  With some smart savings you may be the one able to help others out of their next bind.  Now that’s really treating others.

Just how will you spend your stimulus money?

Clearly, there are a lot of ways to put your stimulus payment to good use. Think carefully about your near-term needs as you decide where to put that money, keeping in mind that a recession may be on the horizon and your job may not be as secure as you think. It’s tempting to use that money to indulge, especially if you have a way to cover your bills for the time being. But if you have any question at all about your job security, or you think you could use a little more money in the bank, pad your emergency fund. It’s never a bad idea


Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

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Lansing, MI  48909-7720

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