Your stimulus check is coming – Here are the do’s and don’ts

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Stimulus checks are intended to stimulate the economy but that doesn’t necessarily mean you should spend yours right away

The Treasury Department and the IRS said last week that stimulus checks will be distributed in the next three weeks, deposited automatically for most people. A family of four could receive up to $3,400, depending on their income.

The stimulus checks are intended to stimulate the economy, but that doesn’t necessarily mean you should spend yours right away. Here are some things to consider:

1. If you are still working but don’t have a three-month emergency fund: Save your stimulus check. Now is the time to stop unnecessary spending and build your emergency fund. You should have money for at least three months of basic expenses (rent and food) in a high-yield savings account. If you don’t, deposit your stimulus check there.


2. If you are still working and already have a three-month emergency fund: Now is a good time to spend. You can find great deals, support your favorite businesses, and help stimulate our nation’s economy. You may also be eligible for current low refinance rates for homes and auto loans. Now is the time to take advantage of these opportunities to lower your monthly loan payments or shorten your loan terms.


3. If you are out of work: Use your stimulus check to cover basic essentials to help you live over the next few months. Remember that federal unemployment insurance will cover four months of your full salary – much higher coverage than ever. Also, consider filing your 2019 income taxes. The previous year, the average tax refund was $2,725 per filing. If you don’t need to spend your stimulus payment – even if you are out of work – don’t. Put it in your emergency fund in case your unemployment lasts longer than four months.

4. Defer loans if you can’t make all of your monthly payments. You can now defer payments on federal student loans, and many lenders are allowing borrowers to skip payments on mortgages, car loans, credit cards and other debt. Check with your lender to see if you qualify and what options are available to you.

5. Use this time at home to assess your financial situation. A quarter of Americans don’t know their mortgage rate; nearly half haven’t checked their credit score recently; and one in five don’t know whether they have credit card debt.


A good financial assessment means knowing all of your debt and the interest rates you are paying. Pay off debt with the highest interest rate first. Keep in mind your highest-cost debt has the highest interest rate, not necessarily the highest payment. Then, budget all of your expenses in order of priority.

6. Consider a credit union. The number of Americans using credit unions grew during and after the 2008 recession. At the end of 2009, credit unions had 89.3 million members and $884.7 billion in assets; by 2019, they had 119.6 million members and $1.54 trillion in assets. The reason is that many banks were unwilling or unable to meet the needs of struggling consumers.

Credit unions, as not-for-profit member-owned financial institutions, don’t answer to stockholders; instead, profits are reinvested back into the credit union to directly benefit members. So credit unions are often more willing and able to work with members having tough financial times.

Full disclosure: I am president and CEO of PenFed Credit Union.

7. Stay positive – and wash your hands. Yes, the stock market is down, workers have been laid off, and many of our favorite places are closed. But this is also a great time to save and plan for your future. You can put yourself in a better financial position. And, now that we have a little extra time, remember to wash your hands for a full 20 seconds. Protect yourself physically as well as financially.

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James R. Schenck is president and CEO of PenFed Credit Union and CEO of the PenFed Foundation. PenFed is federally insured by NCUA. Equal Housing Lender.


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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