How to spend the incoming relief

If you are one of the millions of Americans struggling financially because of the coronavirus pandemic, more relief is on the way.

Included in the $ 1.9 trillion stimulus package making its way through Congress and expected to be legally signed by mid-March is likely to be direct payments of up to $ 1,400, an extension of unemployment controls, more than $ 20 billion in rental aid and enhanced food benefits.

The aid package comes out for about a year in a pandemic that has affected many people’s finances, cost them their jobs, forces them to go into debt, pay bills, and worry about not having eviction letters.

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Here’s a look at the help those who are financially hurt will soon see, and how they might feel about spending it. (Please note that the exact details of these programs are still under negotiation by lawmakers and are subject to change.)

As of now, full direct incentive payments of $ 1,400 would go to individuals with adjusted gross income of up to $ 75,000, householders with up to $ 112,500, and married couples filing jointly with up to $ 150,000.

Under new terms set by the Senate and agreed by President Joe Biden, payments would decrease the more you earn above those thresholds, disappearing completely for those making $ 80,000, householders with $ 120,000, and married couples with $ 160,000.

“Incentive funds are a one-time cash injection,” said Kristen Holt, president and CEO of Greenpath Financial Wellness.

Holt recommends that this money be spent immediately on any essential needs that have been put on the back burner, including medications, groceries or a car repair.

It looks like unemployment benefits will be extended through September 6, with a $ 300 federal boost on top of state benefits. The median weekly state check is $ 346.

Your unemployment checks may or may not equal what you earned before you lost your job. Experts recommend creating a budget with your new income amount. You may need to cut costs to keep paying your bills.

If you have money left over once your base is covered, aim it at a savings account, Holt said.

You will be grateful that you did this if you are still unemployed when the benefits end or if there are unexpected costs. (To get the best return on your money, keep your money in a high-yield savings account. Also make sure the account is FDIC insured, meaning up to $ 250,000 of your investment is protected against loss.)

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

But as daunting as credit card debt can be, you don’t want to use all of your money to turn it off.

“We wouldn’t recommend using the cash you need to pay for drugs and groceries and choosing to pay for a credit card, especially when many lenders continue to provide pandemic relief,” said Holt. “Contact your bank [or] credit union to determine what assistance is still available and ensure that the terms are appropriate. “

According to an analysis by the Center for Fiscal Policy and Priorities, about 1 in 5 tenants said they had not caught up on their rent in January. Closer to 36% of black tenants said they were behind.

A growing pot of federal money that people can use for their rent arrears will help.

All states have already been allocated $ 25 billion in rental aid from the stimulus package passed in December. Now, this $ 1.9 trillion emergency aid that is in the works would put aside another $ 20 billion.

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

Benefits under SNAP, or the Supplemental Nutritional Assistance Program, can help with your grocery bills and enable you to use other incentive tools for other urgent expenses.

Benefits are up 15% for all recipients through June, and the latest incentive package is expected to extend the boost through September.

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

The money is sent to you every month on an EBT card, which acts as a debit card. People usually get the money in less than 30 days, but those with little to no income can get their benefits within a week.

Eligibility rules can be shaky, but it doesn’t hurt to apply.

Many people miss out on benefits because they mistakenly assume they are ineligible or are concerned about the stigma, Carrie R. Welton, the policy director at advocacy group The Hope Center for College, Community and Justice, told CNBC last year.

“People will bring their own shame into this, but these are taxpayer resources,” Welton said. “This pandemic is not anyone’s fault.”

Have you recently applied for rental assistance? If you are willing to discuss your experience for a story please email me at [email protected]