Stimulus check ideas

Extra money is headed your way – carefully consider how you’ll use it

Hawaii locals aren’t shocked to see milk sell for $7 per gallon, a dozen eggs for $5 or a Honolulu 1-bedroom rent for around $2,000. We know the cost of living in paradise is high.

In a few weeks, most Americans will be sent rebate money as part of the coronoavirus (COVID-19) stimulus package. The check does not differ by state – it's based on tax filing status – so your money might not stretch as far here as it would for someone who lives in Iowa.  

Since this is a one-time bonus, it’s important to carefully consider how you will use the extra cash. We’ve put together some ideas so you can maximize your rebate.

This is for informational purposes only and should not be interpreted as legal or tax advice.

Should I use the money toward my mortgage/rent?

If you’re struggling to pay your mortgage or rent, contact your mortgage servicer, your landlord or a housing counselor first to figure out what the right plan is for your unique situation. There are payment relief programs for homeowners and now the same help is being extended to renters.

A convenient summary of resources for homeowners and renters was recently put together by U.S. Sen. Brian Schatz’s office.

Should I pay a creditor?

If you’re struggling to pay a creditor (e.g. credit card, loan or auto payment), inform your service provider and request a deferral or an adjusted payment plan.  

If you have a steady paycheck, consider paying down a credit card since the interest can usually be higher than other debts. Listing your debts and your interest rates could help you decide which card(s) to pay down first.

Should I make a student loan payment?

Student loans typically have low interest rates so you might not want to use your rebate to pay that down, especially if you’re carrying higher interest debts.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows you to press pause on most federal student loans. From April through September, you can stop making payments and no new interest will accrue. Once that six-month period ends, if you’ve made no payments during that time, you’ll owe exactly what you did at the start.

This Forbes article provides an informative perspective on different loan situations and how you might want to manage repayment during this time.

After you’ve assessed your debts, here are ideas on how you might use your stimulus check.

Increase your rainy-day fund.  

We are dealing with a health crisis that may have lasting economic effects. While it’s smart to pay down high-interest debt that perhaps can’t be deferred, it’s also a good idea to put a portion of your rebate toward your emergency fund. This allows you to get a head-start on ensuring some security in what is forecasted to be an unpredictable future.

Local spending.

Not suggesting a shopping spree, but even a small injection of money could make a big difference to a business, especially if others are making purchases too.

Donate to help those less fortunate.

While we are all going through this together, everyone has different circumstances and some may be impacted by COVID-19 more than others. Consider sharing some of your rebate with a Hawaii charity that helps the less fortunate in our community with food, housing and medical efforts. Charities that CPB supports include:

• The Institute of Human Services
• Hawaii Foodbank
• Aloha United Way