President Trump has signed a new $2 trillion stimulus bill into law. The package, meant to help bolster the U.S. economy, which is reeling due to the effects of the coronavirus outbreak, is the largest economic rescue package in American history.
Here are some of the measures that are included:
- $350 billion in aid to small businesses to prevent layoffs
- Cash payments of up to $1,200 for individuals, $2,400 for married couples, and $500 per child, with the total depending on your income
- Increased unemployment benefits, including an additional $600 per week for four months for some workers
- Government aid for freelancers and gig workers
- $150 billion for state and local governments to help with ongoing public health efforts
- Up to $500 billion in funds to support businesses, states, and municipalities
- A total of $42 billion in loans and grants for critical businesses, including $25 billion for airlines
- Suspend federal student loan payments until September 30, with no accrual of interest
This particular piece of legislation comes as a follow-up to other measures put into place last week, including expanded access to sick leave and unemployment benefits.
For consumers, the most critical piece of the bill is those stimulus checks. Policymakers want to get money directly into your hands so that you can cover essential expenses, like rent payments and grocery bills, and buy things you want or need.
"The purpose of the stimulus is to help people in need and to get people spending — to stimulate the economy," says Justin Halverson, a financial advisor at Minnesota-based Great Waters Financial.
Be aware of two key details of these stimulus checks:
- The more you earn, the less you may receive. Payments would be reduced if an individual makes more than $75,000 or a couple makes more than $150,000. Individuals earning more than $99,000 and couples earning more than $198,000 likely won't receive a check.
- The checks won't count as taxable income, according to The Washington Post.
The government is working to get aid to people as soon as possible. In an interview with CNBC last Thursday, Treasury Secretary Steven Mnuchin said he expects people will start getting checks within three weeks.
The best way to use your stimulus check will depend on your particular financial situation. Experts generally suggest saving some, spending some, and using some to pay off debt, if you can afford it.
If you need to spend all of it to cover the basics like rent and groceries, that's fine — and it's better to spend your stimulus check than to raid your investment or retirement funds, which may cause you to incur a penalty or pay taxes.
Halverson says he expects that most people will find the news of stimulus checks comforting. "If you need it, you'll have that money," he says. And if you have little in savings, "let that money be your emergency fund for now."
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