HOUSTON – If that $1,400 stimulus payment is burning a hole in your pocket, take a minute before you blow it all in one place.
Financial advisors say this is what you should use the cash for (in this order):
- Essential needs that you have been unable to pay for like medication, groceries or car repairs.
- If you have any cash left over, put it into an interest-bearing savings account. You should shoot for saving six months of living expenses, but anything is better than nothing.
- You can then look at paying down high-interest credit card debt. You don’t want to lose money to interest payments.
If you are carrying any debt, reach out to your bank or credit card company to ask about pandemic assistance that may let you defer payments or lower your interest rate temporarily.
Advisors say going on a shopping spree for items you don’t need is the worst way to use your stimulus money if you haven’t already paid for essentials, set up an emergency savings and paid off high-interest debt.