4 Steps to Spending Your Stimulus Check Wisely

4 Steps to Spending Your Stimulus Check Wisely

Most Americans don’t have an emergency fund. While we’re all experiencing this pandemic very differently — some having only minor inconveniences and others finding themselves without a job or having to close their business — those without a savings cushion are vulnerable to feeling the ramifications of COVID-19 for a very long time.
There will be tough financial decisions to make once you receive your stimulus check. Here are active steps you can take, along with things to consider to help you develop a solid spending plan.

1. Make a list of all expenses

Write out every single expense that you have, including essentials like food and utilities. Be sure to go through your checking and savings account history to make sure you don’t have any “vampire” expenses, like monthly subscriptions that you may have forgotten about and no longer need.

2. Talk to all creditors and lenders

The CARES Act puts into effect two mortgage relief provisions: protection from foreclosure, and a right to forbearance (pausing or making partial payments) for those experiencing loss of income due to COVID-19. However, the provisions are not automatic and are only for federal loans, so you MUST talk to your lender.

If a creditor/lender offers you a payment plan or other relief, make sure you get it in writing and take note of the names and dates of the customer service representatives with whom you speak.

Thankfully, some utility companies have announced they won’t cut off services if they aren’t being paid. Be sure you know all of your utility and service providers’ stance on this, so there are no surprises. You don’t want to make any assumptions.

3. Prioritize expenses

Expenses relating to food, shelter, and medicine should come first. This would include mortgage, rent, utilities, groceries, diapers, and medications. It also includes medical insurance premiums and homeowners/renter’s insurance.

If you need childcare to work, that is another essential expense. Next in line are auto-related expenses, including transportation, gas, insurance premiums, and car payments.

Loans that are secured by collateral (for example, mortgages and auto loans) are generally considered more important than those without collateral, like consumer credit card debt. For example, if you don’t pay your mortgage, a bank can foreclose on your property; if you don’t pay your car loan, the bank can seize your car. While not paying your credit card bills will negatively affect your credit score, credit card companies will not come into your house and take your personal possessions.

Federal student loans are currently not accruing interest until September 30, 2020, and can be put into forbearance so that no payments are due. If you have a private or institutional loan, you will have to contact the lender for other options.

Remember, if you can afford the minimum payments on your credit cards, then make those payments. It will help to maintain your credit score.

Expenses for “elective” items, like gym memberships, streaming services, and other subscriptions, come last. Before simply canceling a contract, make sure to contact the vendor – canceling may come with a hefty penalty, but you may be able to temporarily “pause” the service.

4. Pay your debts in the order of priority.

Now that you know all your expenses, have prioritized them, and know your payment options with creditors and lenders, it’s time to make the payments in order of priority.

It’s important to note that many are still receiving their tax refunds now, too. If you receive a refund, you can apply the same process to that extra income.

If you are still unsure or are overwhelmed with where to start, use our decision tree for guidance on what to do with your stimulus check and tax refund.

Source: Americasaves.org

Worried About the Market? Don’t panic.

Worried About the Market? Don’t panic.

Because of current events, you may be tempted to sell off your assets after watching the market go down one day, then up the next. Resisting the urge to react to volatility, however, may allow you to benefit when it recovers. Instead, consider worrying more about the factors you can control, like how much you are saving and consider putting more of your attention toward constructing a portfolio that reflects your risk tolerance and your long term retirement planning strategy.

Understanding the market cycle may be a key factor to getting the most out of your investment goals. Disciplined investing and managing your reaction to a bad market day or week could be the best hand you can play. Systematic investing does not ensure a profit nor guarantee against loss. Investors should consider their financial ability to continue their purchases through periods of low price levels. Watch this video provided by one of the A&M System retirement vendors, Voya Financial, to help make better decisions regarding your assets during this turbulent time.

America Saves Week 2020

America Saves Week 2020

America Saves Week 2020 is February 24th to February 29th. It is a nationally recognized campaign that encourages you to take a closer look at how you are saving in order to set yourself up for success in the year to come.

TIAA, one of the Retirement Program partners of the A&M System, provides savings advice to help you make saving a habit.

  1. Set goals you can reach—Saving is a challenge. To win big, you don’t have to start big. Set realistic goals and try to increase your savings every year.
  2. Switch into “easy” mode—Automatic deposits allow you to set it and forget it. And you can’t spend what you’ve already saved.
  3. Use the right tools—Financial calculators can help you track your progress and see if changes are needed.
  4. Protect your accounts—Taking some simple steps may help ensure your savings won’t end up in the wrong hands.

To get started, you can use TIAA’s financial goal planner. Gauge your “fiscal fitness” by calculating your monthly income and expenses, write down achievable financial goals, and then identify a time frame to achieve those goals.

In addition to TRS and ORP, the A&M System offers two additional voluntary, pre-tax savings programs: the 403(b) Tax-Deferred Account (TDA) and the 457(b) Texa$aver Deferred Compensation Plan (DCP). Take this opportunity to also learn about the savings options available to you on the Retirement Programs website at https://www.tamus.edu/business/benefits-administration/retirement-programs/.

Ready to Retire?

Many people experience a reduction in expenses after retirement, but some do not. Travel, medical expenses, long-term care, taxes, and more free time to spend are all reasons why you might need more funds in retirement than you think! TRS suggests trying to live on your estimated retirement income for a few months while you are still working so you know exactly how much you will need. Watch this short video* from TRS’s financial awareness video series to learn more.

 

*Transcript is available on the TRS website.

National Retirement Security Week

National Retirement Security Week

National Retirement Security Week

When it comes to saving for retirement, there is never a better time than today to assess your progress toward meeting your retirement goals. With Oct. 20 through Oct. 26 designated as National Retirement Security Week, the opportunity is right in front of you. It is important to begin saving today for retirement – or increase your contributions – if you aren’t meeting your goals. This week is dedicated to showing you different ways to meet your objectives.

If you save just $10 per week in a 403(b)Tax Deferred Account or Texa$aver 457 Deferred Compensation Plan for 40 years and earn an average rate of return of 7 percent, you will have over $100,000 in your account. That just shows the power of tax-deferred savings! Over 30 years, adding $25 to your $100 biweekly contribution can increase your account from $264,327 to more than $330,409, assuming you earn 7 percent. Take advantage of National Retirement Security Week and review The Texas A&M University System Retirement Programs Booklet while evaluating your retirement plan.