money Here are Suze Orman's top tips on your stimulus check and money during the pandemic
Suze Orman has built a decades-long empire on giving financial advice and she’s now applying her no-nonsense money guidance to the pandemic-era economic uncertainty.
Considering another round of stimulus checks could be sent to some Americans as soon as spring if another relief bill is passed, here’s Orman’s tips on how to spend and save wisely, and how to avoid some common stimulus check mistakes.
Orman gave this advice during a virtual event hosted on Feb. 3 by Visionary Women, a Los Angeles-based women’s empowerment nonprofit.
Sock away your stimulus money
Do this as opposed to paying down credit debt or student loan debt. Ordinarily, Orman is a big proponent of carrying zero credit card debt, but paying off debt comes secondary these days, she said. Instead, Orman suggests saving your stimulus money or additional unemployment insurance.
“I do not want to see you take this money and pay off something that you owe, or whatever it may be,” she said.
Read more: Here's what to do when your emergency fund runs out
And if you have federal student loans, President Biden extended zero-interest student loan forbearance program until September 30, 2021.
“Take the money that you normally would have paid for that,” she said, “and save it if you have the ability to do so.”
Give directly to a family in need
If you’re in a position to give, consider giving directly to a family instead of a non-profit organization. While food banks and animal shelters are organizations worthy of charity, Orman stressed that if you’re financially stable, rather than spending your stimulus money on things that you don't need, “you can help somebody who’s a have-not,” she said.
Read more: Americans reach into their own pockets to financially help family and friends
“Every single one of us knows one person, one family, two families that are behind in their rent, they don't have a job, their job is not going to come back, their kids are still at home, they're behind in their car payment, everything,” she said. “We all know a family like that. It would be so great if you could give it there.”
Take out a home equity line of credit
Even if money isn’t tight, homeowners should take out a home equity line of credit, or HELOC. Orman suggested that the worst-case scenario is that you don’t need to use the money, adding it’s “far better” to draw money on the HELOC “than to be taking money from a 401k plan” in an emergency.
Go into savings overdrive
If you’re still working and your income hasn’t been impacted by the pandemic, Orman suggested expanding your emergency fund to 12 months worth of expenses, making the maximum contributions to your retirement accounts, and paying off any credit card debt.
Read more: Emergency fund: What you need to know to build one
Her rationale: There’s no forecasting when the economy will recover or when the virus will be defeated so “you have to prepare,” she said.
“You have to be doing everything today to protect your tomorrows because you've got to learn,” she said. “You've got to reset how you think about things. Anything can happen — it happened this last year. It's still happening. It could get worse again.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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