The 5 Worst Things People Are Doing With Stimulus Checks

The 5 Worst Things People Are Doing With Stimulus Checks, Suze Orman Says

Sigrid Forberg  Mon, March 22, 2021

More than 90 million American households have now received their third stimulus checks.  The $1,400 checks, which are part of President Joe Biden’s $1.9 trillion relief bill, are expected to help recipients cover immediate household expenses and pay down debt.  And given that many qualifying households are receiving additional checks for dependents — that is, children and non-working adults – a large number of Americans are seeing a bigger one-time influx of cash than they’ve ever seen before.

And Suze Orman, one of America's most prominent personal finance experts, has some strong opinions about how you should not spend your windfall.  Read on to find out where she thinks some people may go wrong — and what you can do instead.

1. Spending it all right away

After a full year into the pandemic, Orman recognizes you may be keen to use your stimulus funds to pay off some of your outstanding balances.  But, she says, that would be a mistake — especially if you’re still looking for work.   “Do not rush, especially if you do not have a job yet and everything isn’t going the way you want it to be, do not rush to take that money and pay off your credit cards.”

If your bills are piling up and expensive interest is adding to your troubles, a better option would be to get a lower-interest debt consolidation loan to help you better manage what you owe — and pay it off sooner.

2. Skimping on saving

Before the pandemic hit, Orman had long counselled her followers to build up emergency funds for at least eight months.  Other finance experts had suggested that was more than necessary and three or six months was all you’d need.  “What happened last year? Three months would have gone in three months,” Orman says. “And then what would you have done? Now it has come to pass that eight months wasn’t even enough.”

Because of the pandemic, Orman now recommends having at least 12 months socked away in an emergency fund.  “I don’t think you can have too much of an emergency fund,” she adds.

Taking some of your stimulus money and putting it into your emergency fund is Orman’s top suggestion

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