What to do with a stimulus check?

calculator and notepad placed over stack of usa dollars

I’m not going to take too much time to discuss whether or not the government sending out stimulus money is a good idea or not. I want to focus more on some ideas of what you can use any “found” money for.

First, have you lost a job, worried about losing your house or apartment, or figuring out how to put food on your table? That’s first and foremost where the stimulus money should go. Make sure you can get yourself on stable ground before considering other choices.

Second, pay down or pay off debt. However, if you’re going to pay it down just to rack it back up again, then what’s the point? You need to pay off the debt and keep it gone so you can free up some monthly cash flow to save and invest.

Third, start or finish an emergency fund. If you don’t have 3-6 months of expenses saved up somewhere that you can get your hands on, put the money towards that.

Four, put it towards any important major purchase you’ve been saving for. Have you been saving to replace a vehicle or fix something around the house? If so, put the money there. I wouldn’t say that a new phone or TV falls under this category though. While it may seem important, those things can wait and you should continue to save for them as you have been.

Five, invest in yourself. Have you been considering taking some classes or getting a certification that could further your career or bring in additional income? Maybe you’ve considered hiring a career or fitness coach? A great long term investment is to improve your health or add a new skill. It should pay off in the long run.

Six, invest in a mutual fund. Our national debt continues to climb and at some point, we will have to deal with it. We may experience a period of inflation that becomes incredibly difficult for us to live with. Long story short, we can’t borrow our way into the future. That being said, investing for the long term is one way to ensure you’re ready. If you were to take a $1400 stimulus check and invest it for 20 years at a 10% return, you’d have around $9400.

If you have a 5 year old and you receive $1400 for them and decide to invest it and they leave it there until they turn 67 years old, it could be worth over $500k by then (using the same 10% return above)

Last, but not least, give it away. If you feel like you’re doing well financially, then find a cause that you believe could use a boost and give the money to them. Perhaps you know an individual that is struggling and could use a helping hand.

This list is certainly not extensive. You could even apply a combination of the items above if you’d like. Do you have any other ideas that I didn’t think of? Feel free to add them in the comments.

FIRE Progress Report for January 2021 (New Year Edition)

people toasting wine glasses

A new year, and a good time to reset some numbers. Our numbers changed significantly this month because I decided to remove the unvested RSUs (restricted stock units) until they vest. Technically, they’re not mine until they vest anyhow. They also cause our monthly numbers to vary widely from time to time.

In addition, my employer changed providers for the stock purchase program and RSUs to E*Trade. That’s fine, but it also means that my contributions that I make each paycheck no longer get added into my numbers. I won’t see them until shares are purchased twice a year.

One thing that moved us in a positive direction was the annual HSA employer contribution. All things considered, our numbers look like their down because it set us back 2-3 months from where we were before.

If you’re wondering what I use to track these numbers monthly, it’s Personal Capital. You can start using them too and we both get $20: https://pcap.rocks/adam4058

How did this affect us?

This month we had to pay property taxes, and for the second visit to have our plumbing issues resolved in December. Even with those things, our expenses were lower this January compared to 2020.

  • Property Taxes – $1097
  • Plumbing – $150

The Money Related Numbers

Current and future value against Minimum FIRE Goal and 25x Expenses Goal

43.98% to target number (previously 51.77%)

This is our invested assets/target number. Our invested assets span across a variety of investment vehicles such as 401k, HSA, IRA, Roth IRA, ESPP (Employee Stock Purchase Program) and standard taxable mutual funds.

90 months (previously 91)

The number of months until my 45th birthday and our finish date.

64.61 months (previously 53.09)

The number of expected months until we reach our target number based on our current expected monthly contributions, assuming a 10% annual return.

The Expense Related Numbers

12.19 times annual spending (previously 14.25)

This is how many multiples of our annual spending we have saved up towards our goal. For example, if this value was 9.1 and we spent $10,000 annually, we would have $91,000 saved up.

48.76% to minimum FIRE (previously 56.99%)

The minimum number to achieve FIRE is 25 times our annual spending. This number shows how close we are to the absolute minimum.

27.72 times annual spending at goal number (previously 27.52)

We have a goal amount that we’d like to reach. Given our current annual spending, this is how many times our annual spending we’ll have saved when we reach our goal number.

How Much We Invested

-22.76% Month to Month Change In How Much Saved (previously 54.56%)

This number shows the change in what we saved this month compared to the prior month in things like 401k, Roth IRA, taxable accounts, and Employee Stock Purchase Program.

-22.68% Month to Month Change in How Much Saved With Employer Contributions (previously 51.54%)

Same as the prior number, but with employer contributions counted.

-1.04% Month to Month Change in 6 Month Savings Average (previously 12.61%)

This number show the change in what we saved this month compared to the prior month, but on a 6 month rolling average. This helps to smooth out months over time and shows a more general trend.

-1.46% of 6 Month Average Net Income Invested With Employer Contributions (previously 10.93%)

Same as the prior number, but with employer contributions counted.