President Biden is determined to get another round of stimulus checks to the American people. Even though Congress is working through the details, many can expect another round of stimulus money. This is good news for many American who are dealing financial hardship during this crisis. There is more good news. It is also tax season, and many will receive tax refunds. Again, this money is important for those with struggling to survive.
While I understand that many of you having mounting debt, I urge you to use your stimulus checks and tax refunds for your basic needs. The money should be used to feed your family, pay our utilities, make rent or mortgage payments – life’s essentials. If you are struggling with the essentials, you should not use your stimulus checks and tax refunds to pay down debt.
Said differently, prioritize how to spend the money. After paying for food, shelter, and utilities, make a list of other creditors. You should always make secured creditors a priority. Examples of secured creditors are the mortgage company or the car loan company. Basically, a secured creditor is one that lends you money backed by some sort of collateral. If you fail to pay your mortgage, they can foreclose on your house. Likewise, if you stop paying for you car, you will face repossession of that car.
Last on the list should be unsecured creditors. Examples of unsecured debts include bank credit cards, store credit cards, medical debt, and student loans. If you fail to pay these in a timely manner, you may face some inconveniences. However, you will survive. You will not go to jail; you will not be thrown on the street.
Further, some of these debts can be renegotiated if you are having a hard time. Also, should bankruptcy be the best solution, many, if not all, of these debts can be discharged. This means that you can clean the slate completely of these debts.
So, for those who receive stimulus checks and tax refunds, use the proceeds to survive. Do not try to manage debt especially if you do not have enough money to get completely out of debt. You may be better off using some of it to finance a personal bankruptcy. Of course, every situation is different. Therefore, give me a call. I will listen to your situation and get you on a path to financial health.