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$1400 Stimulus! What now? (6 Questions To Ask)

"Nowadays people can be divided into three classes – the haves the have-nots and the have-not-paid-for-what-they-haves." — Earl Wilson

 

Ah, yes… stimulus checks! They’re “finally” arriving. But, what should you do with it? Do you save it, invest it or pay off debt with it? 

In this post, I’m going to give you an easy 6 question framework for how to make that decision whether it’s a $1400 stimulus check or some other type of financial windfall.

The entire goal of this post is to equip you with and actual decision-making framework to employ anytime you get an unexpected inflow of cash like this stimulus check or any other "unexpected" infusion of cash.

 

Here are the 6 questions in brief:

  1. What's the amount of money in question? 
  2. Do you have non-mortgage consumer debt? 
  3. If so are you in the process of addressing that debt and how? 
  4. What's your annual household income and current savings rate? 
  5. What's your age/stage of life and how many years until you intend to retire? 
  6. What's your retirement "number"?

 

Hey friend, I’m Brad Long here with ZeroDebtCoach where we help 5 and 6 figure corporate burnouts escape the corporate cult by helping them: 1) organize and optimize their finances, 2) eliminate debt and 3) move on to financial independence by starting and growing an online business.

So, let’s jump right into it…

 

The 6 Questions

When you get some kind of financial windfall (like a $1400 stimulus check) it can be hard to know which is the best thing to do with it. So let's walk through the 6 questions in detail and unpack “what to do” for each one.

Again, the entire goal of this post is to help you clarify and focus on precisely what you should do anytime you get an unexpected inflow of cash. 

 

1. What's the amount of money in question?

How much money are you currently able to either save, invest or to throw at debt. In this case we know it’s $1400. CHECK!

 

2. Do you have non-mortgage consumer debt (i.e. credit cards, car loans, student loans, personal loans, HELOCs)?

If so, how much and what kind? If you’re here, you should definitely go check out this video. That will help you outline precisely what you need to do including #3.

 

3. If you do have consumer debt are you in the process of addressing that debt?

Debt snowball? Debt avalanche? Spray and pray? 

Debt snowball: smallest to largest by amount, attacking the smallest one first, ignoring interest rate.

Debt Avalanche: smallest to largest by interest rate.

We actually coach a hybrid of the first two, depending on the student’s situation…

Spray and pray: not a real strategy, just trying to rob Peter to pay Paul with no real plan of attack. This doesn’t work by the way. If you’re doing this, just plan on being in debt forever...

 

4. What's your annual household income and at what rate are you currently saving/investing?

Also, does your company "match" and if so to what percentage?

In our system the 8 Steps To Erase Debt, you shouldn’t really be investing until you’ve paid off all that non-mortgage consumer debt and have 6 months to 1 year of expenses set aside for emergencies. 

Once you do, you can start focusing on increasing your savings rate, which is reducing the % of your income that you live on and increasing the % of your income that you save and invest.

Just as a side note, my wife and I ratcheted this all the way up to between 70-80% in my last 5 years in corporate America. It’s doable...

 

5. What's your age/stage of life and how many years until you intend to retire?

Things look very different depending on your proximity to retirement, right? If you’re in your 20s or 30s, don’t wait. If you’re in your 40s, MAN, get on it! If you’re in your 50s or 60s, it’s not too late, but you MUST act immediately.

 

6. What's your retirement "number", meaning how much in assets do you need to be able to fund your retirement lifestyle?

This is a question shockingly few people really think about actually. And it’s super important. 

A good rule of thumb is what’s called the “4% Rule”.

This theory basically says that you can receive an annual income equaling up to 4% of your invested assets.. forever..

A quick math example to illustrate: If you have $1M in invested assets, the 4% Rule says that you could reasonably take a $40,000 income per year (which is 4%) without ever really having to worry about running out of money.

There’s much more to it than that but, that’s some easy math for you to chew on for now.

 

Struggling Or Feeling Alone?

Join Our Private FB Group: Zero Debt Tribe

Now, if this decision process is something you struggle with and you constantly feel isolated about, I’ve got some great news for you and it’s free.

Our private Facebook group, ZeroDebtTribe. It’s a group of like minded people that are all somewhere along this P2P/debt-elimination/on their way to FI continuum. So click the image above and apply to join us. :)

 

Call To Action 

So, we’re all about taking action around here, so I wanted to offer you this free little resource that will help you get your finances organized an on track in less than 4 hours. It’s called our “Debt-Elimination Quick-Start Guide” and the link is in the video description below.

Looking for a way to get started on your own debt-free journey? Check out my: 

 “Debt-Elimination Quick-Start Guide”. This free resource will have ALL the tools, forms and printables you’ll need while moving through this 30 day challenge.

 

  

How can ZeroDebtCoach help you? 4 ways...

 

1. Subscribe to our YouTube channel and click the notifications bell to make sure you get our new videos every week. 

 

2. Download one of our free personal finance guides. You’ll learn some of the exact strategies I teach my private coaching students on how to organize and optimize their finances, obliterate debt and move on to financial independence by starting and growing online businesses.

 

3. If you’re looking for a community of motivated and like-minded people, go ahead and get on the waitlist to join our private financial coaching community. We only open it for new students a couple of times a year, so make sure to get on the waitlist.

 

 

5. If you need some help right now because you’ve got a burning issue, you need a problem solved, you want to talk through a complex situation, click on the button below.

 

 

All that said, let's keep on building your financial acumen and make this your best year yet!

Thanks so much for reading and we’ll see you in the next video post!

 

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