Well, the good news from last week is that the market has gone on to yet another all-time high. We’ll just stop there.
Stimulus payments have also begun hitting people’s bank accounts. We’ve had lots of questions, both about the stimulus itself and what to do with it.
The stimulus payments are technically refundable credits towards your 2020 taxes. The first round was based on your 2019 tax return, or if you hadn’t filed that yet, your 2018 return. This most recent round was based on 2019 returns. However, when you file your 2020 tax return, the IRS will use your 2020 income to see if you are entitled to more money. They will not charge you back if you received more stimulus money than your 2020 income supports. If you had a child in 2020, you will receive the stimulus money for the child on your 2020 return.
And what do you do with that money? First, look to pay down credit card debt, or other debt you’ve accumulated because of the pandemic. Second, build your nest egg. Remember, the long-term goal should be six months of living expenses in liquid savings. If you’ve already taken care of that, you have until April 15th to fund your IRA or Roth IRA for 2020.
Since I mentioned credit cards, were going to add one more thing to our podcast each week, an actionable step to take to get your financial house in order. If you have credit cards that are not paid off in full each month, do what you can to lower the interest rate. You can call the card and ask for a lower rate. Sometimes that works, sometimes it doesn’t. But it can’t hurt to ask. You can also look for a lower-interest rate card or a promotion for zero-interest for a set period of time. Lowering your interest rate means more of your payment goes to principal each month.
We are offering a deep dive into what happened in 2020 and what we expect in 2021 later this month. Our signature event, Women, Wine & Wisdom, becomes a co-ed economic update for the month of January. You can register for that event, and find much more on our website at covingtonalsina.com, or visit our Facebook page to learn more.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.