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For Dennis Diaz, the benefits of pandemic-era stimulus checks have far exceeded everyday dollars and cents. They rewire how you think about money.
Diaz, a mother of three who lives outside of Orlando, Florida, received more than $10,000 from three rounds of “Economic Impact Payments.”
It was among 472 million batches export by the federal government, totaling about $803 billion. Effort It was an unprecedented experience To support families as Covid-19 has devastated the US economy.
The checks (and other federal funds) are at the center of the debate about whether and to what extent the financial assistance has helped increase inflation, which is running within its limits. Hottest in about 40 years.
But it undoubtedly provided a lifeline for millions of people during the worst period of unemployment since the Great Depression. The recipients CNBC reached have used the money in various ways — to cover household essentials, make debt payments, and set up rainy day funds, for example.
Diaz, who co-runs a local nonprofit, Central Florida Jobs With Justice, used the money to pay off a credit card and car loan. Her credit score improved. I set up an emergency fund—which hadn’t existed before—that the family was able to draw on when Diaz’s partner lost his job earlier this year.
Consequently, Diaz, 41, feels more financially stable than any other period of adulthood.
The financial barrier and the peace of mind associated with it have changed my psyche as well. It has automated bill payments (for utilities, a second family car and credit cards, for example) for the first time.
“We weren’t doing that [before]”Because you never knew what could happen .” Diaz said [financially]So I never trusted him.”
These days, Diaz is thinking more about budgeting. Home ownership seems to be within reach after years of renting.
“Incentives have changed the way I think about what’s possible, my personal spending habits and the way I manage my money,” she said.
The stimulus checks were the result of legislation — the CARES Act, the Consolidated Appropriations Act, and the US Bailout Act — passed by Congress in 2020 and 2021 to manage the fallout from Covid-19.
Families received payments of up to $1,200, $600, and $1,400 per person, respectively. Qualifications such as income limits and amounts of payments to dependents changed across the three funding tranches.
Census Bureau Survey Data Offers Most families used the money to buy food and household products, and to make utility payments, rent, cars, mortgage, and other debts. To a lesser extent, households used them for clothing, savings, investments, and leisure goods.
Salam Bhatti and Hina Latif, a married couple living in Richmond, Virginia, used a large portion of their money to reduce credit card debt, which has proven difficult in recent years, especially after having children. (They have a 3 year and 3 month old baby.)
They said that Bhatti and Latif had paid off several thousand dollars in debt during the pandemic, with about $30,000 remaining.
“It was hard to make an impact,” said Bhatti, 36. “Sometimes it feels like you’re not making any progress.”
The couple’s total income was around $75,000 during the pandemic. Bhatti was a public benefit attorney at the Virginia Poverty Law Center (now the deputy director), and Latif teaches online at DuPage College in Illinois.
Before getting the stimulus payments, Bhatti said, the duo used a “debt shuffling” approach to stay afloat. This includes taking advantage of multiple balance transfer offers that carry interest-free periods, he said.
They also used stimulus money to help cover the higher household costs of groceries and other items such as diapers.
Behati and Latif, like Diaz, also received monthly payments from the Enhanced Child Tax Credit — up to $250 or $300 per child, depending on age — and that It lasted for six months starting from July 2021.
“The costs have increased with our newborn, so it often feels like we are collecting water from a boat with a hole in it,” Bhatti said. “We do not live in profligacy by any means, but because the greater part of our income [is] Going into debt, we pretty much live from paycheck to paycheck.”
Nestor Moto Jr., 27, has used stimulus payments largely to allocate student loans. The Long Beach, California resident received about $4,000 in federal and state payments.
Use about half on loans and 10% for savings. The rest helped Moto, an office manager for an accounting firm, pay the bills (phone and car insurance, for example) when his employer cut his full-time schedule to about 10 hours a week earlier in the pandemic.
“They really helped me offset my student loans,” said Muto, who graduated from California State University Long Beach with a bachelor’s degree in political science. He still owes about $10,000 of the $18,000 of the initial balance.
Moto wanted to reduce his debt even though the federal government had stopped payments and interest over the past two years. He doesn’t expect the Biden administration to do that Erases outstanding debts.
“I saved money,” Mutu added. “[The stimulus] It really helped determine how much money I make in the month and week and how much I spend.
“It showed me how important every dollar really is.”
While he is grateful for the financial help, Bhatti is slightly disappointed after getting a brush with financial freedom. The US economy has rebounded significantly since early 2021, when lawmakers passed the latest large-scale pandemic aid package for individuals; There does not appear to be another possibility despite the ongoing financial pressures on some families.
“It sounds like hypocrisy,” Bhatti said of the stimulus payments. “You felt like you were dangling a carrot in front of you, the government saying, ‘We know we can help you.’ Then he finally chose not to.”