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- My wife and I had an adjusted gross income (AGI) of less than $150,000 last year, so we qualify for a combined stimulus payment of $2,400.
- Our first thought was to donate our whole stimulus check to charity, since we are both still working and getting paid.
- To be prudent and meet a multitude of needs, however, we decided to put some money into savings, as well as donating some. The last third of our stimulus will go to much-needed fun.
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When my wife and I figured out that we would get a stimulus check for $2,400, she immediately suggested we give all the money away. While I like the idea of helping those who are struggling right now, I feel less sanguine than she does about our finances.
Our employment situations are quite different. My wife's job as a social worker with a school district is secure. Even though in-person classes have been cancelled for the year, she is as busy as ever, working from home to make sure families get connected with food and other resources and counseling students, teachers, and parents. She will continue to get a paycheck through this crisis.
My work as a freelance writer, on the other hand, is anything but guaranteed. So far, I'm one of the fortunate ones. My clients have needed my help as they communicate with their customers and members about their work during coronavirus pandemic. The future, however, remains unknown. And, while I have business reserves that would allow me to pay myself a salary for a few months even if all my work dried up, I owe a big chunk of that money to the IRS for 2019 taxes.
In the end, we decided to handle the stimulus check the way we usually do large sums that come in outside our regular earnings: using the one-third rule.
The one-third rule says that, when you get a bonus or other financial windfall, you put one third into savings, spend one third on debt repayment, and use one third for something fun. That way, you have been responsible with your money and also given yourself a treat. Since we don't have debt (other than our mortgage), we will spend one third on charitable donations.
One third to savings
The $800 that we'll put into savings doesn't seem like a lot, but the one-third rule has helped us build up our savings account over the years. Savings is an investment in ourselves. Money in the bank reduces my stress levels, especially right now, when financial security seems particularly ephemeral.
One third to charitable donations
We haven't chosen which nonprofits we'll donate to, but we have a list of candidates. They need to be serving our local community here in the Bay Area or helping combat the pandemic in other hard-hit areas of the country.
Charities we have in mind include:
- The Alameda County Food Bank is high on the donation list. Food banks are struggling with vastly increased demand and need all the help they can get.
- East Bay Feed ER, which was started by local author Ayelet Waldman to order meals from local restaurants and send them to feed emergency room staff.
- Chef José Andrés' World Central Kitchen, which is preparing meals for local families in the Bay Area and around the country, as well as partnering with restaurants to keep them in business through the pandemic.
- GetMePPE - Bay Area has links to donate not only actual personal protective equipment (we already donated the N95 masks we had on hand for fires) but also cash to help healthcare organizations buy more PPE.
- Local media. Local new organizations have lost advertising revenue as businesses have shut down. The crisis has made me more aware than ever of how reliant I am on good, local news coverage. I already subscribe to one local paper, but I can contribute more to my local public radio stations and to a local news nonprofit.
This is just the beginning of our list. There are so many groups doing great work it will be hard to choose. And we will consider more personal donations as well. If we have a friend or family member who's been laid off or is struggling by the time our check comes, we would like to help that person directly. Taking care of our community feels vital during this moment in time.
One third to fun
This is going to be the hardest part. There isn't much to spend money on right now that falls into the category of fun. The things I consider fun all have to do with travel or getting together with friends. Both of those are off the table for at least the next few months and perhaps much longer.
In a perfect world, it will be safe for us to go out soon. The $800 designated for fun would buy us most of a weekend getaway in Santa Cruz, including a couple of nights at the Dream Inn. Every room in this hotel faces the Pacific Ocean and the room service food is ridiculously good. We only stayed there once, when we won a room in a silent auction. Eating a gourmet breakfast on a balcony overlooking the ocean would feel like a lovely splurge.
But, since travel is likely to be too dangerous for quite a while, I have to look at options closer to home. Down the road, an evening at the Pacific Pinball Museum in Alameda where admission to the museum lets you play on the museum's historic pinball machines and games would be great. A night out there with friends would feel like a huge treat. I hope it is still in business when the stay-at-home order is lifted.
If the shelter-in-place continues for more than a couple of months, we'll have to find stay-at-home fun. I have wanted us to get DNA tests to find out more about our ethnic origins. We could get two tests from Ancestry.com and still have money left over for some very nice jigsaw puzzles and takeout meals from favorite restaurants. We will find ways to have fun, even if we are stuck inside.
Everything could change by the time we get our check
Because we owed taxes last year, we mailed a check to the IRS. We have gotten tax refunds delivered into our bank account in the past, so the IRS might still have our account information on file. If that's the case, we should receive our stimulus sometime in the month of April. Otherwise, we might have to wait to get our check in the mail - possibly as late as September.
If our stimulus doesn't come for a few months, we may have to reconsider our plan. It's hard to predict our financial future, even just a few months out, when the world seems to be changing around us on a daily basis.
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