So at some point you get your stimulus check.
What happens now?
It’s an interesting experiment to think about. Effectively you’ve been given an inheritance from the United States government (if you happen to live in the United States and if you happen to make under a certain proportion of income yearly and if also you happen to have children, this amount can vary).
How best to spend the money? Is there a “best” way to spend $1,200 or $2,400 or whatever the spectrum is? For many of us, the decision has already been made. As Caged Elephant sang from “Ain’t No Rest for the Wicked” “I’ve got bills to pay, I’ve got mouths to feed, and there ain’t nothing in this world for free.” Debt may be siphoned off, food delivered to your doorstep may include a lot of high-calorie options, rent and property taxes may be paid, as well as some other bills gone by the wayside, or at the very least pushed. Will property taxes be ameliorated to compensate for the impending economic crisis? If you have until June to pay those, do you hold onto the money until more information comes along?
Long story short, for many of us, there is hardly a choice at all: pay now or pay later.
But we also know that spending all the money has its own temptations. It is not a lot of money, but neither is it a little. Rich people like Scott Galloway recommended at the beginning of the crisis spending for something “big”. This bigness is up to each person. The new iPad Pro refresh for 2020 got plenty of people’s attention, and tech seems incredibly useful for this era, and tech’s novelty is always a good selling point as it has replaced other products and commodities. Coupled with the now obvious dilemma of social distancing, and we could all easily envision Apple doing well this year with their iPad lineup.
Some people might embarrassingly head off to Costco with their stimulus check and pick up the absolute largest television they can find.
The radically other end of the spectrum would be saving the money in cash, which would provide some people with several months to work with, especially service workers, as they wait out the social distancing as long as they can before they return to work and risk illness. As much as investors, so far away from the typical plight of the American worker, can deny in such a moment, cash really is king. It allows that barrier between health and destitution.
Let’s suppose you had plenty of money in reserve (lucky you). So we speculate that this stimulus check is nice, but is also burning a hole in your pocket because you develop a cushion for weathering setbacks. And you’ve always been told that, due to 2% inflation each year, that cash is depreciating in value as we speak. Short term cash is king, but long term that could not be farther from the truth. And you my friend are lucky enough to think long term.
America will do its due diligence for businesses, even if they let the poor and obese members of this country die out, and have already begun a series of plans which ultimately may end up amounting to quantitative easing, which is a nice way to say that they print money and make the numbers go up. If you want to invest and get in on the action (insert Catholic cross sign gesture), go and sin plenty more.
For my stimulus check, a likely blended action will occur: we needed a printer, so we bought an Eco-Tank printer to save long term on ink.
We will likely save a great deal of the money and use it to pay a hefty amount of our property taxes.
And we may invest slightly to see how the money turns out in two years. Less survival tactic and more thought experiment.
Ultimately everyone will fall somewhere into this spectrum. Where you end up is of course up to you (and sort of not up to you). Every advertisement on Hulu right now is reminding you that they are still a company. Don’t fall for a cheap spiel.