HOW TO SPEND YOUR $1200 STIMULUS CHECK

What's up, guys? It's Graham here, and welcome to my channel, where some random guy on the internet gives his unqualified opinion on the most important financial matters of today.

So, there's a lot we got to discuss in today's video, and I'm wondering if we should begin with the good news first or the bad news first. Well, I guess we should start with the bad news first to just get that out of the way because the unemployment numbers just came out. Even though we knew they were not going to be good, they were definitely not good, because unemployment just hit an all-time high. Unlike the stock market hitting all-time highs, this is not a good thing. Almost 3.3 million people claimed unemployment, which was the highest number ever reported in history, and we even surpassed the previous all-time unemployment record in October of 1982 by more than five times.

So obviously, a lot of this is situational, while many businesses temporarily shut down. It kind of makes sense that these numbers are gonna be absurdly high while all of this is going on. Hopefully, a very large percentage of those people will begin to return back to work once this begins to normalize.

However, on the bright side, remember how I quoted a while ago that the majority of Americans didn't have enough in savings to afford a $1,000 emergency? Well, problem solved, because the Senate just passed a stimulus package that is being voted on this morning, and assuming it isn't blocked, that means that every eligible American is going to be receiving a check for $1,200.

Now, in order to qualify for this amount, your most recent tax return filed in 2018 or 2019 must show that you made $75,000 or less if you're single to qualify for the $1,200. For married couples, you could receive up to $2,400 if you made less than $150,000 in combined income. You're also gonna be receiving an extra $500 for every child listed as a dependent on your tax return. And no, unfortunately, you can't claim cats as children, as much as I would like to try to claim Ramsey as a dependent, because he is dependent on everyone smashing the like button through the YouTube algorithm if you have not done that already.

Anyway, for every $100 you make above the $75,000 and $150,000 threshold, your stimulus check is going to be reduced by $5. So that means if you make more than $99,000 as a single person or $198,000 as a married couple, you're not going to be receiving anything.

Now, it's estimated these payments will be dispersed in the next few weeks, so if you qualify for them, you'll be getting a payday very soon. And that's gonna be the topic of today's video. Before I get into the best ways to save and invest this money, let me just clear up a few questions that I've been asked a lot from my previous video.

If you have not already seen that, go and see it because these are the questions that everyone has been asking about the $1,200. One commenter asks, “So if I didn't start working until 2019 and filed for 2019, I'm not going to get it?” So I looked into the most recent verbiage, and as of right now, they're going to be looking into your most recently filed tax return beginning in 2018. So if you've already filed for 2019, then that is what they're gonna be basing their numbers on. So yes, within that scenario, you will be getting paid as long as you're within the income limit.

Now, another one asks, “Wait, so if they pay me, I have to pay them back?” No! This money is completely yours to keep. However, the only stipulation is that if you make more than $99,000 as a single person or $198,000 as a married couple, then yes, you will need to pay it back the following year in 2021. And no, for anyone else wondering, you're not going to be taxed on this money either, because it's structured as an advance tax credit in 2020. So in a way, enjoy your tax-free money!

So even if I'm still a minor, I still get this. I filed in 2018 but I'm still currently 17. Does that affect anything? That is a really good question, and I had a lot of people asking me, saying that they're under the age of 18 but they were working and they filed a tax return. Are they still going to get the $1,200?

I've been trying to find a definitive answer on this, although it appears as though if you live full-time with your parents, if you're under the age of 18 years old and they claimed you as a dependent on their tax return, then no, you would not be getting the $1,200, and instead, your parents would be getting an additional $500 by claiming you as their child living full-time with them. So if that's the case, you just got to pester them long enough to try to give you some of that hard-earned stimulus money and then show them this video just so I can look them straight in the eyes and tell them to smash the like button.

Next, we got, “Let the hyperinflation begin.” So obviously, we'll see what happens with this, but I would say increasing the national debt by ten to fifteen percent is unlikely to cause hyperinflation at a time when no one is spending money. No, I could be wrong, but I think the actual enemy here is deflation, where the price of everything goes down and the value of your cash goes up. That indicates that people are not spending money due to hoarding cash, and as the prices of everything begin to fall, people just hold off from spending any further because they believe their money is just going to be worth more.

I would argue that has a worse effect on our economy, all things considered. But then again, I'm just a dude on the internet; I have no idea what's going on. Just a guess.

Then we have hit the pause button: “Graham for president 2024.” You know, as much as I would love to be involved to help implement better financial policies in the United States, I just don't think I could ever get into politics because I can't run the country from my garage and using a camera by recording myself. But I guess if I ever did run for president, I would just be asking everyone for likes and not votes.

Okay, but in all honesty, I just prefer to stay out of politics and remain completely neutral, so it's never something you're gonna hear me mention. I never take sides; I just look at every item independently and objectively and then make a decision based off that.

I want to hear you play the drum set. Yes, so for anyone who's interested in the drums, this is a DW Collector Series in Black Ice, formerly owned by the drummer Tony Royster Jr. He was one of the people I really looked up to when I was learning to play the drums as a kid, and when I saw his personal drum set come up for sale, I jumped on it. Even though I'm not even close to being one-one hundredth as good as he is, I'm gonna be practicing a lot. And yeah, here you go.

Okay, so with the Q&A out of the way, let's go over and discuss the best ways to save, invest, and spend this $1,200 so that way it does not go to waste. Especially at a time of high unemployment, economic uncertainty, and a lot of unknowns, you really need to be careful to make sure you stretch this $1,200 as far as it will possibly go. Even if you think you have a stable job, plenty of money in savings, and a margin account on Robinhood that's begging for another $1,200 deposit, it's worth playing it safe because you never know what's gonna happen.

This is really a time where I'm perfectly okay erring on the side of caution, and having more money available to you at your disposal, in the event you really need it, is going to be way more important than trying to inch out a few extra percentage points in profits in a volatile market.

So with that said, here are the most important purchases that I think you could make with this $1,200 and exactly what you could be doing moving forward. Well, the first thing that you could do is buy the latest iPhone 11 Pro, which comes in just under $1,000, and that leaves you plenty of money left over to pay the sales tax and have $100 left to put down on a deposit on the upcoming Tesla Cybertruck.

So seriously, the first thing you should do is open up a high-interest savings account that pays you more than 1% in interest and then deposit the entirety of that check in that account. I personally use Ally Bank, and they're one of the few banks out there that have not dropped below a 1.5% interest rate. So for that, combined with their customer service, they're pretty good.

Now, I know it sounds like they're paying me to go and promote them, and believe me, with the amount of times I've talked about Ally Bank, I wish they would have paid me for that, but now they're not paying me; I'm just a fan, and I talk about what I like the most and what I personally use, and Ally Bank is one of them. So if you don't already have a high-interest savings account, just go ahead and open one up today. Discover Bank and American Express Savings are also two other really good options as well.

So between those three suggestions, you should be all set. Now, this is going to be the place where you keep your money safe short term until you actually need it, which hopefully you won't end up needing; this should just be something to fall back on should something end up happening.

The second you should use this money towards buying essentials if you absolutely have to. The most important thing right now is that you have food on the table, you're safe, your family is safe, and you have any necessary medical supplies to hold you over in the event of a temporary shutdown. That comes first before anything else—before paying the bills, before investing, before depositing $100 into Webull using the link down below in the description so you can get two free stocks with one of them valuing at $1,400 because that offer is expiring in a few days from now. So now is your last chance to do it, and even with that, the necessities and essentials are really going to be the best use of your money.

Stock up on food, make sure you're healthy, and then stay that way. Even if you think you might not need it, you never know. I would probably advocate not using this money towards anything that is not essential to your own safety and well-being, and that's it.

The third, if you already have the essentials, you have money sitting in the bank, you have your savings, then it might be a good idea to use that $1,200 towards an additional emergency fund just in the event you need it. I know this might be a very Dave Ramsey thing to do and just play it cautiously safe, but I would hate to see people invest this money, have their investments drop in price, and then have to cash out in the event something happens, and they need that money to put food on the table.

Like I said, being a little bit more cautious at this point is probably going to be a smarter move than going and investing, and if $1,200 is gonna make a significant difference towards your emergency fund, just apply it towards that and then leave it alone for a few months.

So forth, if you already have a three to six-month emergency fund, you're still working, you've already got the essentials covered, and this $1,200 is pretty much just like bonus money for you—well, congratulations! You're in a great spot financially, and with this $1,200, you could just go ahead and spend or invest it. If it were me, I would probably say that you would get the best ROI by spending that money to reinvest back into yourself since you probably have way more free time on your hands right now with everything shut down.

Like, if you're stuck inside, now would be the best time to go and get a home gym set or anything to stay in shape unless they're all sold out. Or go and pick up an instrument to learn, or spend some money going and learning another language, or take some online classes to go and learn or improve on any skills that you could brush up on. Even go and spend your time making YouTube videos because people are home and need something to watch.

Seriously, I just think that if you have a lot of extra time right now, spending this money back on yourself in some way to get yourself ahead—both creatively or professionally—is probably gonna be the best use of this money right now if you have everything else already covered.

After all, that was a rare opportunity where you can't go out, you're stuck inside, and you need something to do besides smash the like button for the YouTube algorithm. And now is the perfect time to go and get done anything you've been putting off. For me, I bought the drum set, I'm in the process of setting up a home gym, I've been doing way more reading, and I've been taking on a few additional projects that I've just been delaying.

Really do your best to make good use of this so when all of this blows over, you're gonna come out of this a much more refined and sophisticated person.

And fifth, if you're gonna be investing it, then go ahead and invest it. I'm a little cautious about giving this advice because there are a lot of unknowns in terms of how long this is gonna last, how many people are gonna be out of work for it, and for how long. But hey, if you're gonna be investing it and you are already in a good spot financially, then go ahead and do that.

As far as where to invest it, you guys know me—I'm a big fan of index funds, and I never usually give any suggestions as far as individual stocks to buy. But if you are gonna be investing, I would suggest maybe investing within a Roth IRA; that way, you can get some good tax advantages later in life, and all of those profits can be tax-free.

So if you're already in a good spot financially, now could be a really good time to invest and be able to buy stocks at a 20-80% discount from their all-time highs. And that, I got to say, is such a good opportunity. You could either just go and invest it all into the markets all at once or just spend $200 every single week over the next six weeks buying into the market. The choice is yours, but just be thankful that if you get this $1,200, and this is just extra money to you, you're in a great position, and definitely do your best to put it to its best use possible.

But like I said, just my opinion to use this $1,200 towards the essentials, building up an emergency fund, and keeping it safe just in case you need it, because I'm concerned this could be going on for quite a long time. And if things don't get better within a few months, there might be another round of layoffs and further issues.

Now, it has been suggested that if a situation like that arises, they might look into issuing another round of stimulus checks to be deposited. But still, let's not count on that happening, and I would much rather see you play it safe with this money and not spend it on something that doesn't provide you with enough value, wishing that you had the money available later if something should hopefully not come up.

So stay safe, everyone. Save your money, spend it wisely, and don't forget to smash the like button through the YouTube algorithm.

So with that said, you guys, thank you so much for watching! I really appreciate it. As always, if you've not already subscribed, make sure to subscribe, hit the notification bell. Also, feel free to add me on Instagram; I post pretty much daily. So if you want to be a part of it there, feel free to add me there. Also, on my second channel, The Graham Stephan Show, I'm posting there every single day I'm not posting here. So if you want to see a brand new video from me every single day, make sure to add yourself to that.

And lastly, if you guys want two free stocks, use the link down below in the description, and Webull is going to be giving you two free stocks when you deposit $100 on the platform, with one of those stocks valued up to $1,400. This offer is expiring at the end of March, so you really only have a few days left to take advantage of this.

So again, if you guys are interested in doing this, now is your chance to get those two free stocks. Let me know which two you get. Thank you so much for watching, and until next time!