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For Denise Diaz, the benefits of pandemic-era incentive checks outweigh the daily dollars and cents. They changed the way she thought about money.
Diaz, a mother of three living outside of Orlando, Florida, received more than $ 10,000 from three rounds of “economic impact payments.”
They were among 472 million payments issued by the federal government totaling about $ 803 billion. The effort became an unprecedented experiment to support households as Covid-19 shattered the U.S. economy.
Inspections (and other federal funds) are at the epicenter of the debate over whether and to what extent financial aid has helped fuel inflation the hottest in about 40 years.
But they undoubtedly offered a lifeline to millions of people during the worst period of unemployment since the Great Depression. Recipients reached by CNBC have used the money in a variety of ways, such as to cover household goods, make debt payments and set up funds for rainy days.
Diaz, who co-runs a local nonprofit, Central Florida Jobs With Justice, is using the funds to pay off a credit card and car loan. Her credit rating improved. She built an emergency fund – hitherto non-existent – which the household was able to rely on when Diaz’s partner lost his job earlier this year.
Therefore, 41-year-old Diaz feels more financially stable than in any other period of adulthood.
The financial buffer and the associated calm also changed her psychology. It automates bill payments (for utilities, second family car and credit cards, for example) for the first time.
“It simply came to our notice then [before]Diaz said, because you never knew what might happen [financially]so I never believed him. “
These days, Diaz is thinking more about budgeting. Home ownership seems affordable after years of renting.
“The incentive has changed the way I think about what is possible, my personal spending habits and the way I manage my money,” she said.
The incentive checks were the result of legislation – the CARES Act, the Consolidated Appropriations Act and the US Rescue Plan Act – Congress passed in 2020 and 2021 to manage the effects of Covid-19.
Households received payments of up to $ 1,200, $ 600 and $ 1,400 per person, respectively. Qualifications such as income limits and payments to dependents have changed through these three funding tranches.
Data from the Census Bureau survey shows most households used the funds for food and household goods, as well as for payments of utilities, rents, vehicles, mortgages and other debts. To a lesser extent, households use them for clothing, savings and investment, and leisure goods.
Salam Bhati and Hina Latif, a married couple living in Richmond, Virginia, used some of their money to reduce credit card debt, which has proved difficult in recent years, especially after having children. (They have a 3-year-old and a 3-month-old child.)
Bhati and Latif paid off several thousand dollars of debt during the pandemic, leaving them with about $ 30,000, they said.
“It was difficult to make a dent,” said Batty, 36. “Sometimes you just feel like you’re not making any progress.”
The couple had a gross income of about $ 75,000 during the pandemic. Batty was a public benefit lawyer at the Virginia Poverty Legal Center (now deputy director), and Latif teaches online at DuPage College in Illinois.
Before receiving the stimulus payments, the duo used a “debt shifting” approach to stay afloat, Batty said. This includes the use of multiple balance transfer offers that carry zero interest periods, he said.
They also used incentive funds to help cover higher household costs for food and other items such as diapers.
Bhati and Latif, like Diaz, also received monthly payments of the increased tax credit for children – up to $ 250 or $ 300 per child, depending on age – this lasted six months from July 2021.
“The cost has increased with our new baby, so we often feel like we’re drawing water from a boat with a hole,” Bhatti said. “We do not live extravagantly in any way, but because most of our income [is] going to debt, we almost live from salary to salary. “
Nestor Moto Jr., 27, is using his incentive payments to a large extent to reduce student loans. A resident of Long Beach, California, received about $ 4,000 in federal and state payments.
He used about half for loans and 10% for savings. The rest helped Moto, an accounting manager’s office manager, pay the bills (such as phone and car insurance) when his employer reduced his full-time schedule to about 10 hours a week earlier in the pandemic.
“They really helped me catch up on my student loans,” said Moto, a graduate of California State University in Long Beach with a bachelor’s degree in political science. He still owes about $ 10,000 from the original balance of $ 18,000.
Moto wanted to reduce its debt, although the federal government has suspended payments and interest rates for the past two years or more. He does not expect this from the Biden administration deletes his unpaid debt.
“I saved money,” Moto added. “[The stimulus] it really helped to understand how much money I make per month and week and how much I spend.
“It showed me how much every dollar really matters.”
Although he is grateful for the financial help, Bhatti is a little disappointed after learning about financial freedom. The US economy has recovered significantly since the beginning of 2021, when lawmakers adopted the latest broad package of pandemic relief for individuals; another does not seem likely despite continued financial pressure for some households.
“I feel like such a joke,” Bati said of the incentive payments. “I had the feeling that a carrot was hanging in front of you, the government saying, ‘We know we can help you.’ And then in the end they choose not to do it. “