LEXINGTON, Ky. (LEX 18) — As the Senate debates another stimulus package's details, some Americans already received a $600 check in the mail. A Central Kentucky financial advisor urges them to spend wisely.
Family Wealth Group Financial Advisor Jeff Sheppard explained it is not the time to go out and splurge, especially during a pandemic.
He said, "A lot of times, you know, an influx of money would kind of send you towards that I know that you've been wanting, And you're like, 'Oh, this would be a big part of that, and I can put the rest of it on a credit card, and then I'll figure out how to pay for it later.' And then, all of a sudden, you've gone through all of your money and added some more credit card debt, and it just totally defeated the purpose."
Sheppard suggested focusing on the bigger picture and asking yourself where your debt is so you can think about the future.
"If you have bad debt and just can't get on top of it, you're making that minimum payment. That's a rough rut to get into, and you want to get out of that," he explained. "So, maybe the stimulus check helps that. But a lot of things need to be analyzed because saving that extra $100 a month, $200, $300, that you're making towards that credit card payment if that could come into your pocket. Because you ... got rid of some debt or consolidating some debt that could be a huge benefit for you."
He also suggested thinking about recent spending from the holidays, "We're finishing up Christmas, and if you're like my family, we usually splurge during Christmas. And so a lot of times you're, you're trying to figure out, 'now how am I going to pay for Christmas.?' So, using some of that to go ahead and knock out some of those bills are good or rebuilding that emergency fund, you know?"
Also, Sheppard admitted the traditional rule of thumb of three to six months of expense money in the bank is not necessarily the rule of thumb to use during a pandemic as layoffs are expected. He said, "What's scary these days is, you know what, what is the next way you have COVID-19 going to look like? Is my employer going to have more cutbacks?"
Therefore, he said the "normal rules" do not apply during the pandemic and said he hopes Kentuckians will have the willpower to cut back and focus on the long-term when they receive a stimulus check.
Sheppard explained, "This is where you have to figure out how am I going to get through this? How am I going to survive? Are there jobs that normally I would not take and not accept? And I just gotta, I just gotta rip this out and get through this and generate some money for myself, for my family."