As President Biden pushes to send a third round of stimulus checks to most households, finance guru Suze Orman recommends Americans prioritize bills and focus on building a 12-month emergency fund.
A 12-month emergency fund is critical because once mortgage and student loans come out of forbearance, and the federal eviction moratorium expires, Americans need money on hand to meet their financial obligations, Orman, host of the “Women & Money” podcast, told Yahoo Finance Live.
Roughly 2.7 million homeowners are currently postponing mortgage payments, according to the Mortgage Bankers Association, a figure that has held steady for the past two months.
“This whole thing that's happening with evictions and a moratorium on mortgage payments scare me,” Orman told Yahoo Finance Live. “Because what happens when you have to pay up.”
As of this month it’s estimated that more than 10 million renters are behind on their payments with about $57 billion in total owed, according to a paper co-authored by Mark Zandi, Moody’s Analytics chief economist, and Jim Parrott, a fellow at the Urban Institute.
But if you’re lucky enough to be in a position where you’re not behind on your financial obligations, Orman said you should “give away” the stimulus money to someone who needs the help.
“Let's say you're doing great. You have your 12-month emergency fund, you're out of credit card debt, you're funding your retirement accounts and you're not behind on anything… give the money away,” Orman said. “Every single one of you knows somebody [in need].”
Orman told Yahoo Finance Live that there should have been a better way to determine who should receive stimulus checks, but since there is not, people should take it into their “own hands” to assist the less fortunate.
“They don't have the money to pay their rent… they're behind on everything. They don't know what they're going to do. Help them out and give the money to them,” she said. “It was a gift to you and you don’t need it. You probably never should have gotten it.”
Seana Smith anchors Yahoo Finance Live’s 3-5 p.m. ET program. Follow her on Twitter @SeanaNSmith