As the pandemic drags on, struggling families are calling for more financial aid, including a long-awaited fourth round of stimulus checks.
For those least fortunate, the payments so far have been life-changing. Stimulus checks alone lifted close to 12 million Americans out of poverty last year, a new government analysis shows.
The numbers are encouraging — but they may not last. With government support drawing down, the poverty rate could spike this year.
Here’s what the payments have achieved so far, and what you can do if you’re drowning in debt and in dire need of a fourth check.
Stimulus checks make a huge difference
Last year, the government’s official poverty threshold for a family of four was $26,496. By that definition, 11.4% of households were living in poverty — more than in 2019, though not the disaster many had feared.
But as the Census Bureau points out, the “official” measurement can be misleading. It was designed in the 1960s and only counts cash income. That’s why it created the Supplemental Poverty Measure, which takes into account government support for low-income families and individuals.
With COVID relief measures and other programs factored in, poverty was just 9.1% — the lowest on record.
Two key policies made the difference. Stimulus checks brought 11.7 million people above the poverty line, and newly expanded unemployment benefits ensured 5.5 million wouldn’t fall below the line in the first place.
The extra cash also boosted households’ median income by 4% (once taxes were taken out) and reduced income inequality.
But don’t expect more checks from Congress
While the stimulus checks and a half-dozen other relief measures made 2020 significantly more bearable, most of those programs are now gone or winding down.
And yet the economy is still recovering. Unemployment claims remain well above pre-pandemic rates, with 9 million people officially unemployed and 5 million more who abandoned their jobs, according to researchers at the Universities of Chicago and Notre Dame.
Poverty is likely to be higher this year. The researchers point out that the poverty rate already rose sharply in the last half of 2020 as many of the initial government benefits expired.
For now, lawmakers have moved on to other priorities. President Joe Biden is working to push through a $3.5 trillion spending bill that doesn’t include a fourth round of stimulus checks.
Some low- to moderate-income families will still receive support through the expanded child tax credit, which provides up to $3,600 per child this year — but after that, Americans shouldn’t count on more direct payments anytime soon.
What to do if you still need a little stimulus ASAP
As the government tapers its pandemic support programs like the eviction moratorium and student loan forbearance, many Americans may find their monthly budgets much tighter.
Fortunately, there are a few ways you can create your own stimulus check to give yourself a little breathing room.
Refinance your mortgage. If you’re a homeowner and you haven't refinanced your loan in the last year, you could be missing out on some game-changing savings. The average rate on a 30-year fixed mortgage is under 3% again, and the mortgage data provider Black Knight recently said over 15 million homeowners could save an average $298 a month with a refi.
Deal with your debt. If you’ve been relying on credit cards to carry you through the pandemic, you may now be faced with a pile of expensive interest. Consider folding your balances into a single debt consolidation loan — the lower interest rate will cut the cost of your debt and help you pay it off faster.
Slash your insurance bills. When was the last time you looked around for a better rate on your auto insurance? If it’s been more than six months, you could be overpaying by hundreds of dollars a year. A little comparison shopping could slash your monthly bill, and you can use the same strategy to find a lower rate on home insurance, too.
Find better prices online. The internet is a big place, so it’s hard to feel confident you’re getting a good deal when you shop online. Download a free browser add-on that will automatically hunt for better prices and coupons before you hit checkout.
Turn your pennies into a portfolio. You don’t need thousands of dollars or investing experience to get your share of the profits from today’s red-hot stock market. A popular app can help you get your foot in the door by allowing you to invest with just your “spare change.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.