More Americans Use Stimulus Money to Pay Down Debt
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What is the main topic discussed in this episode?
Here's your money briefing for Wednesday, February 10th. I'm J.R. Whelan for The Wall Street Journal.
What stimulus proposals are currently being debated in Congress?
A new coronavirus aid package is working its way through Congress right now. One part of it is a third round of direct stimulus payments to Americans. That would put some much-needed cash in a lot of people's bank accounts. But a year into the pandemic, many people see economic relief from the government as more than just money to spend.
The longer that we go into the pandemic, the more people are uncertain about whether that be the length of the medical crisis or job stability. So they're really just thinking about, do I need a rainy day fund? Where is the most responsible place to put this money?
Coming up, our personal finance reporter Amber Burton will discuss how consumers are trying to make ends meet.
How have Americans' spending habits changed a year into the pandemic?
Plus, we'll speak with a 27-year-old Rhode Island resident about how she's chosen to use her stimulus checks. That's after the break.
When Congress approved stimulus checks last spring, one of the goals was to inspire spending and help keep businesses afloat. But many consumers are still facing unemployment in an uncertain economic future, and they're being much more careful about how they spend the second check they got late last year. In a moment, we'll hear from 27-year-old Rhode Island resident Ruth Estrella on how she's been putting her stimulus money to work. But first, let's get the big picture from our personal finance reporter, Amber Burton. Amber, thanks for being with us.
Thanks for having me.
So Amber, how does the way consumers have used stimulus in this recession compare to past economic downturns?
Consumer behavior has really changed this time around. A lot of that stems from the fact that a lot of the ways that consumers spend got shut down in many ways with the pandemic.
Why are more people choosing to save stimulus checks or pay down debt?
So they might have gone out to restaurants or different places, bars even, that are just not available right now. They're shut down due to the crisis. So people are really spending it more so at home now. whether that be paying off debt or even saving it for a later date when they could spend it out and about.
So we've had two rounds of stimulus so far. How has the way people use the money changed since the start of the pandemic?
Whereas more people might have been more willing to go out and spend the money at the beginning of the pandemic, people are being a little bit more slow to decide what they want to do with this check. We spoke to a lot of younger people this time around, and a lot of people decide to either put it toward debt like student loans or either save it and put it in their savings account.
How have usage patterns shifted between the first and second rounds of stimulus?
The driving force behind a lot of these decisions, with the people that we spoke to at least, were that the longer that we go into the pandemic, the more people are uncertain about whether that be the length of the medical crisis or job stability. So they're really just thinking about, do I need a rainy day fund? Where is the most responsible place to put this money?
One of the Americans who's having to make those tough decisions is Ruth Estrella. She's 27 and lives with her family in Rhode Island. And she's here with us now. Ruth, thanks for being with us.
Thanks for having me.
So before the stimulus money came out a year ago, how are you managing your expenses?
We're in a situation where I moved in with my sister and my parents in our household because everybody together would be able to chip in and pay the expenses versus everyone being on their own. So we are in survival mode, just everybody putting in what they can to cover monthly expenses. So I relied heavily on credit cards to just pay the monthly bills or buy the food or purchase those necessities that we all have on a monthly basis.
All right. So tell me, how have you used the two stimulus payments sent out by the government so far?
So with the economic situation that we're going through during the COVID, I've been relying heavily on my credit card to just maintain, just sustain my expenses every month. So I thought of taking my stimulus checks, both the first one and my second one, and that went directly into my credit card payments.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
What stimulus proposals are currently being debated in Congress?
0:10–0:50
3
How have Americans' spending habits changed a year into the pandemic?
0:50–1:49
4
Why are more people choosing to save stimulus checks or pay down debt?
1:49–2:37
5
How have usage patterns shifted between the first and second rounds of stimulus?
2:37–4:03
6
How did Rhode Island resident Ruth Estrella use her stimulus payments?
4:03–5:14
7
What would recipients do with a proposed $1,400 third stimulus payment?
5:14–6:14
8
Is stimulus money acting as a lifeline or economic stimulus — what do experts say?
6:14–7:38
Speakers
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