Stimulus checks were enough to cover most bills for families in this Texas city
Stimulus checks trickling into bank accounts this summer might go the farthest for families living in two cities in Texas — one significantly more so than the other, according to a new report.
The one-time cash payment under the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, was not designed to replace lost income. The checks have, however, provided necessary security for Americans without the means to pay for food, housing and other bills during the pandemic.
LendingTree pit how much a family of four would receive under the CARES Act against their average monthly expenditures given where they live. For most, the cash wouldn’t cover more than roughly 50% of those bills.
However, that’s not the case in McAllen and El Paso, Texas — where the checks reportedly covered between 77% and 96% of monthly expenses.
To complete the study, North Carolina-based LendingTree examined 98 metros with the most families and identified the median income for two-parent, two-child families in the area.
The lending marketplace then multiplied that monthly income by 83.1% — how much the U.S. Bureau of Labor Statistics estimates most families put toward monthly expenses — and calculated what percentage of those expenditures would be covered by a $3,400 stimulus check.
Texas came out on top
McAllen, Texas, is considered one of the least expensive cities to live in the U.S. by the Community Cost of Living Index, which has compared the cost of living on a city-by-city basis since 1968 for use by the U.S. Census Bureau and U.S. Bureau of Labor Statistics.
It should come as no surprise then that a stimulus check issued to families of four in the McAllen-Edinburg-Mission area would go the farthest.
McAllen ranked No. 1 in the country for how far an economic impact payment would go for the average family of four.
The median income for a married couple with two children there is $51,060, according to LendingTree.
That means their average monthly expenditures come out to roughly $3,536 — 96.2% of which would be covered by a $3,400 stimulus check.
“The average home sale price was under $160,000 in 2018, according to the McAllen Chamber of Commerce,” the LendingTree report states. “At that price, your mortgage payment could be less than $900 per month, so it makes sense that $3,400 can go further in this Texas city.”
Close to 700 miles north along the Texas-Mexico border, El Paso, Texas, came in second, LendingTree reported.
“But there’s quite a difference for families in the No. 1 and No. 2 spots,” the report states. “The Economic Impact Payment could cover about three-quarters (76.9%) of a month’s worth of expenses (in El Paso).”
The median income for a married couple with two children there is $63,825, according to LendingTree.
That means their average monthly expenditures come out to roughly $4,420 — 76.9% of which would be covered by a $3,400 stimulus check.
Farther down the list, Dallas filled out the No. 60 spot.
- The median income for a married couple with two children there is $111,441, according to LendingTree.
- That means their average monthly expenditures come out to roughly $7,717 — 44.1% of which would be covered by a $3,400 stimulus check.
Nationally
The average family of four in the U.S. spends roughly $7,500 a month on expenses, according to LendingTree.
That means for most, an economic impact payment would cover 45% of their monthly budget.
Cities in Texas, California and Florida made up the bulk of the top 10 places where stimulus payments would go the furthest, the report found.
- Bakersfield, California; Deltona, Florida; Cape Coral, Florida; Fresno, California; and Lakeland, Florida accounted for half of the top 10 spots.
- Economic impact payments covered between 59% and 96% of monthly bills in those cities.
“The cities that experience the biggest proportional benefit still won’t be able to rely on the stimulus check to pay all their bills,” LendingTree said. “In eight of the top 10 cities, the Economic Impact Payment only covers between 60% and 71% of the estimated monthly budget for a family of four.
Not a replacement income
The $1,200 economic impact payments were never intended to supplant income lost because of the coronavirus — that’s why Americans are filing for unemployment in droves, LendingTree said.
But financial experts suggested early on that families use the stimulus cash for necessities like bills.
“Food and housing should be your top priorities,” CNBC reported in April.
Charlie Bolognino, owner of Side-by-Side Financial Planning LLC, told the consumer services website BankRate that a strong foundation is the “first building block” during economic hardships.
“You might need this cash for food, supplies and critical bills,” BankRate said last month. “If you can afford to and if need be, save some of the money for the weeks ahead and the next round of bills.”
