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austin mullins

To apply for the Golden Financial Services scholarship, students must come up with a new debt relief program to help consumers who are behind on their credit card payments. The student’s proposed plan must be different from the existing credit card debt relief programs. Students can submit their proposed plan in the form of an online video, infographic, or essay.

The following essay was submitted by Austin Mullins. To vote, simply click the “thumbs up” by CLICKING HERE, (next to whatever student’s essay you want to vote for).

austin mullins

Golden Financial Services Scholarship Essay

Debt relief programs are important to American society in a sense that they essentially serve as a foundational support system to our rapidly increasing debt. To give this claim a point of reference, American debt has grown 67.5% from 2010 to 2019. 8 of every 10 Americans were in some sort of debt in 2008. On average, each household with a credit card carries $8,398 in credit card debt.

The fact of the matter is that many people do not have the education or resources to fully understand the consequences of debt or how financially burdensome interest and principal repayments can actually be. Taking on debt is essentially a legally binding contract that will follow a person until the day they die. The lack of understanding and information leads many to become financially obligated to debt at a very young age. Obviously, nobody has the ability to foresee the future nor the unexpected events that come along in a person’s life. Things such as injury, child birth, losing a job, national pandemics, or maintenance and things breaking arise introducing financial instability into a person’s life. This can be very dangerous, especially if that person holds a substantial amount of obligations such as debt repayment. These types of situations can even be as extensive as putting livelihood and mental wellbeing to risk. This just further reinforces the concept of the importance of debt relief programs. Although the importance is certainly not of question, when evaluated systematically, there are only so many effective methods to helping consumers with their debt relief. I would like to introduce a couple programs that I was able to construct using my own intuition to help add further depth to the possible methods available to consumers with debt problems.

The first method that I believe could be beneficial to the borrower would be to construct a well-rounded budget and repayment schedule that can be easily accessed and monitored. Tailored recommendations and spending limits would be set to give the consumer structure and peace of mind. I firmly believe that in order to get over any financial burden, such as debt, as quickly as possible, spending has to be optimized to its maximum potential. In many cases, people become so overwhelmed that they quite honestly don’t know what bill to pay first and how much of it they should pay as to not become behind in others. Coming to an agreement on an achievable budget that takes into consideration compromise for living expenses, basic necessities, and a small amount of pleasure expenses would be the first step. Using current technology can assist the creation of the budget as well as the monitoring of it. The assisting person or company can give performance reviews monthly as well as offer recommendations for the upcoming month. Spending limits in established categories will also be a key factor in assuring that debt repayment can be achieved in the largest amounts and shortest timeframe possible. This sort of system will give the borrower a sense of more complete structure and alleviate the stresses of uncertainty when it comes to how to manage their finances and pay their bills.

The second method that I believe would achieve the goal of debt relief would simply to be to provide education of financial benefits and establish incentives to limit credit expenditures. This method is simple enough, people often do not have adequate financial knowledge or resources to make the best possible decisions for themselves when it comes to their finances. I believe that this could be one the best approaches when it comes to prevention and minimizing debt in the future. A person cannot consistently choose the best possible option for themselves if they are not educated about the subject at hand or even know what it is. This could even be combined with the first method when it comes to constructing a budget and allocating excess income to investments or IRA accounts. Sometimes just physically seeing or hearing how small changes to how they spend or save money can resonate a huge impression. Providing incentives to change spending and saving habits could be contributions to a child’s education funds, a match of emergency funds that are already saved if more was needed at a time of emergency, or discounts on vacations.

The third method that I came up with would be to provide a repayment plan that combined a mixture of principal payments along with investments that would grow to offset interest accumulation as well as pay off amounts of principal in mid-range time intervals. This sort of repayment option would help to mitigate financial burden on the borrower through the use of client preferred risk options from low to high risk investment to cover interest as well as additional principal payments. The borrower could make smaller payments that would make a bigger contribution to paying off their debts in the longer term. An addition of refinancing or lowering of interest rate would only further enhance the effects of repayment. Additionally, this could provide incentive for the person to invest in the future after seeing the benefits that it can bring.

The final method that I would recommend to somebody that was seeking a debt relief program, primarily with credit card debt but also applicable to other debts, would be to research credit cards that offer 0% interest on carryover debt for a longer period of time. This would be beneficial to the borrower because it would allow for one hundred percent of their payment to go straight to the principal amount every month. This could also combine several payments that are carrying interest into one single payment that does not. If the person is paying high interest on 4 separate payments every month, they could be paying upwards of one hundred percent interest. This would allow the borrower to pay off their debts much quicker and pay much less interest.

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