About to Go Into Debt? Check This List of Government Programs First!
- Author: William Asher
- Posted: 2024-06-23
Since the dawn of credit cards, Americans have racked up debt like never before in history. Over the years, credit standards became more lax, and the average person could easily find himself or herself drowning in hundreds of thousands of dollars in debt. With student loans becoming an increasingly critical issue and mortgage securities crashing due to the COVID-19 pandemic, it's no wonder that many people have been pushed into debt.
If you're in debt or about to go into debt, you should first ensure that there's nothing you're currently paying for that the government will pay for.
How a Little Bit of Money Turns Into a Lot of Money
You may be wondering how getting the government to pay for historically cheap services will help you stay out of debt. Let's take a budget $15 a month phone plan as an example. This may sound like a trivial expense at first.
However, after adding the national average wireless tax, that bill is now $18.12. Other fees and assessments like the mandatory E911 fee will push this bill to be over $20.00. Of course, this presumes that you have a working phone.
Remember that this is $20.00 after taxes. If you're the average American, your marginal rate is probably around 14-15% when everything is said and done federally, and 5% on the state and local level. That means that in order to pay this $20.00 bill, you will have had to earn approximately $25.00 in wages. At federal minimum wage, that's more than three hours of work for that "budget" $15 a month plan!
The Federal Lifeline Plan
One plan that can help you stay out of debt is called the Lifeline Program. This is funded by taxes paid on cell phone service by those who can afford it. This is operated by various private companies who contract with the FCC.
LifeLine.org will let you get setup quickly. If you're on unemployment or receive any type of government assistance, you can automatically qualify, skipping a lot of the hoops you jump through. Most programs will send you a free smartphone, SIM kit, etc.! The standard plan, subject to change per zip code, is 1,000 free monthly minutes, unlimited free texts, and 3 GB of high-speed data free each month. If you need more minutes or data, you can always purchase this independently. The carrier will vary based on which major carrier best suits your zip code.
This is a program for which you'll need to certify your eligibility annually. You simply need to affirm that you are still in financial need. You'll also need to count up your income to make sure that you still fall within the threshold required. It is typically about 135% of the federal poverty line, but this also will vary by zipcode.
The Federal Marketplace
If you lost a job and can't afford your COBRA health insurance, remember that open enrollment time is here! You can choose among several affordable plans and companies in the Healthcare.gov marketplace, also known as "Obamacare".
Federal tax money subsidizes these plans for those who make under a certain amount each year. You simply need to estimate what you think your income will be next year, and the portal will output an estimate on the amount you'll owe in premiums.
The Benefits Portal
Though you've likely heard of Healthcare.gov, you likely have not heard of one of the most valuable tools there is for those about to go into debt: the federal benefits portal. This portal is located at Benefits.gov. Essentially, it's a wizard that asks you questions about you and your household.
This will alert you to both federal and state-level benefits programs for which you may be eligible. Unfortunately, some of the benefits listed on it are rather difficult to actually obtain. You may also be shown some benefits for which you don't actually qualify.
However, on the upside, people are often made aware of services like the LifeLine service we discussed earlier through this portal. It doesn't hurt to try, it won't impact your credit score, and all of your information is completely confidential.
Do Your Own Research!
Your own research for your own circumstances is another path to follow. Only you know your own history. You may even have a hunch as to what benefits you qualify for!
