Governernment Refund Checks
Sometime in May the government will be sending out checks worth up to $600 per individual or $1200 per household. The government feels that by doing this they will be able to stimulate our currently stagnant economy. It seems like a fairly good idea and all, but will people really spend the money? I think that for the most part people will spend it. People will look at the money as an unexpected gift and by spending it they won’t be deviating from their budget because they were never expecting this money in the first place. Sure, this may give a temporary boost to the economy, but it won’t be anything long lasting or long term.
Here is what I project people will do with their money:
50% will go out and blow it all within the first few weeks on something that they been wanting but not able to afford. These are the people who probably need this money the most to go towards paying off debt, but that isn’t going to happen.
20% will save the money. These people have always been good savers, and they most likely see this as a golden opportunity to increase their savings without doing any extra work.
10% will put the money towards their credit cards or other sort of loan product in order to pay it off earlier. These people have made an excellent choice for their personal finances. Any opportunity to pay off more debt should be taken advantage of. This is a golden opportunity to do so.
20% will do some combination of the above three things. It will likely be more spending than saving though.
Here is one thing that I don’t like about this rebate. Americans are drowning under piles of debt, but with this free money, most people aren’t going to put it towards paying off their debt. I think that the government should automatically put at least half if not all of this so called “relief” money towards their current debt. They would put half of the funds towards the debt and half as a refund check to the citizen. For those who were in collections or had late debts, all of the refund check would be put towards the creditors. This would encourage people to get up to date with their accounts so that they could get the majority of their check.
All this credit checking would theoretically create a high cost for the government, but the relief act would require creditors to submit a petition for funds if their debtors met a certain criteria. If they did not submit the petition they would not receive a portion of their refund.
I know that this is most definitely a fantasy idea, but I believe that if something like this were to take place, the American citizens would be much better off than they would be with just a straight refund check. I do agree that the government should not be one to tell people what to do with their money, but I do believe that if there was a financial incentive to do the right thing with it, people would be more receptive.
I am really curious to hear what others think about this idea. Do we need to encourage people to pay off their debts? Should the the government have a say or an influence in this? And last but not least, what will you be doing with your relief check come May?
do want the government to tell how to make your money too