Libby Morsheimer, Author at Parachute

Top 10 Money Myths

There are a surprising number of myths surrounding money and how to manage it. These myths can hold people back from achieving financial wellness, which contributes to our overall well-being. Here are some of the most popular myths and the truths behind them:

Myth #1: More money = more happiness

Truth: While money can certainly provide security and comfort, research shows that beyond a certain point, it has little impact on happiness. True happiness comes from meaningful relationships, good health, and personal growth, not just the size of your bank account. Various studies show that most people feel most satisfied making about $75K+ worldwide. However, happiness is influenced by multiple factors beyond income. Strong relationships, meaningful work, good health, and personal growth all contribute to overall well-being. The “ideal” income for happiness may increase over time. Inflation and rising costs of living can shift the threshold for financial satisfaction.

Myth #2: You need a high income to build wealth

Truth: Building wealth is more about smart habits and financial discipline than having a high income. Living below your means, saving consistently, and investing wisely can help anyone build wealth over time, regardless of their income level.

Myth #3: All debt is bad

Truth: Not all debt is created equal. Good debt, like a mortgage or student loan, can be an investment in your future and help you achieve financial goals. Bad debt, like high-interest credit card debt, can drag you down and hinder your progress.

Myth #4: Investing is risky and only for the rich

Truth: Investing can be intimidating, but it doesn’t have to be risky or exclusive. There are many low-risk investment options available, and starting small and diversifying your portfolio can help mitigate risk. Anyone can benefit from the power of compound interest and grow their wealth through investing.

Myth #5: You should wait until retirement to save for retirement

Truth: The earlier you start saving for retirement, the better. Time is your best friend when it comes to compounding interest, so starting early even with small contributions can make a big difference in the long run. You may not be physically able to work in your later years and may need retirement income for 30+ years given overall life expectancies and your family history.

Myth #6: Budgeting is boring and restrictive

Truth: Budgeting can actually be empowering and freeing. It gives you control over your finances and allows you to make conscious choices about where your money goes. There are many budgeting methods available to find one that fits your lifestyle and preferences.

Myth #7: Talking about money is taboo

Truth: Open communication about finances is crucial for healthy relationships and financial well-being. Talking openly and honestly about money with partners, family, and friends can help you make informed decisions and support each other in your financial goals.

Myth #8: You need a perfect credit score.

Truth: While a good score is beneficial, it’s not everything. Building and maintaining good credit habits is more important than reaching a perfect score. Strong but not perfect scores can help you obtain more credit at lower interest rates.

Myth #9: Saving for a house is always the best investment.

Truth: Consider your needs, lifestyle preferences and goals. While homeownership can be rewarding, it also involves significant expenses and risks. Analyze other investment options as well before deciding to commit to a home.

Myth #10: You can always find “get rich quick” schemes.

Truth: Sustainable wealth building takes time and effort. Be wary of quick-fix solutions promising instant riches. Focus on consistent, responsible financial habits over the long term. Consistent habits over time have a large pay off.

By debunking these myths and understanding the truth about money, you can make informed decisions and take charge of your financial future. Remember, financial well-being is a journey, not a destination. It’s about building healthy habits, making smart choices, and continuously learning and adapting.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Would you like to meet one-on-one with one of our Financial Counselors to talk specifically about your budget? Check out our Financial Coaching Session https://parachutecreditcounseling.org/services/credit-budget-counseling/#financial-coaching or call 716-712-2060.

Budget, Credit

Financial Topics for Teens

If you are a teen or (have a teenager in your life), the following tips will be useful in establishing sound money practices early in life leading to stronger financial stability over time.

Bank accounts and debit cards: Teens should learn how to open a bank account, deposit and withdraw money, and use a debit card. They should also read about and understand the fees associated with these services.

Budgeting: Teens can start learning to budget by tracking their income and expenses. This will help them see where their money is going and make sure they’re not spending more than they earn.

Saving: Teens should start saving early, even if it’s just a small amount each month. The more time saving, the more compounding interest has to work. There are many ways to save, such as putting money in a savings account, buying a savings bond, or investing in a mutual fund.

Credit: Teens should learn about establishing credit and how to use it responsibly. This includes understanding how to build a good credit score and how to avoid debt problems.

College planning: If they plan to pursue higher education, teens need to start thinking about college early, including how they will pay for it. They should research different financial aid options and start saving for college as soon as possible.

Getting a job: Teens can start earning money by getting a part-time job. This is a great way to learn about responsibility, money management and feel a sense of accomplishment.

Starting a business: Some teens are interested in starting their own businesses. This can be a great way to learn about entrepreneurship and make money. However, it’s important to do your research and create a business plan before getting started.

Investing: Teens can start investing early, even with a small amount of money. There are many different investment options available, such as stocks, bonds, and mutual funds. It’s important to talk to a financial advisor before investing to make sure you understand the risks involved.

There are many resources available to help teens learn about financial topics. They can talk to their parents, teachers, or a financial advisor. They can also find information online and in books and magazines.

Here are some additional tips for teens:

Talk to your parents. Your parents may be a great resource for learning about financial topics. They can teach you about their own experiences and help you make sound financial decisions.

Do your research. There is a lot of information available about financial topics. Take some time to read books, articles, listen to podcasts and search websites to learn as much as you can.

Start early. The earlier you start learning about financial topics, the better prepared you will be for the future.

Don’t be afraid to ask for help. If you have any questions about financial topics, don’t be afraid to ask your parents, other family members, teachers, or a financial advisor for help.

By learning about financial topics and making smart financial decisions early on, teens can set themselves up for financial success in the future.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Credit, Debt, Parachute Services

Using Credit Wisely

Credit cards can be a powerful financial tool when used responsibly. They offer a convenient way to make purchases, build credit history, and earn rewards. However, they can also lead to significant debt problems if not used carefully. Here are some credit card essentials to help you use your cards wisely:

Understand your credit limit: Your credit limit is the maximum amount you can borrow on your credit card. It’s important to stay within your credit limit to avoid paying high-interest fees. In fact, creditors want you to use no more than 30% of your available credit. This is known as credit utilization. Doing this helps you raise your credit score, which helps you get better terms (e.g., lower interest rates) for future borrowing.

Make timely payments: Pay your credit card bill on time every month to avoid late fees and damage to your credit score. Aim to pay off your balance in full to avoid accruing interest charges whenever possible.

Pay more than the minimum payment: If you can’t pay off your balance in full each month, be sure to make more than the minimum payment. Double it, if possible. This will help you pay off your debt faster and save you money on interest.

Beware of fees: Credit cards often have fees associated with them, such as annual fees, late fees, and foreign transaction fees. Read your credit card agreement carefully to understand all the fees involved before applying for it.

Utilize rewards programs: Many credit cards offer rewards programs, such as cash back, points, or travel miles. Choose a card that offers rewards that align with your spending habits. Some people focus more on the rewards over their responsible usage of their cards. Be careful to not get too preoccupied with the rewards over your reasonable usage of your card.

Secure your card: Protect your credit card from theft or fraud by keeping your PIN and CVV number confidential. Shred old paper statements and keep your card in a secure place when not in use.

Monitor your credit report: Regularly review your credit report for any errors or fraudulent activity. Dispute any inaccuracies promptly. Remember, the only government authorized website is annualcreditreport.com. You can now check your credit reports weekly for free.

Budget your spending: Create a realistic budget to track your income and expenses. Use your credit card only for purchases you can afford to pay off in full each month. You don’t want to treat credit like it is an added source of income.

Avoid overspending: Don’t use your credit card to finance wants instead of needs. Stick to your budget and avoid impulse purchases that you cannot afford. Walk or look away from the item you want for at least 15 minutes and think about longer term, bigger financial goals you may have like a vacation, car or a house.

Consider a secured credit card: If you have a limited credit history or poor credit, consider a secured credit card. You’ll deposit a security deposit, which acts as your credit limit. Use the card responsibly to build your credit score.

Seek financial advice: If you have questions about credit cards or managing your finances, consult a credit counseling agency like Parachute for personalized guidance.

Remember, credit cards are a tool, not a source of income. Use them responsibly to maintain your financial well-being over time and to gain long term financial stability and avoid debt traps.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Budget, Parachute Services

Money and Relationships

Money can be a major source of stress and conflict in any relationship and often is quoted as the top reason for break-ups and divorces. Therefore, it is especially important to manage it carefully in romantic partnerships. Here are a few tips for managing money and relationships.

Communicate openly and honestly about your finances. This includes sharing your income, debts, and spending habits. It’s important to be upfront with each other about your spending habits and financial situation so that you can make decisions together and find ways to strengthen your financial future as a team. It can be uncomfortable and even embarrassing to share some aspects of our financial lives, but it will ultimately help empower you both to establish good money habits.

Create a monthly spending plan (budget) and stick to it. This will help you track your income and expenses so that you can make sure you’re living within your means. There are many different budgeting methods available, so find one that works for you and your partner. You could even try a blend of methods to help you reach those goals! Sound spending plans are the foundation for establishing financial stability and wealth building.

Set financial goals together as a united front. Do you want to buy a house? Save for retirement? Pay off debt? Once you know what your goals are, you can start working towards them together and potentially reach them faster. Place the goals in writing somewhere you will both see them regularly (e.g., on a mirror or refrigerator, on your cell phones).

Don’t make major financial decisions without consulting your partner. This includes things like buying a car, taking out a loan, or making a large purchase. Talking about these decisions before you make them can help to avoid conflict later. Think about if your partner made a major financial decision without consulting you and how you might feel. Remember the team approach.

Be respectful of each other’s spending habits. Even if you don’t agree with how your partner spends their money, it’s important to be respectful of their choices. If you’re concerned about their spending, talk to them about it in a calm and constructive way that stays centered on your shared goals.

Couple discussing money

Don’t let money problems come between you. If you’re having financial problems, it’s important to work together to solve them. Don’t blame each other or let your problems fester over time. Take action to address the issue before it gets bigger.

Seek professional help if you need it. If you’re struggling to manage your finances or communicate about money with your partner, a financial advisor, financial social worker, or a therapist can help.

Money can be a difficult and emotional topic to talk about as people most often feel a range of emotions such as fear and shame, but it’s important to have open and honest communication about your finances in order to maintain a healthy relationship. By following these tips, you can help to avoid conflict and build a strong financial foundation for your future together and also serve as an effective financial role model for your children.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Credit, Debt, Parachute Services

Ways to Reduce Debt

Reducing debt can be a challenging task, but it is definitely achievable with the right mindset and strategies. Here are some effective ways to reduce debt:

Create a budget and track your spending: The first step to reducing debt is to understand your spending habits. Create a detailed budget that includes all of your income and expenses. Track your spending for a month or two to see where your money is going. This will help you identify areas where you have budget leaks and can cut back, if even on a temporary basis.

Pay more than the minimum payment: Paying more than the minimum payment on your credit cards can significantly reduce the amount of interest you pay over time. Even an extra $25 or $50 per month consistently can make a big difference, especially on high interest credit cards.

Prioritize high-interest debts: When paying off multiple debts, it’s important to prioritize those with the highest interest rates. This is because you’ll pay more in interest on these debts over time. There are two main strategies for paying off high-interest debt: the debt avalanche method and the debt snowball method. The debt avalanche method involves concentrating on paying off your highest-interest debt first, followed by the debt with the next highest interest rate and so on. This method may help you reduce the high interest charges. The debt snowball method is where you gradually pay off your debts, smallest to largest and gain momentum while doing so. As one debt is paid off, you add those funds to your payment of the next highest debt and so on. It snowballs!

Increase your income: One of the most effective ways to reduce debt is to increase your income. This could involve getting a second job, taking on freelance work, or starting a side hustle.

Reduce your expenses: There are many ways to reduce your expenses, such as cooking at home instead of eating out, canceling unnecessary or unused subscriptions, finding cheaper ways for entertainment, and reducing habitual habits like coffee/snacks and personal care practices like getting your nails done. Even changing these habits in the short term (6-9 months) can help.

Avoid taking on new debt: The best way to reduce debt is to avoid taking on new debt in the first place. This means using your credit cards responsibly and only making purchases that you can afford to pay off in full each month.

Negotiate with your creditors: If you’re having trouble making your debt payments, don’t be afraid to contact your creditors and try to negotiate a lower interest rate or monthly payment.

Consolidate your debt: If you have multiple debts with different interest rates, you may be able to consolidate them into a single loan with a lower interest rate. This can simplify your debt repayment and save you money on interest.

Seek professional help: If you’re struggling to manage your debt on your own, consider seeking professional help from a credit counselor at an agency like Parachute. We can help you create a debt management plan and provide you with additional guidance on how to reduce your debt. A debt management plan is a structured payment plan to repay your debts in full in five years or less, by lowering interest rates, minimum payments and stopping fees.

Stay motivated: Reducing debt takes time and effort, so it’s important to stay motivated. Set realistic goals and celebrate your progress along the way. Keep your eyes on your future goals and think about how good you will feel when your debt is reduced or gone!

Remember, reducing debt is definitely a journey, not a race. Be patient with yourself and the process and work to keep your focus on your end goal.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Budget, Parachute Services

Post-Holiday Budget Hacks for the New Year; It’s Never Too Early!

Post-holiday budget planning is the process of getting your finances back on track after the holiday season. This can be a challenge, especially if you overspent. But, by taking some simple steps, you can get back on the right track and avoid financial stress in the new year. It can take some time to recover financially after the holidays, but consistency can make a huge difference over time. Be patient with the process and regroup for next year!

Additionally, reading this BEFORE the New Year of 2024 rings in can also be super helpful for this year’s holiday season.

Here are some tips for post-holiday budgeting:

Review your spending. The first step is to take a look at your spending and see where your money went during the holidays. This will help you identify areas where you can cut back in the future. You can use a spreadsheet or budgeting app to track your spending.

Pay down debt. If you overspent during the holidays, you may have some credit card debt to pay off. Make a plan to pay down this debt as quickly as possible to avoid high interest charges. Pay more than the minimum payments required, if at all possible. If possible, consider using all or part of any tax returns to pay down this debt.

Revise your budget. Once you have a good understanding of your spending and debt, it’s time to revise your budget. This may involve cutting back on unnecessary expenses or increasing your income, even if on a temporary basis. You may be back on track after a few months!

Set financial goals. Having financial goals will help you stay motivated. Some common financial goals include saving for a down payment on a house, retirement, or a child’s education. Really be specific with your financial goals to help them materialize. Write out those goals and look at them frequently.

Create a holiday spending plan for next year. Start thinking about your holiday spending for next year now. This will help you avoid overspending again.

Shop around for the best deals throughout the year. Compare prices at different stores and online before you buy anything. Consider dollar, thrift, and discount/liquidation stores.

Take advantage of sales and coupons. There are always sales, coupons and promo codes available, so be sure to check for them before you buy anything.

Take advantage of post-holiday sales. Many retailers offer discounts on leftover holiday merchandise after the holidays. This is a great time to stock up on items you need or want at a reduced price. Be sure to store them in a place you’ll remember!

Return unwanted gifts. If you received gifts that you don’t want or need, return them for a refund or exchange. This will help you get some your money back and/or buy things you actually need.

Regift items. You can regift items that you do not want or need. Keeping inventory of what gift you received from what person can help this be a successful plan from year to year.

Sell unwanted gifts or belongings. If you have unwanted gifts or belongings that you can’t return, consider selling them online or at a garage sale. This is a great way to declutter your home and make some extra money.

Cancel unused subscriptions. Take some time to review your subscriptions and cancel any that you’re no longer using. Be honest with yourself about what you are likely to use in the future. This could include magazine subscriptions, streaming services, and gym memberships.

Here are some additional tips:

Automate your finances. Set up automatic transfers from your checking account to your savings account each month. This will help you reach your financial goals without even having to think about it. Start with a small amount, if needed, and increase it as is feasible for you.

Use cash instead of credit cards. When you use cash, you’re much more likely to be mindful of your spending. People tend to spend less when using cash.

Review your insurance policies. At the beginning of each year, make sure you’re getting the best possible rates on your insurance policies. You may be able to save money by bundling your policies or shopping around for new providers.

Getting back on track financially after the holidays can be challenging, but it’s important to remember that you’re not alone. There are many resources available to help you, and with a little effort, you can get back on track!

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/