Credit Archives - Page 2 of 5

Debt and Mental Health: A Complex Relationship

The connection between debt and mental health is a complex and often overlooked issue. It has only more recently gained attention. Financial stress can have a significant impact on emotional well-being, leading to a range of mental health problems.

Common Mental Health Issues Linked to Debt:

Anxiety: Constant worry about bills, debt collectors, and financial instability can lead to generalized anxiety disorder.
Depression: The overwhelming burden of debt can contribute to feelings of hopelessness, sadness, and low self-esteem.
Stress: Financial stress can trigger physical symptoms like headaches, fatigue, and digestive problems, as well as emotional distress.
Insomnia: Difficulty sleeping due to financial worries can further exacerbate mental health issues.
Substance abuse: As a coping mechanism, some individuals may turn to alcohol or drugs to deal with financial anxiety as opposed to more positive coping techniques.

Factors Contributing to the Link Between Debt and Mental Health:

Stigma: The fear of judgment or shame can prevent individuals from seeking help for both their financial and mental health problems. There is sometimes also denial of the situation leading people to avoid seeking the assistance they need.
Lack of Support: Social isolation and a lack of support systems can make it difficult to cope with financial stress.
Overwhelming Debt: The sheer amount of debt can feel insurmountable, leading to feelings of hopelessness and despair.
Predatory lending: High-interest rates and predatory lending practices can create a cycle of debt that is difficult to break out of. Be careful before you take out any additional financial obligations as a way to get out of debt. Talk to non-profit counselors such as those at Parachute first.

Strategies for Managing Debt and Mental Health:

Seek Professional Help: A therapist can provide support, coping strategies, and guidance for managing both financial and emotional challenges.
Financial counselors: Financial counselors can help you develop a plan to manage your debt and improve your financial situation. You can find them at Parachute!
Create a Budget: Developing a budget can help you gain control over your finances and reduce stress. It can help empower you and identify a plan that will help you gain control of your financial situation.
Negotiate with Creditors: Reach out directly to creditors to discuss payment plans or debt reduction options.
Practice Self-Care: Engage in activities that promote relaxation and well-being, such as positive self-talk, exercise, meditation, or spending time with loved ones.
Join a Support Group: Connecting with others who are facing similar challenges can provide comfort and support.

If you’re struggling with debt and mental health, it’s important to know that you’re not alone especially in these days of high inflation. Seeking help from professionals can make a significant difference in your overall well-being.

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 debt? Check out our Financial Counseling Session https://parachutecreditcounseling.org/services/debt-management/#financial-counseling or call 716-712-2060.

Budget, Credit, Debt, Parachute Services

10 Money Moves for a Brighter Financial Future

Ready to take flight? We’ve just launched a new blog post! We hope it will help you soar to new heights. Check it out and share the adventure with your friends!

Track Your Spending

We underestimate what we spend and we often have multiple (mostly small) budget leaks that can add up to BIG losses. Benjamin Franklin said, “Beware of small expenses. A small leak can sink a great ship”. Think of a small leak in a pipe under a sink. While it is a small, maybe even an infrequent leak or drip, over time, the bucket below the sink can be full of water just a few days later! The same loss can happen to our hard-earned money if we are not mindful of how we are spending it.

Review your spending plan (i.e., budget) regularly

Your budget or spending plan is simply a plan of what money is coming in every month and what money is going out. You want to pre-plan so you know if all your expenses are covered or if you need to concerned about a deficit. Your spending plan or monthly budget can actually be perceived as a wealth building plan if you prioritize regular savings, even small amounts that can help you avoid credit card debt and high interest charges. Your life changes over time and your budget needs to reflect these changes such as a job or income change, a new baby, a mortgage or planning for a vacation, etc. By regularly paying attention to your budget, you can gain greater control over your money and direct the funds where you want them to go – including your financial goals such as a new car, a new place to live, etc.

Live Below Your Means

If you spend less than you make, you will always have some money! Of course, there are times you may need to borrow money and incur debt, but most debt should be based off of our needs and not wants and you don’t want to confuse the two. High interest credit card debt can quickly ramp up leaving you on a debt treadmill where you may be struggling just to make minimum payments. In the meantime, savings and financial goals suffer like buying a home or saving for an earlier retirement.

Automate your savings/investments

If you “set it and forget it” savings and investing becomes a very easy process and funds will grow over time with interest earnings. Don’t withdraw your funds unless there is a true emergency. Shop FDIC insured banks or NCUA credit unions and compare interest rates for the best returns on your money. Educate yourself on investing and understand the risk that can be involved or consult a financial expert who can help you make decisions for your level of risk tolerance. Investing can be both a very safe and also a very risky proposition depends on the decisions you make.

Have more than one income stream

By having more than one income stream, you help protect yourself against any future income losses. If you would ever lose a job, there would still be some funds coming in. Extra funds can always be used to pay down debt, build savings and provide a financial cushion for unexpected events (e.g., major car repair, home repair, illness) as life happens to everyone! Having a cushion of savings and some financial breathing room helps emergencies becoming inconveniences and not the other way around!

Hold a long-term view/save or invest for the long term

Saving and investing for the future is just that and money takes time to grow through compounding interest (interest earned that earns more money on itself). Warren Buffet describes compounding interest as “a snowball rolling down a hill” and Einstein described it as “The 8^th wonder of the world.” Small amounts of regularly saved or invested money can grow to BIG savings and investment over time. It requires regular contributions, time, attention and patience. A perfect example of this is how many people save for retirement so they can enjoy many decades without working.

Avoid excessive and bad debt

Bad debt is debt that has high interest attached sometimes making it impossible to pay it down, especially if it is credit card debt and you keep using the cards. Using credit cards to supplement your income or lifestyle can be a dangerous practice resulting in numerous decades of debt repayment – a debt treadmill where thousands of dollars are being paid out in interest. Bad debt is often unsecured, meaning it does not have any collateral behind it like a house, which can appreciate in value over time.

Learn about money

Financial experts believe that success with money is 80% determined by our decisions and behaviors around our money. The more we learn about how money works and investigate why we make the decisions we make, the more successful we can be! There are lots of easy ways to learn about money! There are articles on online, websites, books, podcasts, documentaries on Netflix and more. There are also many people who work in the financial services industry like the financial counselors at Parachute who can provide trusted advice or point you in the right direction!

Prioritize saving over spending

The key is to try to make regular savings a priority over spending, especially for those wants or luxury items as opposed our basic needs such as food, clothing, shelter, medical and transportation. Approaching your financial health from a savings mindset can help assure there are funds available for you for emergencies (thereby avoiding debt or as much debt) but also for future choices, opportunities and goals. Having savings helps provide financial stability over time. Make saving a habit early on for big long term pay offs!

Ask for Assistance

As said earlier, there are lots of ways to learn about money and get advice from others who work professionally in related fields. There are many books, podcasts, online resources and guides to help! You don’t need to go it alone as mistakes can be costly.

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.

Credit, Debt, Parachute Services

Credit and Your Financial Goals: A Powerful Partnership

Credit can be a double-edged sword. While credit offers the flexibility to make purchases and investments, it can also lead to long term debt and financial hardship if not managed responsibly. Understanding how credit can impact your financial goals is crucial for making informed decisions and achieving long-term financial success.

How Credit Can Help Achieve Your Financial Goals

Homeownership: A good credit score is often a prerequisite for obtaining a mortgage with favorable terms. Favorable terms make it more likely to be able to repay the mortgage loan and build equity in a home.
Vehicle Purchase: A strong credit history can qualify you for lower interest rates on car loans.
Education: Credit cards can be used to help cover educational expenses, but it’s essential to manage them wisely to avoid accumulating debt. You first want to research and take advantage of low interest loans (e.g., federal educational loans) before considering using credit. Credit may be an option for supplemental educational expenses like books or supplies.
Business Ventures: A good credit score can improve your chances of securing loans or lines of credit for business ventures.
Emergency Funds: Credit cards can serve as a safety net during unexpected financial emergencies, but it’s important to pay off the balance promptly to avoid interest charges. Interest charges are now averaging about 27%, so the balance owed can accumulate very quickly if you do not or cannot pay off the balance monthly.

The Risks of Mismanaging Credit

Debt Accumulation: Overspending on credit cards can lead to significant debt, which can be difficult to manage and can negatively impact your financial well-being.
High-Interest Rates: Credit cards often have high-interest rates, which can make it challenging to pay off balances and can increase the overall cost of purchases.
Damaged Credit Score: Late payments, missed payments, or exceeding credit limits can damage your credit score, making it more difficult to obtain loans or credit in the future.

Tips for Using Credit Wisely

Create a Budget: Develop a budget to track your income and expenses and avoid overspending. Think of it as exercising power over your money and as a spending plan instead of something restrictive.
Pay Bills on Time: Make sure to pay your bills on time to avoid late fees and negative impacts on your credit score.
Limit Debt: Try to keep your credit card balances low and avoid using credit cards for unnecessary purchases. Be honest about your wants versus needs.
Monitor Your Credit: Regularly check your credit report for errors and take steps to correct any inaccuracies. Go to annualcreditreport.com as often as weekly to look for errors or discrepancies.
Consider Debt Consolidation: If you’re struggling with high-interest debt, explore options like debt consolidation to potentially lower your interest rates and make payments more manageable. Talk to non-profit agencies like Parachute for other debt management solutions.

By understanding the potential benefits and risks of credit, and by taking steps to use it responsibly, you can leverage it as a powerful tool to achieve your financial goals!

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 debt? Call us at 716-712-2060!

Credit, Debt

How Credit Card Interest Works: The Cost of Convenience

Understanding the Basics

Credit refers to the ability to access and/or purchase goods or services with the understanding that payment will be made later. Creditors grant credit based on their confidence that we can be trusted to pay back what we borrowed, along with any finance charges (i.e., interest charges) that may apply. While credit can come in many forms, the most common are credit cards (e.g., major cards and department store cards) and home, car and student loans.

Credit card interest, known as the Annual Percentage Rate (APR), is the cost of borrowing money using your credit card.

Here’s a simple summary of key interest charges:

No Interest if Paid in Full: If you pay your entire credit card balance by the due date each month, you won’t be charged any interest.
Interest Accrues on Unpaid Balance: If you carry a balance from one month to the next, interest starts accruing on the unpaid amount.
Daily Interest Calculation: Interest is typically calculated on a daily basis. Your APR is divided by 365 to determine the daily interest rate. This daily interest is added to your balance each day.
Compounding Interest: The interest charged each day becomes part of your new balance, and interest is then calculated on the increased balance the next day. This is how credit card debt can grow rapidly!
Minimum Payment: Paying only the minimum payment each month means you’ll carry a balance, and interest will continue to accumulate.

How to Minimize Interest Charges:

Pay Your Balance in Full: This is the most effective way to avoid interest altogether.
Avoid Cash Advances: These often come with high fees and interest rates.
Transfer Balances Wisely: Consider balance transfers only if you can pay off the balance before the promotional rate expires. (See below).

Remember: Credit card interest can very quickly add up! It’s essential to use credit responsibly and make timely payments to avoid excessive debt.

Key Terms to Know:

APR (Annual Percentage Rate): The yearly interest rate charged on your credit card balance.
Grace Period: The time between purchase and the billing cycle when you can avoid interest by paying off the full balance on your card(s).
Balance Transfer: Moving debt from one credit card to another, often with a promotional interest rate.
Cash Advance: Borrowing cash against your credit limit, usually with higher fees and interest rates.

You can learn more information at Credit cards key terms | Consumer Financial Protection Bureau (consumerfinance.gov).

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

Credit Clarity for Couples

Many people have misconceptions about how getting married affects your credit. Let’s clear up some common myths!

Myth 1: Your Credit Scores Merge When You Marry

Fact: Your credit history remains separate from your spouse’s, even after marriage. Your credit score is based on your own individual financial history.

Myth 2: All Your Accounts Become Joint After Marriage

Fact: Accounts you had before marriage remain separate unless you specifically decide to make them joint. Joint accounts will appear on both credit reports.

Myth 3: One Partner’s Bad Credit Affects the Other’s

Fact: Your spouse’s credit history doesn’t directly impact yours unless you have joint accounts or co-sign on loans together.

Myth 4: Marriage Automatically Improves Your Credit

Fact: Getting married doesn’t magically boost your credit score. Your credit is based on your individual financial behavior, not your marital status.

Myth 5: You Must Have Joint Finances to Buy a House

Fact: While joint finances can make buying a house easier, it’s not mandatory. You can still qualify for a mortgage with separate finances if your combined income meets the lender’s requirements.

Myth 6: Changing Your Name Changes Your Credit

Fact: Changing your name after marriage won’t affect your credit history. Credit bureaus have systems to track name changes and maintain your credit information.

Important Considerations:

Joint Accounts: Opening joint accounts can benefit both partners, but it also means you’re responsible for each other’s debts.
Authorized Users: Adding a spouse as an authorized user on your credit card can help build their credit, but it doesn’t affect your score. They don’t necessarily need to use the credit card and they are also not legally responsible for the charges.
Separate Finances: Maintaining separate finances can protect you in case of divorce or financial hardship.

By understanding these myths and facts, you can make informed decisions about your finances and credit as a couple.

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 credit? Check out our Credit Report Review Session at https://parachutecreditcounseling.org/services/credit-budget-counseling/#credit-report-review or call 716-712-2060.

Budget, Credit, Debt, Parachute Services

Top 20 Inspirational Quotes That Relate to Money

We all need a little inspiration sometimes! Here are some great quotes to give inspiration around your finances:

“The only reason for time is so we can experience change. The only reason for money is so we can experience life.” – Tony Robbins
“Investing in yourself is the best investment you can ever make. It will pay the best interest.” – Warren Buffett
Financial freedom is the ability to live the life you want, when you want, on your own terms.” – Robert Kiyosaki
“If you’re saving, you’re succeeding.” – Steve Burkholder
“The key to making money is to save money.” – Horace Greeley
“Owning a home is a keystone of wealth… both financial and emotional.” – Suze Orman
“The only time to buy something is when you can afford it.” – Thomas Jefferson
“Financial peace isn’t the absence of money; it’s the absence of worry.” – Dave Ramsey
“Budgeting is telling your money where to go, instead of wondering where it went.” – John Barnes
“The more you learn, the more you earn.” – W. Clement Stone
“Don’t tell me what your priorities are. Show me where you spend your money, and I’ll tell you what they are.” – James W. Frick
“If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffett
“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn
“Start where you are. Use what you have. Do what you can.” – Arthur Ashe
“Don’t be afraid to give up the good to go for the great.” – John D. Rockefeller
“The journey of a thousand miles begins with a single step.” – Lao Tzu
“The best way to predict the future is to create it.” – Peter Drucker
“You miss 100% of the shots you don’t take.” – Wayne Gretzky
“The mind is everything. What you think you become.” – Buddha
“Believe you can and you’re halfway there.” – Theodore Roosevelt

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.