Category: Debt

Budget, Debt, Parachute Services, Relief Programs

Financial Parachute: Essential Money Tips for the Government Shutdown

The news of a government shutdown can send a wave of panic through federal employees and contractors. The uncertainty of a delayed or missed paycheck is stressful, but you are not without options. Having a financial “parachute” plan is the single most important step you can take right now to weather this disruption.

Here is your essential guide to stabilizing your finances and finding immediate relief.

1. Act Fast: Create a Bare-Bones Budget

The first, non-negotiable step is to get a crystal-clear picture of your money. You need a shutdown budget.

Triage Your Spending

Immediately identify and prioritize your “Four Walls” (essential expenses): housing (rent/mortgage), food, utilities, and essential transportation.

Slash Discretionary Spending

Temporarily pause or cut non-essentials. This may include streaming subscriptions, dining out, entertainment, and extra payments toward debt. Every dollar you save now is a dollar you won’t have to borrow later.

Evaluate Your Emergency Fund

Know the exact number of weeks your savings can cover your essential bills. This number provides the clarity you need to move forward.

2. Contact is Key: Talk to Lenders and Creditors

Do not wait until a payment is past due. Financial institutions and service providers are well aware of the situation and often have established assistance programs for affected federal workers.

Financial Institutions

Immediately call your bank or credit union. Many, particularly those that serve the military and federal community (like Navy Federal, USAA, and federal credit unions), offer special support, including:

  • Interest-Free Paycheck Advance Loans.
  • Temporary Fee Waivers (e.g., overdraft fees).
  • No-Penalty CD Withdrawals.

Housing & Loans

Contact your mortgage lender or landlord. Ask about hardship programs, payment forbearance, or temporary payment plans. Do the same for your auto and student loans.

Utilities

Many electric, gas, and water companies offer flexible payment arrangements for customers facing a temporary loss of income.

3. Income Bridges: Explore All Safety Net Resources

While you wait for Congress to reach a deal, look into every available source of financial assistance for federal employees.

Unemployment Insurance (UCFE)

Furloughed federal employees are generally eligible to file for Unemployment Compensation for Federal Employees. Though back pay is usually guaranteed (meaning you’d have to repay the benefits later), filing now can provide crucial income when you need it most.

Non-Profit Assistance

The Federal Employee Education & Assistance Fund (FEEA) often activates emergency grant and loan programs for employees impacted by a shutdown. Search for local community support by dialing 2-1-1 or visiting 211.org.

Temporary Work

Consider short-term, flexible side jobs, often referred to as “gig work,” to generate income and bridge the gap until you receive your back pay.

4. The Last Resort Rule: Protect Your Future

Be extremely cautious when considering solutions that compromise your long-term financial health.

Avoid High-Interest Debt

Stay far away from payday loans or car title loans. The predatory fees will only deepen your financial hole.

Think Twice About TSP/401(k)

Tapping into your Thrift Savings Plan (TSP) or other retirement accounts should only happen as an absolute last resort. Loans or hardship withdrawals can trigger penalties and permanently damage your retirement savings growth.

Your Trusted Guide: How Parachute Credit Counseling Can Help

Facing an income disruption makes you feel like you’re in a financial freefall. That’s where non-profit credit counseling steps in to be your guide.

Certified financial counselors at an organization like Parachute Credit Counseling can provide a non-judgmental, objective view of your situation. They can specifically help you:

Refine Your Shutdown Budget

They’ll work with you to master your cash flow and ensure every dollar goes toward essentials.

Navigate Debt

If you have credit card or other unsecured debt, they can provide debt management solutions and even intercede on your behalf.

Create a Repayment Plan

They’ll help structure a realistic plan for managing bills now and repaying any short-term loans once your back pay arrives, helping you land debt-free.

Don’t wait until the stress becomes overwhelming—reach out for confidential support now at 1-800-926-9685.

By taking these steps proactively, you can deploy a robust financial parachute that protects you and your family until your regular paychecks resume. You have options—use them!

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan:

GET STARTED HERE

Budget, Credit, Debt, Parachute Services

The 5-Step Formula to Financial Freedom

The 5-Step Formula to Financial Freedom

Feeling overwhelmed by debt? Struggling to save money? Many people find themselves trapped in a cycle of financial stress. With the right approach, you can take control of your finances and build a brighter future. This blog post will guide you through five essential steps to help you overcome financial challenges and help you achieve your goals. Here are some effective strategies to help you accomplish them!

Budgeting and Saving

  • Create a Realistic Budget: Track your income and expenses to identify areas where you can cut back.
  • Emergency Fund: Aim to save 3-6 months’ worth of living expenses to cover unexpected costs.
  • Automate Savings: Set up automatic transfers from your checking to savings account.
  • High-Yield Savings Account: Maximize your savings with a high-interest rate. Research daily rates at https://www.bankrate.com/.

Spend Mindfully

  • Track Your Spending: Monitor your expenses to identify areas of overspending.
  • Cut Unnecessary Expenses: Reduce costs on subscriptions, dining out, and entertainment. Most people gain the most traction by watching what they spend on food, groceries and drinking/dining out. 
  • Shop Smart: Use coupons, compare prices, buy generic brands, shop discount grocery stores and dollar stores.
  • Cook at Home: Prepare meals at home frequently to save money on dining out.
  • Explore Money Mindfulness: https://www.forbes.com/sites/financialfinesse/2024/05/07/financial-mindfulness-the-key-to-enhancing-your-financial-life/.

Reduce Debt

  • Prioritize High-Interest Debt: Focus on paying off credit cards and other high-interest loans first.
  • Debt Avalanche Method: Pay off the debt with the highest interest rate first.
  • Debt Snowball Method: Pay off the smallest debt first to gain momentum.
  • Consolidate Debt: Combine multiple debts into a single loan with a lower interest rate.
  • Look into the various debt repayment options: Consult not-for-profit credit counseling agencies like Parachute to explore the best option for you!  https://parachutecreditcounseling.org/services/debt-management/

Increase Income

  • Side Hustle: Explore opportunities like freelancing, tutoring, or driving. Turn a hobby into an opportunity!
  • Upskill or Reskill: Invest in your education to increase your earning potential.
  • Negotiate a Raise: Advocate for a higher salary or better benefits.
  • Passive Income: Generate income through rental properties (e.g., apartment building, a spare room, storage space), dividends, royalties, etc. 

Invest

  • Start Early: The earlier you start, the more time your investments have to grow.
  • Diversify Your Portfolio: Spread your investments across various asset classes to reduce risk.
  • Dollar-Cost Averaging: Invest a fixed amount regularly, regardless of market conditions.
  • Consider a Financial Advisor: Seek professional advice to tailor your investment strategy. Because there is a risk of losing money, you should thoroughly educate yourself or seek expert advice. 

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan:

GET STARTED HERE

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

Building Credit for a Brighter Financial Future

Building Credit for a Brighter Financial Future

Building good credit is a process that takes time as well as consistent and responsible financial habits. Here are some key strategies to help you establish a strong credit history:

1. Get a Credit Card:

  • Secured Credit Card: This is a great option for those with no or a limited credit history. You’ll need to deposit a security amount, which acts as your credit limit. Responsible use can help you build credit over time. You can consult https://www.nerdwallet.com/best/credit-cards/secured?msockid=27ec8dd2cb9164941d859e36ca39659e for options.
  • Unsecured Credit Card: Once you’ve established a good credit history, you may qualify for an unsecured credit card, which doesn’t require a security deposit.

2. Make Timely Payments:

  • Payment History Matters: Paying your bills on time is the most crucial factor in building credit as it accounts for 35% of your credit score. Late payments can significantly damage your credit score, so be sure to be on time!
  • Set Reminders: Use digital tools or calendar reminders to stay on top of due dates.

3. Keep a Low Credit Utilization Ratio:

  • Credit Utilization: This is the amount of credit you use compared to your total available credit limit.
  • Aim for 30% or Less: Ideally, you should keep your credit utilization below 30%. This means if your credit limit is $1,000, you should aim to use only $300 or less at any given time.

4. Limit New Credit Applications:

  • Hard Inquiries: Each time you apply for credit, a hard inquiry is made on your credit report, which can temporarily lower your score.
  • Apply Strategically: Only apply for credit when you truly need it. Try not to have more than 2-3 hard inquiries per year, if that.

5. Monitor Your Credit Report:

  • Free Reports: You can get a free credit report from https://www.annualcreditreport.com/index.action representing each of the three major credit bureaus (Experian, Equifax, and TransUnion) weekly for free.   
  • Check for Errors: Review your report for any inaccuracies and dispute them if necessary.

Additional Tips:

  • Pay More Than the Minimum: Paying more than the minimum payment can help reduce your balance faster and save on interest charges.
  • Consider a Credit Builder Loan: These loans can help you build credit by reporting your on-time payments to credit bureaus. Consult banks and credit unions to see if they offer this. 
  • Be Patient: Building good credit takes time. Don’t get discouraged if you don’t see results immediately. It can take several months to see the impact. 

By following these tips and practicing responsible financial habits, you can establish a strong credit history that will benefit you for years to come.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan:

GET STARTED HERE

Budget, Credit, Debt, Parachute Services

Living a Financially Peaceful Life

Creating and living a financially peaceful life is a journey, not a destination, and it’s very personal. It’s about aligning your financial habits and mindset with your values and goals so that money supports your well-being rather than causing stress. Here are steps to find this peace:

Deepen Your Understanding and Acceptance:

  • Revisit Your Money Story: Take some time to reflect on how your upbringing and past experiences have shaped your current beliefs and behaviors around money. Understanding the roots of your financial habits can help you approach them with more compassion and less judgment.
  • Practice Self-Compassion: Be kind to yourself regarding past financial mistakes. Everyone makes them. Focus on learning and moving forward rather than dwelling on regret.
  • Define “Enough”: In our consumer-driven society, it’s easy to fall into the trap of always wanting more. Take time to define what “enough” means for you. What level of financial security and lifestyle allows you to feel content, fulfilled and help you sleep at night?

Solidify Your Financial Foundation:

  • Craft a Conscious Spending Plan (Budget): Move beyond simply tracking expenses to creating a plan that reflects your priorities. Allocate your money intentionally towards your values and goals. Consider using different budgeting methods (e.g., 50/30/20 rule, zero-based budgeting) to find what makes sense to you.
  • Build a Robust Emergency Fund: Aim for 3-6 months’ worth of essential living expenses in an easily accessible, liquid account. Knowing you have this safety net can significantly reduce financial anxiety.
  • Prioritize Debt Reduction: Develop a clear strategy to tackle any outstanding debt. Whether it’s the snowball (start with small debts) or avalanche (highest interest rates) method, consistency is key. Celebrate milestones along the way to stay motivated.
  • Automate Savings and Investments: Set up automatic transfers to your savings and investment accounts on payday. This “pay yourself first” approach ensures consistent progress towards your future goals without requiring constant conscious effort.
  • Protect Your Assets: Ensure you have adequate insurance coverage (health, home/renters, auto, life if applicable) to safeguard yourself and your assets from unexpected events that could derail your financial peace.

Cultivate a Peaceful Financial Mindset:

  • Practice Gratitude for What You Have: Regularly acknowledge and appreciate the financial resources you currently possess. We can always be grateful for something.   
  • Embrace Mindful Consumption: Before making a purchase, pause and ask yourself: “Do I truly need this? Will it genuinely add value to my life? Am I buying this for emotional reasons?”
  • Detach Your Emotions from Market Fluctuations: If you’re investing, understand that market ups and downs are normal. Avoid making impulsive decisions based on short-term market noise. Focus on your long-term investment strategy especially if years away from retirement.
  • Limit Exposure to Financial “Noise”: Be mindful of how much financial news and social media you consume. Constant exposure to others’ seemingly “perfect” financial lives or fear-mongering headlines can increase anxiety.
  • Focus on Progress, Not Perfection: There will be months where you overspend or face unexpected expenses. Don’t let these setbacks derail your overall progress. Learn from them and adjust your plan as needed.
  • Practice Generosity: Giving to others can foster a sense of connection and purpose, which can contribute to overall well-being and a more peaceful relationship with money.

Nurture Your Financial Well-being:

  • Regularly Review and Adjust Your Plan: Your financial goals and circumstances will likely change over time. Schedule regular check-ins (e.g., monthly, quarterly, annually) to review your progress and make necessary adjustments to your spending plan and goals.
  • Seek Knowledge and Education: Continuously learn about personal finance. The more you understand, the more confident and in control you’ll feel. There are ample free resources. 
  • Communicate Openly About Money: If you share finances with a partner or family, have open and honest conversations about your goals, values, and concerns. This fosters trust and collaboration.
  • Know When to Seek Professional Help: Don’t hesitate to consult a fee-only financial advisor, therapist or counselor (e.g., Parachute) if you’re struggling with financial stress, anxiety, or making sound financial decisions.

Creating a financially peaceful life is a process that involves practical steps and a shift in mindset. By focusing on clarity, control, and aligning your finances with your values, you can move towards a future where money supports your overall well-being.

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.

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan:

GET STARTED HERE

Credit, Debt, Parachute Services

FREE July 29th Virtual Workshop- “How Credit Card Interest Works: The Cost of Convenience”

How Credit Card Interest Works: The Cost of Convenience

Learn the ins and outs of credit card interest to avoid high interest charges and debt balances. We will provide a simple summary of how interest works and how you can avoid the credit card “debt treadmill.”

Register at: https://www.bit.ly/parachute-card

Spread the word! Share this with your employees, friends, family, clients – anyone who could benefit from these valuable tips.

See you there!

P.S. Don’t miss out on this FREE opportunity to take charge of your finances.

All workshop attendees will be entered to win a free Parachute appointment!

If you’re dealing with high interest debt payments, see what you can save with Parachute’s Debt Management Plan by clicking Get Started Here:

GET STARTED HERE

Budget, Debt

Unlock Summer Fun Without Emptying Your Wallet

Summer can be a time for fun, relaxation, and making memories. However, it can also be an expensive time of year with vacations, activities, and increased utility bills. By being mindful of your spending and implementing some smart strategies, you can enjoy all that summer has to offer without draining your bank account.

Budgeting and Planning

  • Create a Summer Budget: Before summer begins, take a good look at your finances and determine how much you can realistically allocate for summer-related expenses. Factor in any vacations, day trips, entertainment, potential higher utility costs, and any summer camps or activities for children. Just a little bit of planning can go a long way!  
  • Track Your Spending: Once you have a budget, keep track of where your money is going. This will help you identify areas where you might be overspending and allow you to make any adjustments as needed. You can use budgeting apps, spreadsheets, or even a simple notebook.
  • Plan Affordable Getaways: Summer vacations are a highlight of the year for many, but they don’t have to be extravagant. Consider budget-friendly destinations, explore staycation options in your local area, or travel during off-peak times to save on flights and accommodations. Look for deals on hotels and activities well in advance.
  • Take Advantage of Free Activities: Many communities offer free events during the summer, such as outdoor concerts, movie nights in the park, and festivals. Check your local listings for free entertainment options. Parks and recreation centers often have low-cost or free programs and activities.  
  • Pack Lunches and Snacks: When heading out for day trips or activities, pack your own food and drinks instead of buying them along the way. This can save a significant amount of money, especially for families.

Saving on Everyday Expenses

  • Save on Cooling Costs: Warmer temperatures often lead to higher energy bills. Use strategies like closing curtains and blinds during the day to block sunlight, using fans to circulate air, and adjusting your thermostat a few degrees higher. Consider using smart thermostats to optimize energy usage. Regularly maintain your AC unit by cleaning or replacing filters. Try to run the AC in off hours (early in the morning or at night) to take advantage of cooler temps.  
  • Cook at Home More Often: Dining out can add up very quickly! Take advantage of seasonal produce and cook more meals at home. Plan your meals in advance and make a grocery list (and stick to it!) to avoid impulse purchases. Consider grilling outdoors to avoid heating up your house.  
  • Look for Sales and Discounts: Keep an eye out for summer sales events, such as holiday weekend discounts and back-to-school promotions, for potential savings on various items. Many museums and attractions offer discounts for local residents or through daily deal sites.  
  • Reduce Transportation Costs: When possible, walk, bike, or carpool instead of driving alone. This can save on gas and reduce wear and tear on your vehicle. Check if local public transportation offers summer passes or discounts.
  • Utilize Free Entertainment Resources: Take advantage of your local library for free books, movies, and even events. Explore free streaming services or borrow DVDs instead of going to the movie theater.  If you do go to the movies, go to the matinee whenever possible. Ask for student and senior discounts.

Smart Spending Habits

  • Differentiate Needs vs. Wants: Before making a purchase, especially on non-essential items, ask yourself if it’s a need or a want. Prioritize essential spending and be mindful of impulse buys. Then, direct any savings to summer fun. 
  • Use Cash Instead of Credit: For discretionary spending, consider using cash. This can help you stay within your budget and make you more aware of how much you’re actually spending.
  • Automate Savings: Set up automatic transfers from your checking account to your savings account at the beginning of each summer paycheck. Even small amounts can add up over time without you having to actively think about it.  
  • Review Subscriptions and Memberships: Take a look at your recurring subscriptions and memberships (e.g., streaming services, gym memberships) and cancel any that you don’t use regularly.  
  • Consider a Spending Cleanse: Before summer begins, try a “no-spend” week or weekend to reset your spending habits and identify areas where you can cut back.
  • Involve the Family:  Give small jobs to each member of the family for shared summer goals. Have the kids look for and save change, host lemonade stands, help neighbors with errands or lawn work for some extra spending money. 

By implementing these summer savings tips, you can enjoy the season’s activities and maintain a healthy financial outlook. Remember that even small changes in your spending habits can lead to significant savings over time!

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan by clicking Get Started Here:

GET STARTED HERE

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.