Debt Archives - Page 3 of 8

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/

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/ or call 716-712-2060.

Debt, Parachute Services, Student Loans

Valiant Battle to Achieve Student Loan Repayment Assistance Despite Persistent, Ongoing Attempts to Squash It

Latest News: August 2024 Financial Update

Parachute Credit Counseling Offers FREE Student Loan Counseling

While June brought good news for student loan repayment when a federal judge gave a largely favorable ruling to a resoundingly political move where 11 states filed lawsuits to halt repayment assistance for student loans—the most recent news is unfortunately less optimistic.

This week, President Biden was forced to formally file an appeal with the Supreme Court, asking the justices to step in and reverse the most recent federal court order challenging his SAVE plan which is his $156 billion student loan debt forgiveness plan that he has spent several years refining.

The president is hoping to reverse the most recent action which negatively impacts not only the eight million Americans enrolled in the SAVE plan, but other borrowers pursuing loan forgiveness and reduced payments under separate programs that aren’t even subject to the current legal challenges.

Student Loans have been a major issue these past ten years, with national student loan debt totaling over $1.7 trillion. An entire generation of young people have been drowning as college costs rose exponentially—as did all living expenses—while salaries have not kept pace. Tens of thousands of local residents grapple with student loan repayment, financially and even more so, in understanding its many rules and complexities as well as its ever changing status. Parachute Credit Counseling, formerly known as Consumer Credit Counseling Service of Buffalo (CCCS), is the only organization in the Western New York region to offer free student loan counseling. Parachute strongly supports repayment assistance like the recently launched SAVE plan.

Under the SAVE plan, 8 million people are eligible for lower payments or potentially full debt forgiveness. The repayment plan calculates monthly loan payments based on income and family size as well as discretionary income. It has lowered the monthly repayment amounts for millions. Around half of the eligible borrowers saw their monthly payments drop to zero if they make/made under $16 an hour.

At present time, in response to the federal appeals court order, the Biden administration has placed more than eight million borrowers into an administrative forbearance. No payments are due during the forbearance period and no interest will accrue, but the forbearance will not count toward student loan forgiveness, including under Public Service Loan Forgiveness — an entirely separate program clearly authorized by Congress. And the Education Department has had to take down its online Income Driven Repayment (IDR) and Direct consolidation applications and pause IDR processing, even for borrowers not enrolled in SAVE, to update its systems and comply with the new court directive.

These latest actions are unwelcome and unhelpful for all, creating “widespread confusion and uncertainty,” according to Justice Department attorneys in their Supreme Court brief. “Indeed, as the Eighth Circuit acknowledged, this is unambiguously worse for all involved.”

Despite this forced “pause,” Parachute Credit Counseling continues to provide free student loan counseling and encourages WNY residents to use this time wisely by making an appointment for free counseling and working with a counselor to create a solid repayment plan—or even better, a plan for ongoing financial stability.

For many months, while all student loan news has focused on various court battles, it was recently announced that there will soon be even more news.

New Student Loan Forgiveness Plan Coming

This major new student loan forgiveness initiative is coming soon through an entirely separate program, expected to be released this fall. It is entirely separate from the SAVE plan, and will target relief to four categories of borrowers, including those who have experienced runaway interest and borrowers who first entered repayment at least 20 or 25 years ago.

There is no doubt that detractors will oppose this plan as well, but the president has not backed down on his promises to forgive student debt.

There is Good News

As previously mentioned:

Western New York residents are eligible for Free Student Loan Counseling at Parachute Credit Counseling.

Parachute Credit Counseling recommends that borrowers contact their office to enroll in the free Student Loan Counseling program, available to all residents of the eight counties of Western New York. Parachute’s Certified Financial Counselorshelp WNY residents consolidate their student loans and review other potential relief options and assistance with existing programs available to help borrowers reduce or eliminate their debt as well as help them in making payment plan arrangements. Call 716-712-2060 or visit https://parachutecreditcounseling.org/ for more information on our Student Loan Counseling Program.

Parachute also provides many other financial counseling services, from budgeting help to credit repair to buying a home. Nationally Certified Parachute counselors offer expert strategies for attaining financial stability, working with their clients every step of the way. Call 716-712-2060 or visit https://parachutecreditcounseling.org/ for information on financial counseling services.

Debt, Student Loans

Beware of Student Loan Scams!!

Latest News: July 2024 Financial Update

Parachute Credit Counseling Offers FREE Student Loan Counseling

Parachute Credit Counseling, formerly known as Consumer Credit Counseling Service of Buffalo (CCCS), is Western New York region’s premier organization providing our community with the best strategies to master their credit.

Today we issue an alert about new scams that are unfortunately gaining popularity in the student loan world.

Last week, the Federal Trade Commission (FTC) announced that they shut down another bogus company. Prosperity Benefit Services, which offered “complete” student loan forgiveness…for a fee, of course. Prosperity claimed that they had an affiliation with the U.S. Department of Education and that they would help clients receive quick loan forgiveness. Neither of their assertions were true.

The FTC has seen several other fraudulent student loan debt relief companies. They delivered an official warning last week. Here are red flags to watch out for:

Scammers use official-looking names, seals, and logos to make them seem more legit. Make sure you’re working with a federal student loan servicer that’s listed on the Department of Education’s website. (And use the contact information listed there too — scammers can spoof the numbers and names of legit servicers.)
Scammers charge an upfront fee. It’s illegal for companies to charge you before they help reduce or get rid of your student loan debt.
Scammers say they need your FSA ID login information. Never give out this information. If a scammer gets your FSA ID, they could cut you off from your loan servicer — or even steal your identity.

The Good News

New York residents are eligible for Free Student Loan Counseling at Parachute Credit Counseling.

Parachute Credit Counseling recommends that borrowers contact their office to enroll in the free Student Loan Counseling program, available to all residents of New York. Parachute’s Certified Financial Counselors help NY residents consolidate their student loans and review other potential relief options and assistance with existing programs available to help borrowers reduce or eliminate their debt as well as help them in making payment plan arrangements. Call 716-712-2060 or visit https://parachutecreditcounseling.org/ for more information on our Student Loan Counseling Program.

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.

Debt, Parachute Services

How to Tackle That Debt

Feeling buried in debt? You’re not alone! This post explores practical strategies to tackle your debt, from budgeting tips to repayment methods, and help you achieve financial freedom.

Assess the Situation:

List your debts: Make a comprehensive list of all your debts, including the type of debt (credit card, student loan, car loan, etc.), the outstanding balance, and the interest rate. This will give you a clear picture of what you owe.

Track your expenses: Understanding where your money goes is crucial. Track your expenses for a month to identify areas where you can cut back and free up extra cash for debt payments.

Choose a Repayment Strategy:

There are two main strategies for paying off debt:

Debt avalanche: This method focuses on paying off the debt with the highest interest rate first. By eliminating high-interest debt quickly, you save money on interest charges in the long run.

Debt snowball: This method prioritizes paying off the smallest debt first, regardless of interest rate. Seeing debts disappear quickly can be a motivation to keep going and help you stay on track.

Create a Budget and Allocate Funds:

Budgeting: Create a realistic budget that allocates enough money to cover your essential expenses (housing, food, utilities), minimum debt payments, and ideally, extra money towards debt. Many budgeting apps and tools can help you with this.

Debt allocation: Assign the extra money you freed up to your chosen debt repayment strategy. Whether it’s the debt with the highest interest rate (avalanche) or the smallest balance (snowball).

Reduce Expenses and Increase Income:

Cut back: Identify areas where you can cut back on spending, like eating out less or canceling unused subscriptions. Every dollar saved can go directly towards your debt. Many people find meal planning at home helps them save a significant amount of money.

Boost income: Consider a side hustle or explore ways to increase your income at your current job. This extra money can significantly accelerate your debt payoff.

Additional Tips:

Pay more than the minimum: Make more than the minimum payment required whenever possible. This reduces the principal faster and saves you money on interest.

Explore debt consolidation: Consider consolidating high-interest debt into a single loan with a lower interest rate. This can simplify your payments and potentially save money.

Stay motivated: Paying off debt takes time and discipline. Celebrate your milestones and track your progress to stay motivated.

Consider a Debt Management Plan: Find a reputable not-for-profit agency that offers a debt management plan to help you reduce your monthly payments and overall interest while paying down debt sooner.

Remember, there’s no one-size-fits-all approach. Choose the strategy that works best for you and your financial situation. Don’t hesitate to seek help from a credit counselor (such as at Parachute).

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/

**NEW** We are now able to assist residents in the state of Texas! We are excited to extend our services to the Lone Star State!