Parachute Services Archives

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!

Budget, Parachute Services

Breaking the paycheck-to-paycheck cycle

Living paycheck to paycheck can result in the inability to cover necessary and unexpected expenses and be mentally and physically stressful. It can result in the accumulation of debt and the inability to gain financial security over time.

Here are some ways to break the paycheck to paycheck cycle and work towards long term financial stability. Being patient and consistent with the process is important.

Track your spending. This will help you understand where your money is really going and identify areas where you can cut back, at least temporarily. There are many different ways to track your spending such as using a writing it down in a notebook, using your bank’s online spending tracker or using a budgeting app. Do you research as to the best app for you. Check out The Best Budget Apps for 2024 – NerdWallet. If you are serious about breaking the cycle, make the commitment to really see where your money is going as this is way to gain control over it.

Create a budget. Once you know where your money is going, you can create a budget to help you to live within your means. A budget is a plan for how you will spend your money each month. Think of it as a foundation to help you build long-term financial stability. It should include all of your income and expenses, and it should help you save money each month.

Cut back on unnecessary expenses. Be honest with yourself about what is a “want” and what is a “need”. Take a close look at your budget and see where you can cut back on unnecessary expenses. This may mean eating out less, canceling unused subscriptions, shopping around for better insurance rates, and reviewing and organizing your clothing before buying something new.

Pay off debt. Debt can make it difficult to break the paycheck-to-paycheck cycle. Make a plan to pay off your debt as quickly as possible by making more than the minimum payments each month. Paying anything over the minimum required can help! At least double your minimum payments, if possible, whenever possible.

Increase your income. Try to increase your income by getting a raise at your current job, working extra hours, or getting a second job. Consider selling items you no longer need or want. 7 Ways to Increase Your Income – Experian

Involve your family. Schedule some family creative savings meetings.

Here are some additional tips:

Set financial goals. What do you want to achieve with your money? Do you want to buy a house, a car, save for retirement, or pay off debt? Having financial goals will help you to stay motivated and on track. Be sure your goals are specific and detailed as research shows you are more likely to achieve them.

Automate your finances. Set up automatic transfers from your checking account to your savings account each month. This way, you will be saving money without even having to think about it. You can also redirect some money from your paycheck directly into a savings account. Make it hard to withdraw from that account by not using a bank card.

Make sacrifices. Breaking the paycheck-to-paycheck cycle may require you to make some sacrifices. Before you buy something, ask yourself out loud, “Is this a want or need?” “Can it wait until my next paycheck?” It will be worth the sacrifices in the long run especially as you begin to see the accumulation of those savings! This will empower you and motivate you to keep going.

Breaking the paycheck-to-paycheck cycle definitely takes time, effort and commitment, but it is possible! By following the tips above, you can start to build a more secure financial future for yourself and your family.

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, Parachute Services

Our Relationship with Money

Our relationship with money is complex and often shaped by our upbringing, societal norms, religious and cultural background, and personal experiences. It can be a source of great joy and security, but also stress, shame, anxiety, and conflict. Understanding our relationship with money is crucial for achieving financial well-being and building healthy relationships.

Positive Aspects of Our Relationship with Money include:

Security and Stability: Money provides a sense of stability and security, allowing us to meet our basic needs, pursue our goals, and plan for the future when we are no longer working or able to work for our income. Retirement could involve 30+ years!
Freedom and Choice: Money empowers us to make a number of choices, from what we eat to where we live and what we do for a living. It enhances our freedom and autonomy.
Opportunity and Growth: Money can open doors to opportunities for further education, travel, and experiences that we pursue to enrich our lives and broaden our perspective on the world and others.
Contribution and Impact: Money can be used to make a positive difference in the world, supporting causes we care about and contributing to the well-being of others. It allows us to help others who may be struggling and help ease the suffering of people around the world.

Negative Aspects of Our Relationship with Money:

Stress and Anxiety: Financial instability, debt, and the pressure to achieve financial goals can lead to stress, anxiety, and fear. This can lead to poor mental and physical health outcomes for us.
Materialism and Consumerism: Excessive focus on material possessions and external validation through wealth can lead to dissatisfaction with ourselves and others and a sense of emptiness and lack of fulfillment.
Comparison and Frustration: Comparing our financial situation to others can fuel feelings of envy, inadequacy, and frustration, hindering our progress overall and toward our financial goals.
Relationship Strains: Financial disagreements, misunderstandings, and unequal financial contributions can strain relationships, affecting trust, communication, and intimacy. Money issues remain a top contributor to broken relationships and divorce.

Building a Healthy Relationship with Money:

We can work every day toward having a healthy relationship with money as every day gives us a chance to make different decisions. We can research the topic to better understanding our unique relationship with money and choose options that support our overall financial well-being. In doing so, we may help our own physical and mental health as well as improve our relationships with others.

Financial Awareness: Develop a clear understanding of your income, expenses, and financial goals. Utilize budgeting tools and track your spending habits. You owe it to yourself to know where your money goes. You’ve worked hard to earn it!
Responsible Spending: Make informed decisions about purchases, prioritizing essential needs over impulsive wants. Avoid impulse buying and unnecessary spending to be sure you have what you need.
Saving and Investing: Set aside a portion of your income for savings and investments. Long-term financial planning ensures security and stability for the future. The importance of planning for the future cannot be underestimated.
Delayed Gratification: Prioritize long-term financial goals over immediate gratification. Delaying immediate pleasures can lead to greater long-term happiness and peace of mind.
Seeking Support: If you struggle with money management or have accumulated debt, seek professional guidance from a credit counseling agency like Parachute.

Remember, our relationship with money is fluid and it can evolve and change over time. By understanding our own financial habits, recognizing our emotional triggers, and making conscious choices, we can develop a healthier and more balanced relationship with money, enhancing our well-being and enriching our lives.

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/

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.

Budget, Parachute Services

10 Common Budget Mistakes You Can’t Afford to Make

Winging It (Not Creating a Budget): This one tops the list for a reason. Without a budget, you have no roadmap for your money. It’s like driving without a map or any sense of the directions – you might get where you’re going eventually, but it will likely be a bumpy ride with wasted resources like those small budget leaks that add up to BIG expenses over time.
Unrealistic Expectations: A budget shouldn’t be a strict punishment; it’s really a tool for empowerment. Don’t set yourself up for discouragement with unrealistic goals. Be honest about your spending habits and use past information (bank statements or receipts) to create a workable plan. Your budget can and should change over time with your life circumstances, so it is important to pay attention to it.

Forgetting Fixed vs. Variable Expenses: Imagine your budget as a sturdy table. Fixed expenses (rent, utilities) are the table legs – they provide stability. Variable expenses (groceries, entertainment) are the table top – they offer flexibility. Ignoring either category creates an unbalanced and wobbly budget.

Ignoring Sinking Funds and Unexpected Costs: Life happens – car repairs, appliance breakdowns, medical bills. Don’t let these events derail your progress. Factor in sinking funds (designated savings for anticipated expenses) and an emergency fund for unexpected costs. Even if you start small and use those funds to reduce some debt, it’s a win!

Not Tracking Your Spending: This is crucial for staying on track. You can’t manage what you don’t measure. Track your spending with budgeting apps, spreadsheets, or even a simple notebook. Identify areas where you can cut back and adjust your budget accordingly. Research budget apps at The Best Budget Apps for 2024 – NerdWallet.

Not Periodically Reviewing and Updating Your Budget: Your income and expenses might change over time. Maybe you get a raise, or your car insurance goes up. Regularly review your budget and update it to reflect your current financial situation.

Falling Prey to Lifestyle Inflation: As your income increases, it’s tempting to increase your spending along with it. Resist lifestyle inflation by sticking to your budget and prioritizing your financial goals. Use automatic pay deductions to go into your savings.

Neglecting Debt Repayment: Don’t let debt snowball out of control. Factor in minimum debt payments into your budget, and prioritize paying off high-interest debts first (credit cards) to save money on interest charges.

Not Automating Your Finances: Set up automatic bill payments and transfers to your savings account. This reduces the risk of missed payments and late fees, and helps you stay on track with your savings goals.

Giving Up Too Easily: Sticking to a budget takes practice. Don’t get discouraged by setbacks. Analyze what went wrong, adjust your budget, and recommit to your financial goals. Remember, progress over perfection!

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

Budget Strategies During Times of High Inflation

During times of high inflation, here are some budget strategies you can use to help stay financially sound during these times.

Track Your Spending:

Know Where Your Money Goes: Before you can make any adjustments, you need a clear picture of your spending habits. Track your income and expenses for a month using a budgeting app, spreadsheet, or even pen and paper. Research budget apps here – Research budget apps at The Best Budget Apps for 2024 – NerdWallet. Be honest with yourself about what you need and what you want. Needs reflect those things we need to survive. Wants can often wait for future paychecks.

Cut Back on Discretionary Spending:

Identify Areas to Trim: Once you see where your money goes, pinpoint areas where you can cut back. This could include dining out, entertainment subscriptions, impulse purchases or those small daily habits that add up quickly.
Embrace Frugal Fun: Find free or low-cost alternatives for entertainment. Explore local parks, museums with free admission days, or board game nights with friends. As the weather gets warmer, there are often many outdoor, low cost events.

Stretch Your Groceries:

Plan Your Meals: Plan meals around what’s on sale and utilize coupons. This reduces impulse purchases and food waste. This is an area where most people say they improve their budget and boost savings.
Consider Generic Brands: Store brand staples are often just as good as name brands at a fraction of the cost. Shop at discount grocery stores in your area such as Price Rite or Aldi.
Embrace Meatless Meals: Meat can be a significant expense. Try incorporating more vegetarian meals into your diet. Try to identify more high protein items like peanut butter, legumes, and tofu.

Be Strategic with Debt:

Prioritize High-Interest Debt: Focus on paying down credit card debt first, as high interest rates can quickly magnify the cost of borrowing. Start with those credit cards with the highest interest rates first. Know that you can contact your creditors if you are having trouble making minimum payments. They may be able to work with you to temporarily lower your interest or your payment amount to help you catch up.

Explore Balance Transfers: If you have good credit, consider a balance transfer card with a 0% introductory APR to temporarily reduce your interest charges.

Boost Your Income (if possible):

Explore Side Hustles: Look for ways to generate extra income, like freelancing, online gigs, selling unused items, making deliveries, etc. Check out 25 Passive Income Ideas To Help You Make Money In 2024 | Bankrate. Also, if inflation is eroding your purchasing power, consider having a conversation with your employer about a raise to keep your salary competitive.

Additional Tips:

Shop Around for Better Deals: Compare prices on everything from groceries to insurance to ensure you’re getting the best value.

Review Subscriptions: Audit your monthly subscriptions and cancel any you don’t use regularly.

Utilize Cash: Using cash for everyday purchases can help you stay more mindful of your spending. Multiple studies show that we spend less when using cash instead of a credit or debit card.

Research Ways to Lower Utility Costs:

Adjust Your Thermostat: A programmable thermostat allows you to adjust temperatures when you’re away or sleeping. Lowering your thermostat in winter and raising it in summer can significantly reduce energy use.

Unplug Unused Electronics: Even electronics in standby mode draw a small amount of power. Unplug chargers and devices not in use to eliminate “vampire energy drain.”

Wash Clothes Smarter: Wash clothes in cold water whenever possible and air-dry laundry when weather permits.

Shorten Showers: Every minute counts. Reducing shower time can significantly lower hot water usage and lower water heater temperature: Most water heaters are set too high. Adjust the thermostat to 120°F (49°C) to save energy without sacrificing comfort.

Fix Leaks: A leaky faucet or dripping showerhead can waste a lot of water and energy. Repair leaky fixtures promptly.

Switch to LEDs: LED lightbulbs use significantly less energy than traditional incandescent bulbs and last much longer.

Embrace Natural Light: Open curtains and blinds during the day to maximize natural light and reduce reliance on electric light

Consider Alternative Billing Options: Some utility companies offer time-of-day billing where rates fluctuate throughout the day. This can be advantageous if you can shift energy usage to off-peak hours.

By implementing these strategies, you can tighten your budget and make your money stretch further during times of high inflation.

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/