Tag: debt relief

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:

Credit, Debt, Parachute Services

A Quick Guide to a Debt Free Life

Avoiding debt is a crucial step towards financial stability and peace of mind. Here are some practical strategies that you can begin to use right away.

Budgeting and Saving

  • Create a realistic budget: Track your income and expenses to identify areas where you can cut back.  
  • Build an emergency fund: Aim for 3-6 months’ worth of living expenses to cover unexpected costs.
  • Prioritize needs over wants: Differentiate between essential purchases and impulsive ones. Don’t confuse needs versus wants and don’t elevate wants to needs. 

Responsible Credit Card Use

  • Pay your balance in full each month: Avoid interest charges by clearing your balance completely.  
  • Limit credit card usage: Rely on cash or debit cards whenever possible.
  • Choose cards wisely: Look for cards with low interest rates and rewards that align with your spending habits.

Smart Spending Habits

  • Cook at home: Eating out can be expensive; preparing meals at home saves money.  This is one of the top ways people report gaining traction with their savings.
  • Find free or low-cost entertainment: Explore your local parks, libraries, and community events.
  • Avoid impulse purchases: Take time to consider whether a purchase is necessary before buying. Wait at least 48 hours.  Read more at How to Identify and Eliminate Unnecessary Expenses (firstcomcu.org)

Long-Term Planning

  • Set financial goals: Define your short-term and long-term financial objectives. Think very specifically about what it is you truly want, when and how you can get there.  The more specific you are, the more likely you will succeed!  
  • Invest wisely: Consider retirement savings and other investment options.
  • Educate yourself: Continuously learn about personal finance and money management.

Additional Tips

  • Avoid payday loans and high-interest debt: These options can trap you in a cycle of debt. These are very short-term loans with very high interest rates.    
  • Negotiate bills: Contact service providers to discuss potential discounts or payment plans.
  • Seek professional help if needed: Credit counselors can provide guidance and support.  

Remember: Building a debt-free life takes time, consistency and discipline. Small steps can lead to significant results!

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

Credit, Debt, Parachute Services

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.

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!

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.

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, 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/

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.

**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!