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!

Women and Money

Women may face unique challenges with money due to a number of factors. Such factors can make it more difficult for women to achieve their financial goals and obtain financial security. These factors include: 

  • Pay gap: Women still earn less than men for doing the same work. According to the U.S. Census Bureau, currently women earn 82 cents for every dollar that men earn.
  • Lack of retirement savings: Women are more likely than men to be single and not have a partner’s income to help them save for retirement. They are also more likely to take extended time away from work to care for children or ill or older family members. This can impact their overall savings rate, their retirement savings rate and Social Security contributions.
  • Debt: Women are more likely than men to carry debt, particularly student loan debt. Consider this also in light of the pay gap (see above). This can make it difficult for them to save for other financial goals, such as retirement or a home.
  • Lack of financial literacy: Women may be less encouraged to gain a basic understanding of financial concepts, such as investing or budgeting. This can make it difficult for them to make sound financial decisions.
  • Societal pressures: Women may feel pressure to confirm to societal expectations and may use larger portions of their income on clothing, accessories, dry cleaning, shoes, beauty routines (e.g., hair and nails) and more. 
  • Women live longer: According to the World Health Organization (WHO), the life expectancy for women in 2023 is 80.2 years, while the life expectancy for men is 73.3 years. This means that women can expect to live 6.9 years longer than men. This means they need their savings to be larger or last longer.
  • Living single, longer: More women are living single longer than men. In 2019, 34% of women ages 18 and older were living without a spouse, up from 28% in 1990. Meanwhile, 29% of men ages 18 and older were living without a spouse, up from 24% in 1990.
  • Under-presentation of women in finance professions: According to a 2022 report by the Financial Industry Regulatory Authority (FINRA), women make up 26.8% of the workforce in the U.S. investment industry. This is still significantly lower than the 49.7% of women in the overall workforce. One factor is the lack of female role models in the industry.

These challenges can make it difficult for women to achieve financial security. However, there are a number of things that women can do to overcome these challenges, such as:

  • Negotiate their salaries: Women can and should negotiate their salaries and seek out career coaching and/or mentoring to help with such processes. They should also be aware of the pay gap and consider this as they make job and career decisions.
  • Start saving early: Women should start saving for retirement as early as possible, even small amounts are helpful. They should also take advantage of tax-advantaged retirement savings plans, such as 401(k)s and IRAs.
  • Pay down debt: Women should focus on paying down debt, especially high-interest debt, such as credit card debt. This will free up more money to set aside funds to save and even invest.
  • Automate savings: Make savings as consistent and easy as possible by having a set amount taken out of each paycheck for emergency funds and future financial goals, such as buying a home.
  • Encourage finance careers: More girls and young women can be encouraged to study finance. More female-friendly workplaces can be created in the industry.
  • Get educated: Women should educate themselves about financial concepts, such as budgeting and investing. There are *many* resources available to help women learn about money, such as books, magazines, podcasts, websites, and financial counseling services such as Parachute! Spending at least 1 hour a week learning basic money matters is really helpful!

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.

While Long Awaited Student Loan Forgiveness is Blocked By Lawsuit, Parachute Credit Counseling Offers Encouragement and FREE Student Loan Counseling

While Long Awaited Student Loan Forgiveness is Blocked By Lawsuit, Parachute Credit Counseling Offers Encouragement and FREE Student Loan Counseling

The Supreme Court will hear arguments for and against this loan cancellation plan on February 28, 2023

The financial futures of nearly 43 million borrowers across the country are in limbo as the Supreme Court considers the legality of President Biden’s student debt forgiveness program.

President Biden’s student loan forgiveness plan, announced in 2022–which provides up to $20,000 in relief to millions of borrowers–faces legal challenges. While many Americans were happy with the new loan forgiveness plan, there is concern that without the root causes of the student debt crisis addressed, there will be no fundamental changes made to a system in great need of fixing. Most people on all sides of the issue agree that the present system is broken and will need legislation to fix it. Even without further and far reaching actions at this point, if allowed, student loan forgiveness will still make a big impact among borrowers who are low-income or didn’t finish college and are stuck paying off a loan.

Parachute Credit Counseling—formerly known as Consumer Credit Counseling Service of Buffalo (CCCS)—announced that it is now offering free Student Loan Counseling throughout the eight counties of Western New York along with expert strategies for attaining financial stability. Although payments on federal student loans have been suspended since March 2020, with interest-free relief, they will resume later this year so it is time for all to plan. Despite the current uncertainty, other relief options and changes to existing programs will be available to help borrowers reduce or eliminate their debt. Now is the time for borrowers to seek free and unbiased counseling to understand their options.

Parachute has operated the only Student Loan Counseling Program in Western New York for the past ten years. Right now, the national total student loan debt, including federal and private loans, sits at $1.75 trillion.

About 1 in 6 adults in America holds federal student loan debt. A typical undergraduate finishes school with nearly $25,000 of debt and a monthly payment of $460, which takes an average of 20 years to pay back while accruing $26,000 just in interest. Tuition fees have nearly tripled since 1980, outpacing inflation and wage growth. Student loan repayment is a critical issue that needs much direction.

The situation at this time is: millions of borrowers have already been approved for loan forgiveness, but the government is powerless to act because two federal courts issued nationwide injunctions prohibiting any debt relief under the plan. Most legal analysts expect the Supreme Court’s conservative supermajority to side against the administration, preventing the government from forgiving a cent of student loan debt. There is a real chance, however, that a majority may instead find that the plaintiffs—a group of red states and two disgruntled borrowers—lack standing to sue, which would allow the program to move forward. SHIRIN ALI, FEB 26, 2023—SLATE

While we wait for an answer…Parachute encourages residents to join our FREE Student Loan Counseling Program, staffed by experienced, certified financial counselors.  Call 716-712-2060 or visit https://parachutecreditcounseling.org/  for more information on our program and other financial services we provide.