Navigating on a Reduced Income

How to Navigate on a Reduced Income

Many Americans are facing drastically reduced income due to the Covid-19 pandemic. Unfortunately, some people have lost their jobs or have reduced work available to them. With the CARES Act supplemental relief expiring at the end of July, extra federal unemployment benefits may be reduced. There are many ways to navigate a reduced income. It’s all about proper planning and cutting unnecessary expenses.

1. Analyze the Numbers

You need to revisit your budget and make any necessary changes. Figure out what income you currently have so that you can adequately budget what you’re able to spend.

2. Talk to your service providers and financial institutions

If you are unable to make your rent/mortgage, utility, credit card/loan, or other payments, you should reach out to your providers and financial institutions to see if they offer any accommodations. Many credit card providers were allowing their members to skip payments without any consequences. It’s worth asking even if it’s a long shot.

3. Cut out all non-essential items from your budget.

This means anything that is not essential to your life or work. For example, you may have to skip happy hour with your friends on Fridays because you don’t have the available funds with a reduced income. Of course, this won’t be fun, but it’s something that you will need to do. All these non-essentials will return once your income increases.

4. Apply for any and all assistance

Go to your county’s website for health and human services to find out what kind of public assistance they offer. This could include food assistance, childcare assistance, health insurance, work search programs, and transportation certificates. Using these services can help tremendously. Make sure you apply for assistance immediately because it can take some time to process.

5. Look for odd jobs

Exploit your talents and skills by finding different jobs that you can perform to make money. This could be as simple as working for GrubhubUberEatsGoPuff, and other delivery services. You can also sell your own products such as masks, art, handyman work, cooking, cleaning, or dog walking.

6. Learn how to DIY

We sometimes spend money on things that we can do ourselves just for the sake of saving a few minutes. Instead of paying to get your car washed, you can easily grab a bucket and soap to scrub with. If your furry friend needs a haircut but some clippers and do it yourself. It might not be as professional is you’re used to, but eventually, your skills will improve. Doing tasks yourself will save you more money than you may initially think.

7. Stay home and enjoy free things to stay entertained and healthy

Staying home will not only help you stay within social distancing guidelines, but you will also save money by not going out. Enjoy a good book, movie, or an at home workout. This is also an excellent opportunity to discover new hobbies or talents that you may not have considered before.

Navigating on a reduced income can be stressful, but with the proper planning is doable. For more financial tips, visit Balance Financial.


Understanding Credit in a Changing World

Your Credit Matters!

Understanding your credit is an incredibly vital thing to grasp. It’s what employers, lenders, and even insurance agencies can look at to determine if they will provide you with a service. Especially in today’s world, credit can be a huge lifesaver when needing a little extra help.

What is a credit score?

Your credit score can range from 300-850. Ratings 720 and above will usually give the borrower the best rates available unless it is a thin file (minimal trade lines and history) also known as a false Beacon. The following are the roles of credit scores:

  • One element of the credit decision-making process.
  • Often the key to better rates. Higher scores equal a better rate.
  • Not a money-management tool. This is purely an indicator of how risky you are to a lender.
  • Discovering fraud or credit reporting errors is essential. You want to check your credit score periodically to ensure your personal information hasn’t been compromised.

How Scores are determined

Many different factors determine your credit score. No one knows precisely how much each category is worth, but they are all significant in determining your final number. Below are the different categories with an estimated percentage of how important each is.

  • Types of Credit (10%)
  • New Credit (10%)
  • Length of Credit History (15%)
  • Amounts Owed (30%)
  • Payment History (35%)

There are many mistakes that you can make when it comes to your credit. Each error will adversely affect your credit score. Typically, if you max out your card, it will decrease your score by 10-45 points. Late payments will reduce your score by 60-110 points. A foreclosure will affect your score by 45-125 points, and bankruptcy will decrease it by 130-240 points. Make sure you are responsible with credit to avoid penalties.

How to improve your credit score

It can take time to repair your credit score, but it’s essential to do. The following are ways that you can improve your score:

  • Pay on time, every time. Even if it’s just the minimum, pay it.
  • Pay collection accounts.
  • Keep your old accounts. Don’t cancel old credit cards that aren’t costing you money. The length of your credit is important when determining your score.
  • Avoid maxing out accounts.
  • Limit balance transfers.
  • Avoid excess credit applications. Generally, you only need 3-5 credit cards.

Beware of credit repair companies. They cannot legally do anything that you cannot do yourself for free. Take steps yourself to dispute incorrect or outdated information. Members of BrightStar Credit Union can speak with a financial advisor for FREE to sort out their credit issues and develop a plan to improve their score. Our Balance Financial Advisors will also help build a household budget, understand your credit report, buy a home, protect your identity, rebuild your credit rating, and more.

COVID-19 and your credit score

While employment status isn’t included in your credit report, job loss can still affect your credit. The reason job loss can affect your credit is that you might not stay current on your payments resulting in penalties. Unemployment itself does not prevent you from applying for new credit. The likelihood of a loan denial is much higher with a loss of steady income. Hopefully, during these hard times, you have taken the right steps to ensure your credit score remains healthy.


Juneteenth Freedom Day

Juneteenth - Let's Celebrate Freedom

Let's Celebrate Freedom!

History of Juneteenth

Juneteenth is an annual celebration marking the end of slavery for over 3.5 million African American Slaves in the United States. Every June 19, millions celebrate the day that slaves in Texas learned that they were finally free. Texas was the last state to enact the Emancipation Proclamation, which took effect on January 1, 1863, signed by Abraham Lincoln. The Civil War ended in April of 1865, and two months later, on June 19, 1865, Major General Gordon Grander issued General Order No. 3 in Galveston, Texas. He proclaimed, “The people of Texas are informed that, in accordance with a Proclamation from the Executive of the United States, all slaves are free.”

Congress ratified the 13th Amendment to the U.S. Constitution 6 months later, on December 6, 1865. The following year, freed slaves across the United States celebrated their newfound freedom on June 19. The celebration of June 19 was coined Juneteenth.

BrightStar Credit Union’s Observance

Currently, 47 states (including Florida) recognize Juneteenth as a holiday or day of observance. BrightStar Credit Union is committed to supporting and helping our employees celebrate Juneteenth with family and friends. June 19, 2020 will serve as the inception of BrightStar Credit Union observing Juneteenth Day. In lieu of closing operations this year, all BrightStar employees will receive a paid floating holiday to use at their leisure. Thereafter, consistent with all BrightStar Credit Union observed holidays, our operations will be closed annually for Juneteenth Day commencing in June 2021.


Hurricane Survival Guide

Surviving Hurricane Season

Be Prepared!

First, it’s essential to know the definitions and standard terms that are associated with a hurricane. There are many different types of storms, and their intensity is what classifies them as a tropical depression, tropical storm or hurricane. Tropical depressions are cyclones with winds of 38 mph. Tropical storms can vary in wind speeds of 39-73 mph, while hurricanes have wind speeds of 74 mph or higher.

 

Terms you may hear

 

  • Tropical Storm Watch – Tropical storm conditions are possible.
  • Hurricane Watch – Hurricane conditions are possible. Watches are issued 48 hours in advance of the anticipated onset of tropical storm force winds.
  • Tropical Storm Warning – Tropical storm conditions are expected.
  • Hurricane Warning – Hurricane conditions are expected.
  • Eye – The center of the storm.
  • Eyewall – Surrounds the eye of the storm and contains severe weather conditions.
  • Rain bands – Bands coming off the storm that cause severe weather conditions.
  • Storm surge – Ocean water swelling as a result of a landfalling storm.

Everyone should be prepared for anything that can happen during a storm. Having adequate supplies is essential when a hurricane is approaching. Make sure you go to your local store to stock up on supplies well in advance to avoid the widespread panic.

 

Items to purchase

 

  • Non-perishable food (enough to last at least 3 days)
  • Water (enough to last 3 days)
  • First-aid kit
  • Flashlights
  • Battery operated radio
  • Cooler and ice packs
  • Evacuation plan
  • Plenty of recreational items to pass the time
  • Generator
  • Gas

 

Securing your home

 

  • Cover all windows with hurricane shutters or wood.
  • Make sure all trees and shrubs are trimmed to avoid damage from falling limbs.
  • Bring all outdoor furniture inside.
  • Consider parking your car in a car garage.

 

Preparing for power outages

 

  • Have plenty of gas in your car and stored in gas tanks.
  • Have enough cash on hand for emergencies.
  • Fill your bathtub and large containers with water for washing and flushing only.
  • The CDC has created a guide to staying safe in the event of a power outage.

Keeping your family and yourself safe during a storm should be your number one priority. For a downloadable checklist, please visit the American Red Cross.

This blog used “The essential guide to hurricane preparedness” by Christine Harrison as a reference. 


A lady budgeting

Make the Most of a Reduced Paycheck

Don't worry you will get through this!

Don't stress out!

Bubbles burst, the economy falters, companies downsize, and personal disasters happen which can result in a reduced paycheck. Perpetual salary growth or even maintenance is simply not guaranteed. However, by adopting the right tools and attitude, you can make the most of a reduced paycheck and not just survive, but thrive.

 

Determine whether your situation is temporary or permanent

If you fully expect to be back to your full salary soon, you may only have to adjust to lessened cash flow for a limited time. But before you tap into your reserves (and retirement savings, home equity, cash value life insurance, etc.) it would be wise to behave as if the salary reduction is long-term. Cut down on spending now. Securing your old income may take longer than you think.

If you do not expect to make as much money as you once did, you may be experiencing anxiety, which is normal. You may be panicking about the practical matters to contend with as well, such as how you will pay your bills. Adopting a systematic approach and devising a plan will help you manage the anxiety.

 

Recognize that your salary is not you

This is a deceptively obvious statement. Of course your salary is not you. But many people’s self esteem directly corresponds with how much money they make—the higher the income, the more important they feel. If your mood declines when your income drops, make every effort to dispel the attitude that financial wealth equals worth. It does not, nor does having an abundance of money guarantee happiness. Think back to when you were making more money then you do now. Were you genuinely happier, or did you just have the ability to buy more?

 

Seize the day

Hardship can hone skills and challenge entrenched ideas. Perhaps you worked in the high-tech field because the money was good, but that is not where your passion (or even perhaps talent) truly is. Consider this your opportunity to discover what you really want out of life. After all, if you are going to dedicate forty or more hours a week to your job, it should be something you love. Or at least like.

If you are currently unemployed or are working fewer hours, use this “extra” time wisely. Your options are as varied and abundant as your desires. Consider taking a class—one that will boost future earning potential or for pure pleasure. Write that book, paint the kitchen, start an exercise routine. Or just relax.

 

Analyze your expenses

When cash is copious, it is easy to spend arbitrarily. However, when the salary that sustained such a lifestyle is gone or drastically reduced, its time to take a good look at what you need to spend your money on, not what you can. Prioritize expenses now, and identify which bills take precedence. Mortgage versus car payment? Credit cards versus utilities? Analyze the ramifications of missing or not paying each. If you need help deciding, contact a financial counselor for help.

 

Develop a spending plan.

 

It will help you to discern between those expenses you can and cannot live without. If you find there is simply not enough money to support your necessities, much less your desires, at the very least you now know how much you will require from your next job. If expensive dinners are now a thing of the past, relish in the delights of a cheap pizza, or making cold cuts stretch with lots of lettuce. Enjoy and appreciate the things you may have begun to take for granted.

 

Remember: credit is not supplementary income

When money is tight, credit cards can take on an unusually seductive glow. However, a $40,000 line of credit is not a bonus in disguise, no matter how you much you wish it was. If you use credit to maintain the lifestyle you’ve grown accustomed to, it won’t be long before you “hit the wall”. Without an income to support repaying the balance in full every month, you’ll be paying in installments. Interest rates on unsecured credit is not cheap, and if you fall behind by 60 days, the rates will likely skyrocket. Late and over limit fees will add to an increasingly daunting balance. And soon you’ll be wishing you could return all the merchandise you bought and the meals you ate just so you don’t have to open another statement and look at those big, scary numbers. Credit cards are not designed to be emergency savings accounts.

 

Develop a plan

To thwart procrastination, write down what you want to achieve during this time. Be specific: include names of people you need to speak to and proposed accomplishment dates for each task. Update and refer to it regularly. Apathy’s enemy is a detailed and well-thought-out plan.

 

Go forward

Get professional assistance, talk to friends, and find others who are in like circumstances. It is too easy to think you are alone in this—support is key. Vent to those who can empathize; ask for help from those who can assist. Shock, shame, and anger are normal and feeling these emotions is expected. But by adopting a positive attitude and taking pragmatic steps, you can adapt to a reduced income, and achieve a financially stable future.

 

 

Blog Credit: https://www.balancepro.org/resources/articles/how-to-make-the-most-of-a-reduced-paycheck/


Young woman relaxing on beach, ocean view, Vacation Outdoors Seascape Concept

Ways to Save on Your Next Vacation

Man relaxing on the beach

As the spring and summer months quickly approach, we are all looking forward to some much needed vacation time. There are typically two types of people when it comes to planning for a vacation. Read the following sceneries and honestly reflect on which one relates most to your approach.

Scenario 1:

You and your friends/family decide to take a sporadic vacation to Mexico during March. The timing works perfectly for everyone, so you buy your tickets at a high season price. As the date quickly approaches, you all have completely forgotten about planning or buying a hotel, so you scramble to find a bouge place to stay. You end up spending way more than you should have due to your lack of planning.

As your relaxing on the beach with friends and family, zero thought goes into what you purchase or where you swipe your card. By the end of the stay, you have racked up a $8,000 bill for your luxury 4-night stay. Was it worth it?

 

Scenario 2:

You and your friends/family decide to take a vacation together at some point during the year. Everyone sits down and searches for the cheapest times for tickets, hotels, etc. Once the perfect date is settled and hotels and flights are purchased at an offseason price, you decide to make a daily budget to follow.

On vacation, you closely monitor your spending and aren’t just whipping out your rewards credit card to exercise your wrist. On your budget, you’ve accounted for extra spending each day so even if some days are more expensive than others, you have the necessary funds for it. Once it’s time to leave, you have a $4000 bill on your rewards credit card, but have enough money in the bank to pay that off immediately due to your proper planning.

 

Some tips to prepare for your next vacation:

  1. Budget. BUDGET! The last thing you want to do after coming back from a relaxing stay at the Bellagio is worry about paying off a credit card that you don’t have the money for.
  2. Use a rewards credit card for purchases. There’s nothing wrong with putting everything on a credit card. As a matter of fact, it’s what you should be doing to avoid having your account compromised. Earn extra money, miles, or gifts by putting everything on your rewards credit card and then pay the balance off to avoid high interest charges.
  3. Book in advance and during offseason if possible. Scenario 1 and 2 stayed at the exact same place but paid completely different prices. Booking well in advance will relieve stress as well as get you the best price. It’s recommended to start planning your vacation a year in advance to give you plenty of time to budget and find tickets.

According to CheapAir.com 2018 Annual Airfare Study, they determined that you should book this far in advanced for the following seasons.

  • Winter: 62 days in advance
  • Spring: 90 days in advance
  • Summer: 47 days in advance
  • Fall: 69 days in advance
  1. Figure out local transportation. You can easily save money by checking if there are local trains, busses, Uber, Lyft, etc. Taking a taxi everywhere will cost you an arm and leg.


Girl holding cash

8 Reasons to Create and Stick to a Budget

50/20/30 Rule to Budgeting

Try to budget with the 50/20/30 rule. What this means is that 50% of your income after tax goes towards nondiscretionary things such as: rent, utilities, food, car payments, etc. Next, 20% of your income should go towards some kind of emergency fund. Experts recommend saving a minimum of 6 months’ worth of expenses. Finally comes the fun. 30% of your income can go towards discretionary items like going out to eat, vacations, clothes, and anything else that you want to buy. 

 

1. Peace of Mind

You won’t have to stress about running out of money halfway through the month. Budgeting properly will lay out your weekly/monthly expenses and tell you how much you can spend. You just need to make sure to follow your budget precisely.

2. Helps you prepare for emergencies

Having an emergency fund set up is crucial. You never know when something bad will happen and the last thing you want to do is take a loan or put it on a credit card. It could take years to pay off the loan or credit card, so budgeting for an emergency fund will allow you to handle whatever life throws at you.

3. Shows bad spending habits

Bad spending habits can be seen through budgeting. You might not realize that you spend $100 on Starbucks every month unless you establish a budget. Once you see a pattern, you can change your habits to save more money.

4. Motivation

When your financially stable and have a clear goal, you’re automatically more motivated. Having a budget motivates you to make more, save more, and spend less. Without this, you might notice yourself slacking in your professional life.

5. Indulge in your wants

With a budget, you can slowly save for things that you don’t necessarily need. It’s better than charging it to your credit card and then having to pay interest over several months. Budget accordingly and maybe cut out certain unneeded things out so you can reach your goal.

6. It can be as simple as you want!

Budgeting doesn’t have to be a super complex task. You don’t need a finance degree to make a simple spreadsheet or plan. There are many online budgeting tools that you simply input your expenses and income. Start your kids out on a budget when they are young so they grow up learning how to use it. The sooner you start, the better.

7. Helps you determine how much debt you can afford

Oddly enough, budgeting helps you figure out how much debt you can actually afford. For example, if you’re buying a new car it can help you determine how much you can spend on a car loan each month. This is important to figure out because imagine how bad it would be to buy a car that is too expensive for you to afford. This happens to a lot of people so budgeting properly will make sure that you can afford whatever you end up buying.

8. It’s fun!

Budgeting doesn’t have to be boring! You can set mini goals for how much you want to save and then reward yourself when you reach that goal. It isn’t always easy, but creating a flexible budget will help you enjoy a financially stress free life.


Multigenerational Family

Multigenerational Households

Generational Family

There are many reasons for multigenerational households. It can be cultural, economic situations, or if you have dependents. There can be a lot of benefits with a full house, but it also requires a lot more planning and has its own set of problems.  

 

Create a new budget 

With more people in a household, you will need to adjust your monthly budget accordingly. Figure out who will pay for what and create a budget based off that. The worst thing you can do is to go into a situation like this blindly and not have a solid plan. If your parents are dependent on you, then you should figure out their needed expenses. This will include doctor visits, medication, and any other special care they require. Being open with your parents about money is going to help tremendously with planning. It will help relieve stress and confusion about their money, making everyone feel confident about the overall finances of the household.  

 

Create an agreement 

Even though they are your family, it’s important to create an agreement for financial expectations. Creating a document laying out rules that are agreed upon will help avoid future conflicts. If there is ever a question about certain finances, it will be easy to pull up the document and look at what was originally discussed. Obviously, this isn’t a legal document, so changes can be made whenever a situation arises that warrants a revision.  

 

Have a conversation about extra spending 

Not all spending will be for necessities. Even your parents want to go out and have a good time, so creating a budget for that is important as well. Cutting expenses might not be needed for many families, so just developing a plan for fun activities will be a good way to create an environment where finances aren’t just a bummer to talk about.  

 

Have a plan for the future! 

Your month-to-month plan should be focused towards an even larger goal. Looking ahead will make sure that your long-term goals will be met. Don’t just focus on immediate needs because you might overlook needs that should have been accessed way earlier to plan for. Having the big picture in mind will alleviate stress for both parties involved.  


Clean your finances this spring

5 Ways to Clean Up Your Finances This Spring

Clean your finances this spring
When your finances are in check, it shows!

Spring is in the air, but your finances don’t have to be. With spring cleaning on the brain, now is the time to tidy up that closet and more importantly, your wallet.

Fortunately, recent pop culture has heightened the cleaning fix in all our minds. Recently, methods of cleaning up by category and keeping only those belongings that bring you happiness have become increasingly popular. While this method is great for optimizing your physical space, it can also be used with your finances as well.

Here are 5 ways to clean up your finances just in time for spring.

  1. Clean Out Expenses

Give your bank account a clean-out by evaluating any recurring subscriptions that are on auto-pay every month and you can probably do without. For instance, you may realize that you don’t need that 500-channel cable package or magazine subscription. Don’t worry, you can still keep your Netflix subscription, but look into a family account to split the costs. You may want to consider saving money with your Amazon Prime membership by waiting a few extra days for your packages. Not to mention, this can discourage you from buying things you don’t need.

  1. Create Financial Categories

Using this categorizing technique, organize your bank statements from the past few months by creating a category for each transaction. Some categories might include living expenses—such as your rent, car payment, and utilities—savings, and entertainment. Once you’ve created your categories, develop a filing system that works for you, whether it’s folders, an app or online. This will help you see where your money has been going and monitor your spending for the future.

  1. Sort Out Your Credit Score

Improving your credit score is an important step in cleaning up your finances if you want to borrow or make a big purchase in the future. Start by combing through your report to check for any inaccuracies that can be lowering your score. After you’ve created your financial categories from the previous step, keep track of your bill’s payment dates to avoid missing payments. One way you can do this is by setting up automatic payments or calendar reminders.

  1. Pay Off Your Debt

Your first instinct to dealing with debt may be to ignore it hoping it will disappear, but this will only worsen the situation. While you’re partaking in spring cleaning at your home and only keeping items that bring you happiness, set aside the pieces you no longer want and sell them in a garage sale. You can use the money you make to pay off some of your debt. Another way you can accumulate some extra cash is by turning a hobby into a side hustle. For example, if you like crafts, monetize your hobby by selling your works of art online or to family and friends.

  1. Set and Commit to Financial Goals

Outline your short-term and long-term financial goals and plan how much money you need to set aside each month to achieve them. For many people, their primary goal is to increase their savings. While there are many ways to do this, one of the most effective is budgeting. Set a spending limit and commit to saying “no” when you reach your limit. Most importantly, track and be proud of the progress you’ve made to boost your financial confidence and inspire you to keep going.

Regardless of your financial situation, using spring cleaning and organizational techniques in your finances can help you reach your goals and tidy up your finances.


Young Person with Credit Card

7 Tips for first-time credit card users

Young Person with Credit Card

Credit cards are a powerful financial tool. If you use them wisely, they will help you achieve your financial goals. But as the saying goes, with great power comes great responsibility. Abuse them and you will find yourself in a world of financial hurt.

If you recently got your first credit card, here are nine tips to help you use it in a smart, financially-sound way:

1. Read the fine print

Eye-catching promotional headlines can be very appealing. But look at the details. You’ll especially want to watch for things like high annual or late fees, or additional costs attached to using the card.

2. Pay the balance in full every month

Make sure you pay off your purchases at the end of every billing cycle. This way, you’ll avoid paying interest, which, if allowed to build, can dramatically increase the total cost of your debt.

3. Use it to build your credit

Remember when we said credit cards are a powerful tool? When you pay off your balances every month, you establish a positive credit history. You demonstrate to credit agencies that you can handle the responsibility of credit. This will become important when you want to buy a car, rent an apartment or even apply for a job.

4. Treat it like cash

If you don’t have the money now (or in the near future) to pay off the purchase, don’t put it on your card. You increase your risk of accruing interest and expanding what you owe (that’s how people get into debt).

5. Look for a good rewards program (but not at the expense of a high rate)

Cards for first-time users without much of a credit history may not have exceptional rewards, but it can’t hurt to look. You might be able to find decent cash-back or mileage offers.

6. Don’t share it with anyone

Credit cards are private. Don’t let anyone use it under any circumstances, even if it’s a good friend who needs to borrow money.

7. Always check your statements

Unfortunately, credit card fraud is a very real thing. Check your statements every month to make sure there aren’t any unrecognizable charges. If you see a purchase that you didn’t make, report it to the credit card company right away.