Debt Coach was just released today and was announced at the Finovate conference in San Francisco, CA. The New York Times Debt Coach article came out today giving it a positive review. The point of Debt Coach is to help people who are unsure of their financial situation and provide them with simple-to-use tools, information, and potential solutions that will help them reach their financial goals. The best part is that it focuses on helping people get out of debt!
Let’s say you’re looking for the best option to get rid of your credit card debt but are unsure of what exactly each one means, Debt Coach gives you a detailed overview of each solution. This gives you the option of not having calling a bunch of different companies and have a sales person try to tell you which option it right for you. With this application you don’t really have to worry about any pressure to sign up right away without fully considering all your options. It’s already stressful having to think about getting rid of debt or how to go about reaching your financial goals without having to worry about being pressured by someone to do what they think is best for you. So lets dive into this tool and see how it works.
Getting – Started – Step 1 About You
After I clicked on getting started my “coach” asks me to fill in some basic info about myself. For the purposes of this walk through I’m going to put my self in the shoes of an average American with debt. That is I’ll owe $16,000 in credit card debt. If I’m not mistaken the average U.S. income is around $50,000…I put $55,000 just in case. For my financial situation I’ll say “I’m getting concerned…about my payments”, and I’ll put yes I own a home.
Step 2 About You
Okay, so now I’m on to step 2 and my “coach” is asking me more about my situation. For the section that asks me about my credit I just put “good”, and for my home I put “single family residence”. My intent is to fill this out with what is considered the average American information – and so far my “Debt Assessment” is telling me I’m average. Okay, I don’t feel so stressed out about “my situation”, or should I feel stressed?
Step 3 Your Preferences
In the “Your Preferences” section I am able to shift my priorities around. It’s kind of like going to the gym and telling a trainer whether I want to build muscle or burn fat. I can kind of do both at the same time but the reality is I have to focus on one over the other and determine which results are more important, and are going to be accomplished first. This is a cool step which allows me to play around with the options. In this case since I have $16,000 in credit card debt and I want to get out of that as soon as possible because I know if I continue with just the minimum payments this can easily take decades to pay off and cost me tens of thousands more.
Step 4 Your Debt
Wow, after that step my stress level went to high, my debt remains average, cash flow is low, credit is fair, and my net worth is low. What next coach? How do I move these bar graphs so I don’t have high stress and everything gets to where it should be? Well, in order for my coach to give me some solid potential recommendations to get me back in “shape” a little more info is needed. Bills.com has partnered with Experian (I like that because I know it’s trustworthy if a major credit bureau approves of this) to pull my credit information. Another good thing about this is that it does not impact my credit and it’s free! They don’t provide a credit score because they are already paying for the credit report information, and to do so would make it more expensive for the company to provide this free tool. Since, I may be a little hesitant about providing my info, the coach understands. He gives me the option to manually enter my accounts with out pulling my credit info.
Step 5 Your Best Solution
The moment I/we have been waiting for, the solution for me to get out of debt and back in shape. Considering the information I put in throughout the process the coach recommends that I do debt settlement. Now as I have previously written (in another article), debt settlement is typically an option to consider if you know you will fall behind or have already fallen behind with your monthly payments. This type of program is not for someone who could afford their payments, and potentially pay more than the minimum payments. So for my situation it seems as if this is the route I should seriously consider. Now I can click to learn more about why this was recommend for me, and I can also take a look at my other options – current payments, credit counseling, optimized payments, and cash out refinance. First, I want to know more about the coach’s recommendation.
Debt Settlement Recommendation
The coach is telling me that my best solution is debt settlement. He goes on to explain the pros, cons, and how the program works. This type of program can be really stressful and the potential for collection calls, legal action, and the impact on my credit rating can be severe. I do like the coach’s brutal honesty. Ultimately, if I want to be out of debt I must make some sacrifices and deal with the stress (hard work)
of getting through this type of program. I guess this is better than saying “here take these diet pills and you’ll lose all your fat in days and you will be ripped” (those diet pill and muscle building commercials). The pros are quite obvious – cut my payments in half, get out of debt in about 3 1/2 years, and reduce my overall payoff to close to half of what I originally owed. There is also a debt settlement video to watch. The CEO of Bills.com discusses the pros and cons of this option.
Another good feature is that they provide the numbers as to what payments might look like and compare it to what I’m currently doing.
Now I want to go back and compare this option to the current payments I’m making. Again the coach is telling me the pros and the cons of sticking with my current payments. What I find frightening is that based on my current payment it could take me about 13 years at $560 month to pay off my debt at a total of $22,638. Ouch, that’s money that could be going into my 401k, or savings. The coach provides visual affects using graphs and tables to break down how all of this works.
Okay coach what about credit counseling as an option? Again the coach tells me the pros and cons. And since I’m dealing with an application he’s not trying to convince me one way or another. I get the same break down with what my possible monthly payments in a credit counseling program would be and how that looks in comparison to my current payment schedule.
What about doing the “Snowball” strategy?
The coach really knows about all the strategies to get out of debt. In the category optimized payments, as you probably guessed, the coach explains the pros and the cons of optimizing my current payments. Now, since the coach is not sure how much more I can afford on a monthly bases the application lets me select my strategy (avalanche, snowball, minimum payments), play with payment sliders, and enter my liquid assets. I randomly played with the snowball option and put that I could pay $400 more than my current minimum payments. If I were to do that I would then be getting out of debt in about 1yr and 6months. This is a really good calculator for those that know they can afford more than the minimum payments and get a good estimate as to how long it could take to get out of debt, and how much they could save as a result..
This application makes it easy for consumers having a hard time managing their finances, and more importantly it highlights the options available to get out of debt. Debt Coach makes it clear that each option for getting out of debt will have its pros and cons. It’s important for consumers to seriously think about all the options in order to determine what the best course of action for their situation is. Like I mentioned before what I like most about the application is that there is no sense of pressure. Typically when you speak with a company representative it can sometimes feel like you are being pressured to make a decision right away. This is not the case with Debt Coach. The application lets you feel like you’re in control, and using the tools it provides gives the ability to get a better understanding of where you are with your finances, and what the results maybe when you choose a particular option. Give it a shot and let me know what you think about Debt Coach.