Benjamin Feldman knows debt: He covers personal finance for ReadyForZero, a company that offers an enormous suite of tools to visualize, track and, most important, pay down debt. He spoke to us about the problems of debt and how to get it paid off.
How pressing an issue is debt in personal finance?
It's a very pressing issue. When you talk to people all across the U.S., you find that so many are struggling with debt right now. There are people who lost jobs during the recession and had to rely on credit cards to pay bills. There are people who had medical problems with expensive care that resulted in debt. There are recent college graduates who have student loan debt, many of whom are voicing their concern that they won't be able to live the American Dream of buying a home and raising a family because of their student loans.
What are some common misconceptions you've seen about personal debt?
The biggest misconception is that debt is an indication of some flaw or weakness in a person's character. There are so many ways that people can fall into debt and often it has to do with an unexpected crises that snowballs into a larger balance over time. Once the debt is there, it can grow very quickly with a high interest rate. Even for the people who get into debt due to overspending, a lot of times there is either a psychological reason or a lack of understanding as to how long it will take to pay off the debt.
Instead of shame, we prefer a proactive, collaborative attitude toward debt - by sharing our experiences and supporting each other in a positive way, we can help people get rid of debt more effectively and take back control of their finances. We created our ReadyForZero Community for that reason - to help people talk about debt and share strategies for paying it off.
How can software help people manage their debt?
We believe strongly in the power of software and online tools to help people manage and pay off their debt. The two founders of ReadyForZero, Rod Ebrahimi and Ignacio Thayer, first had the idea to build such a tool when they looked around and realized so many of their friends and family were trying to pay off some type of debt.
In response to this realization, they began building ReadyForZero and made sure it would be easier to use than writing numbers down on a spreadsheet and trying to add them up every month.
How important is visualizing your progress with debt management?
We think it's extremely important! That's why we include beautiful graphs and progress bars in each person's plan. Since debt can feel so intangible, we really like to use visual progress displays to help people understand where they are and where they need to go. And we constantly get positive feedback from our users about the graphs showing their total debt and credit score. They love to see the total debt decreasing over time and the credit score increasing as they pay off their accounts one by one.
What do you wish everyone knew about debt?
Oh, there are so many things! I would say the most important thing we want people to know is that you can get out of debt. It just requires having a good plan, sticking with it, and reaching out for help if necessary. There are so many options for those who are in debt, and often people don't know about them. Things like the Income Based Repayment program for people who can't afford their monthly student loan payments. Or balance transfers for people with high credit card balances but good credit scores.
How do you see debt and debt management changing in the future?
I think more and more people will begin using tools like ReadyForZero to expedite their debt repayment process. It's just so much easier when you have a place to see an overview of all your accounts in one place. And being able to do things like make payments from your computer or phone is also so empowering for people with debt. We hope that in the future everyone with debt will have access to these kinds of tools and that it will make the process much easier for people who are ready to pay off their debt for good!