Update: Savvy Money (formerly Debt Goal) is no longer in the business of helping you get out of debt. They will, however, help you monitor your credit (like a Credit Karma or Credit Sesame). If you’d like to check out another get out of debt tool, we recommend you check out the Pay Off Debt app.
Since I started this blog, I’ve paid off roughly $40,000 in debt. I did it primarily through my own efforts (i.e. throwing all my extra cash at the debts). I know some of you are paying off debt as well. Good for you.
If you’ve tried the do-it-yourself guide to paying off debt and not had success, you might want to consider a debt reduction service to help you achieve your goal of paying off debt. I recently interviewed the creator of Savvy Money to learn more about his service to help you pay down debt faster.
1. Why do you think so many people find themselves in debt they can’t manage?
Very few people wake up to find themselves with an unmanageable debt problem. Most of us start with spending habits that put us close to the edge, taking on more debt than we are comfortable with. Then we hit an economic bump in the road or take a hard look at our finances and discover that we more than we can handle.
When we talk to our members, most say that one of the biggest drivers for their debt problem is simply the complexity of their finances: they spend from multiple checking accounts and credit cards and don’t have a consolidated view of what’s happening with their debt. Without that view, it’s easy to take on more debt than we can support.
2. What does Savvy Money offer to help people get out of debt?
The core of the Savvy Money program is the SmartPay Plan. It’s common sense that if you don’t have a plan to follow you won’t make much progress, but over 70% of people who say they have a goal to reduce debt don’t have a plan to do so and have no idea how to do so.
The SmartPay Plan helps borrowers set up a plan that works for their budget that will get them out of debt most efficiently, often getting them out of debt over 15 years earlier and saving $35,000 in interest compared to what would happen if they made the payments suggested by the banks.
We make this process as easy as possible by allowing users to link their SmartPay Plan to their online accounts so that their plan changes to reflect their situation. We also track progress and show users how they’re progressing relative to their plan.
3. How did you come up with this idea?
I came up with the idea after doing product R&D research for a major credit card issuer and from experiences helping family and friends create a plan to pay off their debt. During this process, I realized that it’s very complicated to create an optimized plan. I’ve worked with spreadsheets a lot and for me it was very difficult.
I realized that for most people the process is too complicated and would take too much time, but that we could use technology to simplify the process and make it easy and fun. That’s where the idea started, but we’ve gotten tons of feedback from our users that we use to continually refine the service.
4. Why do you think your solution is so effective?
We’re effective because we hit all the key requirements. First, we offer a consolidated view of their debt that tracks total debt levels over time and highlights progress. Second, we give the user a very tactical month-by-month SmartPay Plan that gives borrowers an optimal payment plan to get out of debt most efficiently.
Third, we give users a framework to look at all areas of their finances in the context of their debt goals to evaluate decisions like whether they should change their retirement contributions to free up money to apply to debt. Finally, we provide as much motivational feedback as we can.
With every payment a user makes, we help them see how much principal they’ll pay off and how much interest that will save them. It’s hard to over-state the power of just telling people that when they pay $100 to their credit card, $60 of that will reduce principal and that payment may save them $40-50 of future interest.
When you help people see that feedback, it becomes much easier to stick with the plan and make progress.
5. What kind of people do you see having the most success with your service?
Our service is designed to help anyone who is currently able to make at least minimum payments. If you can make minimum payments and avoid making new charges, you can pay off your credit card debt in just 2-3 years. So really, anyone can make progress.
The people who are most successful with the program are those that are really committed to getting out of debt. They tend to be families who are looking at the future and have decided that their lives will be much richer without the high costs of debt.
Learn more or SavvyMoney.com