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How Americans Get Out of Credit Card Debt

88 points by innovate 16y ago

kirpekar 16y ago
"How Americans get out of credit card debt." Don't most of them just pay it off? Sure takes a long time, but eventually don't most people pay what they owe? BTW, there are only about 1.5Million bankruptcies in the US every year ... that's <1% of borrowers. So I wouldn't use it as the first kind of "traditional option".
- rbranson 16y ago
  It's kind of misleading to say that it's "only" 1% of borrowers file, because the scope of time is focused on one year, but not only do borrowers have a much larger average lifetime, but the impacts of bankruptcy last 10 years. If we say that the borrower pool stays fairly static over a 10 year period, that means really you're talking about AT LEAST 15% of borrowers are filing bankruptcy.
  - Retric 16y ago
    Many people also die with debt. I suspect less than 50% of people ever get back to zero after gaining significant amounts of debt.
- ithayer 16y ago
  Hey there, thanks for the comment! You are absolutely right that there were about 1.5M bankruptcy filings last year [this number is growing (1)]. Note that we haven't made any claims about the ordering on the graphic, but bankruptcy is an option which is often under-considered, because people are scared of it, and driven by FUD to pursue other options which often have lower success rates. Rod and I have learned a tremendous amount about debt since founding this company. We have heard every possible misconception from people who are not in debt, such as - "people don't care about paying debt off as much as weight loss because it's not visible" - "only dumb people get in debt" - "people should just stop shopping and pay off their cards" The list goes on. What we have learned from speaking with dozens (now probably hundreds) is that there is no "typical" debtor. People that have reached out to us vary in age, sex, location, education level, stress level, income, employment, height, weight, hacker cred, skin color, and so on. The number of people in this situation in the US number in the millions. The statement "Don't most of them just pay it off" trivializes situational problems which are extremely diverse and complex. And "take a long time" it does - people that are either not financially educated or unable to pay off their debt can live in a steady state of repayment, paying a perpetual existence tax to banks. This should not be the state of the world! (1) http://www.uscourts.gov/News/NewsView/10-11-08/Bankruptcy_Filings_Up_Nearly_14_Percent_over_Last_Fiscal_Year.aspx?CntPageID=1 http://www.uscourts.gov/News/NewsView/10-11-08/Bankruptcy_Fi...
  - dstorrs 16y ago
    If the debtor pool varies as widely as you claim, that reinforces something I've been wondering for a while: Is it true that Americans are in debt because they are fiscally irresponsible, or is it because the playing field is tilted? It is hard for me to believe that 33% of all Americans can't grasp the idea of "spend less than you make". Sure, a lot of it is consumer culture / media pressure, etc. But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try, meaning that as soon as they hit a financial bump (job loss, non-insured surgery, car repair) they are in debt and the interest rates on the card spiral? This is not a conspiracy theory -- I don't think there is a literal collection of people in a room saying "how do we stick it to them this week?" -- but I do think that many economic actors (credit card companies, credit bureaus, major retail stores, etc) act in their own self-interest to continue this situation. I've seen bits and pieces that support this theory, but I lack the economic and political background to tell if this is right or not. Can anyone point me at good sources?
    - ithayer 16y ago
      One interesting tidbit: the most popular support request we've received since launching is to make the service available in the US and Canada. One natural reason that this situation has gotten worse is that the credit card market has become completely saturated (everyone who wants a card has one [almost]). This, combined with relatively easy credit recently has resulted in the card companies marketing to people that they would previously had stayed away from. We've learned that people often become accustomed to credit at an early point in their lives (college), rely on it for awhile, then don't suffer any explicit repercussions, and so grow accustomed to it until the problem grows and it's too late. I don't really think it's a 'conspiracy' either, since it's clear what the motivations for all of the involved parties are. Would love to chat about this more, but I need to tend to the serverz :)
    - bkmartin 16y ago
      I think that the tilted playing field is a great analogy. This has been my biggest complaint. There are many actors as you say, and when you add situations in there that are beyond our control it snowballs quickly. Take myself for instance... Me and my wife are both college graduates. We both come from non rich, roughly impoverished backgrounds. Her mom was a single mother, my dad is a small farmer. So we went off and had to pay for it ourselves. College isn't cheap, that means loans. Lots of loans. So we walked out of college with 80k total in just student loans. We both worked summer jobs, plus jobs during the school year as much as we could. Now, neither of us had nice cars, so they needed to be fixed from time to time. You know, a head gasket here and new transmission there. It all adds up. Then we had this crazy idea... Lets get married! Nice, but now we have to pay for that as well. So I've got a mountain of debt that we're both working to pay off (very slowly) and its not like I have a flat screen tv or any of that stuff to show for it. We don't spend more than we make, but we have a huge hole to climb out of that leaves us with very little at the end of every month. And our expenses aren't getting smaller... health care goes up, so does food, and gas, and heating oil. Welcome to the new American Dream. My hope is that my bootstrapped web hosting service will someday allow me the flexibility I long for, but its a lot of sacrificing of sleep and some family time.
contagionhealth 16y ago
Wondering how many people use the consolidators who promise to manage down your debt by acting as midddlemen between you and collectors? What advantages (if any) does Ready for Zero offer over this method? It took me 11 years to pay off 2 credit cards, and I'm still petrified to go into CC debt again. Will Ready for Zero also eventually offer planning tools for saving up for a big ticket item like a new MacBook Air so that I don't have to pull out a CC to purchase it?
- scottkrager 16y ago
  Try something like: http://www.smartypig.com http://www.smartypig.com (online savings accounts goal oriented) or http://www.mint.com http://www.mint.com (nice goals feature)
- innovate 16y ago
  Today, RFZ is a do it yourself type of tool. So it is a different option altogether than debt consolidation but we did recently announce a partnership with Lending Club that allows us to consolidate people's high interest debts when and if it makes sense (not always the best option). Planning tools are definitely in the works. We do help you understand the 'true cost' of items purchased on your credit cards; the interest and fees can be sneaky.
jarin 16y ago
I love this idea, but I've been getting "We're sorry, our server is under heavy load. Please try again." during the verify phase for the last few days.
- joezydeco 16y ago
  I just got a beta code the other day after signing up months ago. Must be another marketing push.
- deleted 16y ago
  [deleted]
- ithayer 16y ago
  Thanks for checking us out - I'm really sorry about that. We are dealing with issues with some of our backend service providers. One of the difficulties of a financial site such as this is that the data which comes back is not very well normalized nor homogeneous, and we are seeing issues and response types which we have never seen before. Please send an email to support@readyforzero.com and we will track your issue. Thanks guys!
  - jarin 16y ago
    Sent! Let me know if I can help in any way.
StavrosK 16y ago
What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.
- randrews 16y ago
  You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.
  - StavrosK 16y ago
    Ah, yes. That's what I meant, good catch.
    - randrews 16y ago
      It's always been my rule. :) If I've had to put groceries (or whatever) on a credit card, I'm not also buying a video game that month.
      - StavrosK 16y ago
        I think it's pretty safe to say that the people in debt don't know about this rule :/
  - Retric 16y ago
    The most useful way of thinking of CC debt is how much it INCREASES THE PRICE of what you buy. That nice lunch might cost 20$ if you paid cash, but use your CC and it's really 20$ + the interest you are going to pay. If it's going to take you 4 years to pay off your 20% APR CC debt then that 20$ lunch is really 41$ 50c. PS: That is not to say paying cash for lunch changes the numbers when you are in debt; CC increases the cost of "everything" you buy without exception.
    - 16y ago
elvirs 16y ago
as long as there is money in society there always will be dept. if consumers pay off all their dept on credit cards. if homeowners pay off all their mortgage dept for property. if all small businesses pay off their dept. if all institutions pay off their dept. if all banks pay off their dept to investors, foundations, etc. if all states pay off their dept to banks, IMF and other organizations. in other words, if every single individual or organization pays of their dept there wont be a single dollar bill in circulation which means an end to our current system, which is something most people do not want to happen (no matter how broken and inefficient it is)
geuis 16y ago
So my question is what about people that aren't in debt, but need help improving their credit score? I had a lot of debt from about 5-10 years ago and it killed my credit score. The debt has all been paid off for a few years, I haven't had credit cards in years, and I still have a few notices from closed accounts that won't fall off for a few years. So I'm currently doing what I can to remove the closed notices and have had some minor success. But a lot of people don't know the right things to do to improve their scores. Having a service that tracks the 3 credit bureaus and provides guidance on steps to take to bring your score up would be mighty useful.
- chrisduesing 16y ago
  Once you hit the 7 year mark those late payments fall off your record. Just keeping your current bills paid on time is probably the best thing you can do if you already have several years without any problems.
- orijing 16y ago
  > I haven't had credit cards in years That raises flags for me, because as far as I know from what I've read, some of the key components of your credit score are 1. length of credit history (i.e. if the average age of your open credit lines is 0, then that's bad) and 2. credit limit (if you have no credit cards, you have no credit. Certainly having no debt helps, but many of the other things hurt more than they help.
- lionhearted 16y ago
  Go to your bank and ask about a secured loan. Basically, you put money in a CD and get 2% or whatever. The CD sits at the bank. You then get a loan for the same amount as the CD at 3% or so. They've got your money in the bank, so it's no risk for them. You put the loan on auto-pay, you lose 1% per year to do this, but you get 12 of these kinds of transaction credits on your account which is good because they count differently than credit card. I did it with $1100 and it cost me $10 or $15 or whatever, but I went from not eligible for a credit card with a limit over $250 to getting an uncapped charge card with good rewards in 12 months, which was very helpful in business. I don't know about getting the bad transactions off, but getting good ones on is important too. I don't know what the lowest amount you can do it with is, but I did it with two loans: one $1000 and one $100, and it worked well.
kirpekar 16y ago
In the context of getting out of debt: Is anyone a Dave Ramsey listener here? I've been an avid listener for a few years now. I recommend his podcast to everyone -- not only for the financial advice, but also for the cultural education about what America really is.
- mattm 16y ago
  I listened to him while paying off my student loans. A bit repetitive but very motivational and encouraging.
- ams6110 16y ago
  I like his debt snowball approach. I don't have a debt problem (and plan to never have, but crises happen). The way I understand it, you pay off your smallest debt by whatever means necessary, make minimum payments on everything else. Then you take what you were paying on that debt, and apply it to the next. Over time you are eliminating debt and applying all the money you spent on the eliminated debt towards the next debt. So you start paying off faster as you go. At least that's how I think the plan works.
  - Teckla 16y ago
    The fastest way to pay off debt is to pay off the highest interest rate debt first, then the next highest interest rate debt, then the next highest interest rate debt, etc. The debt snowball approach isn't the fastest approach, but the theory is that it has a strong psychological impact: By paying off your smallest debts first, you see forward progress more clearly, which motivates and energizes you to keep going. Another good psychological trick is to have only one credit card. Then, when you get the bill each month, you can clearly see how much you've spent. The single big statement is scarier than having lots of little statements, and leads people to spend less money unnecessarily.
- noodle 16y ago
  my mother listens to him a lot, so i've heard him quite a lot. his advice is good, of course, but i find it interesting that every program is the same thing over and over, like its a reaffirmation mantra that people need to hear in order to successfully not spend the money they don't have, or how to deal with it when they forget they're not supposed to.
BlazingFrog 16y ago
The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month. 1. Isn't carrying a balance from month to month the definition of "credit card debt"? 2. As of July 2009, the US population is about 307 million people. That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not true.
- innovate 16y ago
  1/3 of Americans carry a balance from month to month (revolving) = ~100 million people; sorry layout is confusing but this is in fact correct. Of course, more than 100MM actually have at least one credit card but not all of them carry balances. Simply put, way more than 100MM people have credit cards, only ~100MM or 1/3rd carry balances from month to month.
- lurker17 16y ago
  The way I read it, the two facts are redundant, they mean that virtually everybody with credit card debt carries a balance from month to month. That's tautologically true. I would guess that more than 1/3 of Americans have a credit. card account (not necessarily debt).
- ithayer 16y ago
  The most recent Survey of Consumer Payment Choice estimates that there are 178M card holders. The 2009 Survey of Consumer Finances (2) estimates that percentage of card holders of "bank-type" (eg: not Macy's) cards that revolve balances is just under 50%. With store cards, this number is right around 100M. (1) http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.htm http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.htm (2) www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf
nhebb 16y ago
OT: A blog peeve of mine is when you read a blog and want to visit the home page but can't find the link. Out of years of systematic reflex, I clicked the logo in the upper left, only to get the blog home. After a little link hovering I discovered the "try it out" button goes to the home page, but to me that means sign up, not read more about it. If you're going to use your blog for marketing, make it really easy for visitors to visit the home page. Don't make me think!
efields 16y ago
I got my RFZ invite code the other day and took the 10 minutes it required to get my credit cards in the system and play with its tools. I found it to be SO much simpler than Mint, which I've just ignored for more than a year now. With RFZ, I can quickly see that if I stopped using my cards and paid X per month for 3 years, I'm out of debt and am only paying about 15% more over what I owe. Thats not so bad when you consider the alternatives. Now, I think I underestimated what I can afford to pay, so hopefully I look at my bank account one day and see there's a few extra thousand that I don't need to save and can immediately put that on a card. Feels like I'll be better off much sooner than 3 years. Mint can do this, I know, but again — the simplicity of the experience of RFZ is top notch.
- innovate 16y ago
  Thanks. We would love to hear more about your experience as we continue to make improvements.
- sudonim 16y ago
  Ditto. I got my invite the other day. I like that it is one place focused on getting my debt down. I paid what felt like a bunch of money the other day, but on RFZ it's clear that it was a drop in the bucket of what I owe in total... I second that. RFZ is top notch. Edit: this thread reminded me to check if a trade cleared. Just paid another $800 towards credit card zero. Woot!
meterplech 16y ago
Is their business model subscription based or recommendation (like Mint) based? I don't know if I would trust anything from a company like this if I was already in debt. Usually people already feel screwed over. They should really work on PR and branding so people feel like they can trust then.
- innovate 16y ago
  Check out our FAQs and Privacy Policy, we try to address this and other issues there: https://www.readyforzero.com/overview/faqs https://www.readyforzero.com/overview/faqs https://www.readyforzero.com/overview/privacy https://www.readyforzero.com/overview/privacy As a datapoint, since the public launch a few days ago we are already helping people track over $35M in credit card debts. We believe trust is earned not paid for.
  - meterplech 16y ago
    Nice- I should've looked. And, I appreciate the idea behind earned trust. Best of luck!
thompo 16y ago
i rang up about 5k in credit card debt. six months ago, i decided to put my nose to the grindstone and get it done. i paid my last $600 off this morning. i stopped buying unnecessary shit, stopped eating out all the time, and most importantly, made payments -every- time i possibly could. if i opened my bank account online and had $400 left in checking, i'd put $250 into the card. if i had $200 left, i'd put $100. there are a whole boatload of $50 payments and many even smaller. just start paying and don't stop until it's gone. pay your bills, stay fed, and whenever you have money left over, move it to your credit card. try to make a small payment every couple days. just focus on that damn number and make it smaller every single opportunity you have until it reads "0". i also made enough during this period to pay for a trip to jamaica in cash. i only make $39,500 yearly so it's not like i'm hauling in bags of dough, but focusing on my credit card debt also had some interesting side effects - like learning money management and learning how to save WHILE paying down old debts. it got to the point that i found more joy in moving $50 to my credit card than going out and dropping $50 on drinks over the weekend. it's funny, but all that stuff that i just 'had' to buy before ...... it turns out i didn't. imagine that.
- TheAmazingIdiot 16y ago
  I'm sure you're up there with those who think that people who owe large sums of money should "just work harder" or "lay off alcohol and cigs". I had a medical injury that has royally screwed up my life. I also HAD insurance, but starbucks switched insurance and I was now in preexisting condition hell. I had no money for a lawsuit, so I'm now 12k in the hole, along with basic living expenses that I had to cover while not being able to work. Its upwards of 20k and I have no way to pay it off. So no. Quite many people in USA are just 1 accident away from ruin. I've seen it 3x before, and now with me. And there's not much at all that could be done.
  - sixtofour 16y ago
    "Quite many people in USA are just 1 accident away from ruin." I am without health insurance, and I find that I am very careful moving about in the world, for exactly that reason. If I ever get in a major accident, I almost hope they can't revive me.
kevinpet 16y ago
They have a chart showing how people get out of debt, and the chart seriously does not include the option "pay your damn bills?" I'm reminded of statistics saying that the average wedding costs $28k or whatever. The reality turns out to be something like "among weddings arranged by a professional wedding planner, the average cost is 28k". I hope they aren't putting together a funding pitch equating the "1/3 of American's have credit card debt" with "1/3 of Americans have enough debt that they need outside help managing it" as this chart implies.
- arghnoname 16y ago
  I've been in a situation where life sucked and racked up some debt and fouled up my credit, so I can sympathize to some extent, but what I thought was pretty bad debt (including student loans) was less than that 'average' wedding figure. After spending a year or two putting all my extra income toward successfully retiring the debt, my future wife and I looked at engagement rings and weddings and thought, "this is crazy." She has no engagement ring (wedding band though) and we eloped, and we're just as married as my brother and he spent $30k. I have a friend whose parents offered to give them money for a down payment or to pay for their wedding. They chose wedding. What the hell people? It's one day. The wedding madness is just nuts. "Hey, we might want to buy a house and have kids soon. Let's spend all of that money we might need entertaining a gaggle of family and friends, half of whom each one of us doesn't particularly like."
iamchmod 16y ago
I wonder how many people that declare bankruptcy own a big flat screen TV with a DirectTV subscription with at least one premium package (Showtime, HBO, etc)?
pnathan 16y ago
Hi, I don't have much CC debt right now, at all. What I do have is Student Debt, and bags of it. I've rummaged through the relevant federal repayment and waiver options, and I don't see any efficient ways for a software engineer to deal with the debt except "push as much money at it as fast as possible". Loan management options seem to extend debt payments out to about 30-40 years, which generates some eye-hurtingly huge interest payments over time. (think 1.5x the original loan amount). One of the nasty little twists in federal student loans is that bankruptcy won't affect them. They do have various deferment plans, but those can keep the interest ticking along, which can be harsh if loans are large. So: my question is: does readyforzero.com have any plans to work on student loan debt in the future?

88 points by innovate 16y ago

"How Americans get out of credit card debt." Don't most of them just pay it off? Sure takes a long time, but eventually don't most people pay what they owe? BTW, there are only about 1.5Million bankruptcies in the US every year ... that's <1% of borrowers. So I wouldn't use it as the first kind of "traditional option".

rbranson 16y ago
It's kind of misleading to say that it's "only" 1% of borrowers file, because the scope of time is focused on one year, but not only do borrowers have a much larger average lifetime, but the impacts of bankruptcy last 10 years. If we say that the borrower pool stays fairly static over a 10 year period, that means really you're talking about AT LEAST 15% of borrowers are filing bankruptcy.
- Retric 16y ago
  Many people also die with debt. I suspect less than 50% of people ever get back to zero after gaining significant amounts of debt.
ithayer 16y ago
Hey there, thanks for the comment! You are absolutely right that there were about 1.5M bankruptcy filings last year [this number is growing (1)]. Note that we haven't made any claims about the ordering on the graphic, but bankruptcy is an option which is often under-considered, because people are scared of it, and driven by FUD to pursue other options which often have lower success rates. Rod and I have learned a tremendous amount about debt since founding this company. We have heard every possible misconception from people who are not in debt, such as - "people don't care about paying debt off as much as weight loss because it's not visible" - "only dumb people get in debt" - "people should just stop shopping and pay off their cards" The list goes on. What we have learned from speaking with dozens (now probably hundreds) is that there is no "typical" debtor. People that have reached out to us vary in age, sex, location, education level, stress level, income, employment, height, weight, hacker cred, skin color, and so on. The number of people in this situation in the US number in the millions. The statement "Don't most of them just pay it off" trivializes situational problems which are extremely diverse and complex. And "take a long time" it does - people that are either not financially educated or unable to pay off their debt can live in a steady state of repayment, paying a perpetual existence tax to banks. This should not be the state of the world! (1) http://www.uscourts.gov/News/NewsView/10-11-08/Bankruptcy_Filings_Up_Nearly_14_Percent_over_Last_Fiscal_Year.aspx?CntPageID=1 http://www.uscourts.gov/News/NewsView/10-11-08/Bankruptcy_Fi...
- dstorrs 16y ago
  If the debtor pool varies as widely as you claim, that reinforces something I've been wondering for a while: Is it true that Americans are in debt because they are fiscally irresponsible, or is it because the playing field is tilted? It is hard for me to believe that 33% of all Americans can't grasp the idea of "spend less than you make". Sure, a lot of it is consumer culture / media pressure, etc. But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try, meaning that as soon as they hit a financial bump (job loss, non-insured surgery, car repair) they are in debt and the interest rates on the card spiral? This is not a conspiracy theory -- I don't think there is a literal collection of people in a room saying "how do we stick it to them this week?" -- but I do think that many economic actors (credit card companies, credit bureaus, major retail stores, etc) act in their own self-interest to continue this situation. I've seen bits and pieces that support this theory, but I lack the economic and political background to tell if this is right or not. Can anyone point me at good sources?
  - ithayer 16y ago
    One interesting tidbit: the most popular support request we've received since launching is to make the service available in the US and Canada. One natural reason that this situation has gotten worse is that the credit card market has become completely saturated (everyone who wants a card has one [almost]). This, combined with relatively easy credit recently has resulted in the card companies marketing to people that they would previously had stayed away from. We've learned that people often become accustomed to credit at an early point in their lives (college), rely on it for awhile, then don't suffer any explicit repercussions, and so grow accustomed to it until the problem grows and it's too late. I don't really think it's a 'conspiracy' either, since it's clear what the motivations for all of the involved parties are. Would love to chat about this more, but I need to tend to the serverz :)
  - bkmartin 16y ago
    I think that the tilted playing field is a great analogy. This has been my biggest complaint. There are many actors as you say, and when you add situations in there that are beyond our control it snowballs quickly. Take myself for instance... Me and my wife are both college graduates. We both come from non rich, roughly impoverished backgrounds. Her mom was a single mother, my dad is a small farmer. So we went off and had to pay for it ourselves. College isn't cheap, that means loans. Lots of loans. So we walked out of college with 80k total in just student loans. We both worked summer jobs, plus jobs during the school year as much as we could. Now, neither of us had nice cars, so they needed to be fixed from time to time. You know, a head gasket here and new transmission there. It all adds up. Then we had this crazy idea... Lets get married! Nice, but now we have to pay for that as well. So I've got a mountain of debt that we're both working to pay off (very slowly) and its not like I have a flat screen tv or any of that stuff to show for it. We don't spend more than we make, but we have a huge hole to climb out of that leaves us with very little at the end of every month. And our expenses aren't getting smaller... health care goes up, so does food, and gas, and heating oil. Welcome to the new American Dream. My hope is that my bootstrapped web hosting service will someday allow me the flexibility I long for, but its a lot of sacrificing of sleep and some family time.

contagionhealth 16y ago

Wondering how many people use the consolidators who promise to manage down your debt by acting as midddlemen between you and collectors? What advantages (if any) does Ready for Zero offer over this method? It took me 11 years to pay off 2 credit cards, and I'm still petrified to go into CC debt again. Will Ready for Zero also eventually offer planning tools for saving up for a big ticket item like a new MacBook Air so that I don't have to pull out a CC to purchase it?

scottkrager 16y ago
Try something like: http://www.smartypig.com http://www.smartypig.com (online savings accounts goal oriented) or http://www.mint.com http://www.mint.com (nice goals feature)
innovate 16y ago
Today, RFZ is a do it yourself type of tool. So it is a different option altogether than debt consolidation but we did recently announce a partnership with Lending Club that allows us to consolidate people's high interest debts when and if it makes sense (not always the best option). Planning tools are definitely in the works. We do help you understand the 'true cost' of items purchased on your credit cards; the interest and fees can be sneaky.

jarin 16y ago

I love this idea, but I've been getting "We're sorry, our server is under heavy load. Please try again." during the verify phase for the last few days.

joezydeco 16y ago
I just got a beta code the other day after signing up months ago. Must be another marketing push.
deleted 16y ago
[deleted]
ithayer 16y ago
Thanks for checking us out - I'm really sorry about that. We are dealing with issues with some of our backend service providers. One of the difficulties of a financial site such as this is that the data which comes back is not very well normalized nor homogeneous, and we are seeing issues and response types which we have never seen before. Please send an email to support@readyforzero.com and we will track your issue. Thanks guys!
- jarin 16y ago
  Sent! Let me know if I can help in any way.

StavrosK 16y ago

What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.

randrews 16y ago
You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.
- StavrosK 16y ago
  Ah, yes. That's what I meant, good catch.
  - randrews 16y ago
    It's always been my rule. :) If I've had to put groceries (or whatever) on a credit card, I'm not also buying a video game that month.
    - StavrosK 16y ago
      I think it's pretty safe to say that the people in debt don't know about this rule :/
- Retric 16y ago
  The most useful way of thinking of CC debt is how much it INCREASES THE PRICE of what you buy. That nice lunch might cost 20$ if you paid cash, but use your CC and it's really 20$ + the interest you are going to pay. If it's going to take you 4 years to pay off your 20% APR CC debt then that 20$ lunch is really 41$ 50c. PS: That is not to say paying cash for lunch changes the numbers when you are in debt; CC increases the cost of "everything" you buy without exception.
  - 16y ago

elvirs 16y ago

as long as there is money in society there always will be dept. if consumers pay off all their dept on credit cards. if homeowners pay off all their mortgage dept for property. if all small businesses pay off their dept. if all institutions pay off their dept. if all banks pay off their dept to investors, foundations, etc. if all states pay off their dept to banks, IMF and other organizations. in other words, if every single individual or organization pays of their dept there wont be a single dollar bill in circulation which means an end to our current system, which is something most people do not want to happen (no matter how broken and inefficient it is)

geuis 16y ago

So my question is what about people that aren't in debt, but need help improving their credit score? I had a lot of debt from about 5-10 years ago and it killed my credit score. The debt has all been paid off for a few years, I haven't had credit cards in years, and I still have a few notices from closed accounts that won't fall off for a few years. So I'm currently doing what I can to remove the closed notices and have had some minor success. But a lot of people don't know the right things to do to improve their scores. Having a service that tracks the 3 credit bureaus and provides guidance on steps to take to bring your score up would be mighty useful.

chrisduesing 16y ago
Once you hit the 7 year mark those late payments fall off your record. Just keeping your current bills paid on time is probably the best thing you can do if you already have several years without any problems.
orijing 16y ago
> I haven't had credit cards in years That raises flags for me, because as far as I know from what I've read, some of the key components of your credit score are 1. length of credit history (i.e. if the average age of your open credit lines is 0, then that's bad) and 2. credit limit (if you have no credit cards, you have no credit. Certainly having no debt helps, but many of the other things hurt more than they help.
lionhearted 16y ago
Go to your bank and ask about a secured loan. Basically, you put money in a CD and get 2% or whatever. The CD sits at the bank. You then get a loan for the same amount as the CD at 3% or so. They've got your money in the bank, so it's no risk for them. You put the loan on auto-pay, you lose 1% per year to do this, but you get 12 of these kinds of transaction credits on your account which is good because they count differently than credit card. I did it with $1100 and it cost me $10 or $15 or whatever, but I went from not eligible for a credit card with a limit over $250 to getting an uncapped charge card with good rewards in 12 months, which was very helpful in business. I don't know about getting the bad transactions off, but getting good ones on is important too. I don't know what the lowest amount you can do it with is, but I did it with two loans: one $1000 and one $100, and it worked well.

kirpekar 16y ago

In the context of getting out of debt: Is anyone a Dave Ramsey listener here? I've been an avid listener for a few years now. I recommend his podcast to everyone -- not only for the financial advice, but also for the cultural education about what America really is.

mattm 16y ago
I listened to him while paying off my student loans. A bit repetitive but very motivational and encouraging.
ams6110 16y ago
I like his debt snowball approach. I don't have a debt problem (and plan to never have, but crises happen). The way I understand it, you pay off your smallest debt by whatever means necessary, make minimum payments on everything else. Then you take what you were paying on that debt, and apply it to the next. Over time you are eliminating debt and applying all the money you spent on the eliminated debt towards the next debt. So you start paying off faster as you go. At least that's how I think the plan works.
- Teckla 16y ago
  The fastest way to pay off debt is to pay off the highest interest rate debt first, then the next highest interest rate debt, then the next highest interest rate debt, etc. The debt snowball approach isn't the fastest approach, but the theory is that it has a strong psychological impact: By paying off your smallest debts first, you see forward progress more clearly, which motivates and energizes you to keep going. Another good psychological trick is to have only one credit card. Then, when you get the bill each month, you can clearly see how much you've spent. The single big statement is scarier than having lots of little statements, and leads people to spend less money unnecessarily.
noodle 16y ago
my mother listens to him a lot, so i've heard him quite a lot. his advice is good, of course, but i find it interesting that every program is the same thing over and over, like its a reaffirmation mantra that people need to hear in order to successfully not spend the money they don't have, or how to deal with it when they forget they're not supposed to.

BlazingFrog 16y ago

The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month. 1. Isn't carrying a balance from month to month the definition of "credit card debt"? 2. As of July 2009, the US population is about 307 million people. That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not true.

innovate 16y ago
1/3 of Americans carry a balance from month to month (revolving) = ~100 million people; sorry layout is confusing but this is in fact correct. Of course, more than 100MM actually have at least one credit card but not all of them carry balances. Simply put, way more than 100MM people have credit cards, only ~100MM or 1/3rd carry balances from month to month.
lurker17 16y ago
The way I read it, the two facts are redundant, they mean that virtually everybody with credit card debt carries a balance from month to month. That's tautologically true. I would guess that more than 1/3 of Americans have a credit. card account (not necessarily debt).
ithayer 16y ago
The most recent Survey of Consumer Payment Choice estimates that there are 178M card holders. The 2009 Survey of Consumer Finances (2) estimates that percentage of card holders of "bank-type" (eg: not Macy's) cards that revolve balances is just under 50%. With store cards, this number is right around 100M. (1) http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.htm http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.htm (2) www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf

nhebb 16y ago

OT: A blog peeve of mine is when you read a blog and want to visit the home page but can't find the link. Out of years of systematic reflex, I clicked the logo in the upper left, only to get the blog home. After a little link hovering I discovered the "try it out" button goes to the home page, but to me that means sign up, not read more about it. If you're going to use your blog for marketing, make it really easy for visitors to visit the home page. Don't make me think!

efields 16y ago

I got my RFZ invite code the other day and took the 10 minutes it required to get my credit cards in the system and play with its tools. I found it to be SO much simpler than Mint, which I've just ignored for more than a year now. With RFZ, I can quickly see that if I stopped using my cards and paid X per month for 3 years, I'm out of debt and am only paying about 15% more over what I owe. Thats not so bad when you consider the alternatives. Now, I think I underestimated what I can afford to pay, so hopefully I look at my bank account one day and see there's a few extra thousand that I don't need to save and can immediately put that on a card. Feels like I'll be better off much sooner than 3 years. Mint can do this, I know, but again — the simplicity of the experience of RFZ is top notch.

innovate 16y ago
Thanks. We would love to hear more about your experience as we continue to make improvements.
sudonim 16y ago
Ditto. I got my invite the other day. I like that it is one place focused on getting my debt down. I paid what felt like a bunch of money the other day, but on RFZ it's clear that it was a drop in the bucket of what I owe in total... I second that. RFZ is top notch. Edit: this thread reminded me to check if a trade cleared. Just paid another $800 towards credit card zero. Woot!

meterplech 16y ago

Is their business model subscription based or recommendation (like Mint) based? I don't know if I would trust anything from a company like this if I was already in debt. Usually people already feel screwed over. They should really work on PR and branding so people feel like they can trust then.

innovate 16y ago
Check out our FAQs and Privacy Policy, we try to address this and other issues there: https://www.readyforzero.com/overview/faqs https://www.readyforzero.com/overview/faqs https://www.readyforzero.com/overview/privacy https://www.readyforzero.com/overview/privacy As a datapoint, since the public launch a few days ago we are already helping people track over $35M in credit card debts. We believe trust is earned not paid for.
- meterplech 16y ago
  Nice- I should've looked. And, I appreciate the idea behind earned trust. Best of luck!

thompo 16y ago

i rang up about 5k in credit card debt. six months ago, i decided to put my nose to the grindstone and get it done. i paid my last $600 off this morning. i stopped buying unnecessary shit, stopped eating out all the time, and most importantly, made payments -every- time i possibly could. if i opened my bank account online and had $400 left in checking, i'd put $250 into the card. if i had $200 left, i'd put $100. there are a whole boatload of $50 payments and many even smaller. just start paying and don't stop until it's gone. pay your bills, stay fed, and whenever you have money left over, move it to your credit card. try to make a small payment every couple days. just focus on that damn number and make it smaller every single opportunity you have until it reads "0". i also made enough during this period to pay for a trip to jamaica in cash. i only make $39,500 yearly so it's not like i'm hauling in bags of dough, but focusing on my credit card debt also had some interesting side effects - like learning money management and learning how to save WHILE paying down old debts. it got to the point that i found more joy in moving $50 to my credit card than going out and dropping $50 on drinks over the weekend. it's funny, but all that stuff that i just 'had' to buy before ...... it turns out i didn't. imagine that.

TheAmazingIdiot 16y ago
I'm sure you're up there with those who think that people who owe large sums of money should "just work harder" or "lay off alcohol and cigs". I had a medical injury that has royally screwed up my life. I also HAD insurance, but starbucks switched insurance and I was now in preexisting condition hell. I had no money for a lawsuit, so I'm now 12k in the hole, along with basic living expenses that I had to cover while not being able to work. Its upwards of 20k and I have no way to pay it off. So no. Quite many people in USA are just 1 accident away from ruin. I've seen it 3x before, and now with me. And there's not much at all that could be done.
- sixtofour 16y ago
  "Quite many people in USA are just 1 accident away from ruin." I am without health insurance, and I find that I am very careful moving about in the world, for exactly that reason. If I ever get in a major accident, I almost hope they can't revive me.

kevinpet 16y ago

They have a chart showing how people get out of debt, and the chart seriously does not include the option "pay your damn bills?" I'm reminded of statistics saying that the average wedding costs $28k or whatever. The reality turns out to be something like "among weddings arranged by a professional wedding planner, the average cost is 28k". I hope they aren't putting together a funding pitch equating the "1/3 of American's have credit card debt" with "1/3 of Americans have enough debt that they need outside help managing it" as this chart implies.

arghnoname 16y ago
I've been in a situation where life sucked and racked up some debt and fouled up my credit, so I can sympathize to some extent, but what I thought was pretty bad debt (including student loans) was less than that 'average' wedding figure. After spending a year or two putting all my extra income toward successfully retiring the debt, my future wife and I looked at engagement rings and weddings and thought, "this is crazy." She has no engagement ring (wedding band though) and we eloped, and we're just as married as my brother and he spent $30k. I have a friend whose parents offered to give them money for a down payment or to pay for their wedding. They chose wedding. What the hell people? It's one day. The wedding madness is just nuts. "Hey, we might want to buy a house and have kids soon. Let's spend all of that money we might need entertaining a gaggle of family and friends, half of whom each one of us doesn't particularly like."

iamchmod 16y ago

I wonder how many people that declare bankruptcy own a big flat screen TV with a DirectTV subscription with at least one premium package (Showtime, HBO, etc)?

pnathan 16y ago

Hi, I don't have much CC debt right now, at all. What I do have is Student Debt, and bags of it. I've rummaged through the relevant federal repayment and waiver options, and I don't see any efficient ways for a software engineer to deal with the debt except "push as much money at it as fast as possible". Loan management options seem to extend debt payments out to about 30-40 years, which generates some eye-hurtingly huge interest payments over time. (think 1.5x the original loan amount). One of the nasty little twists in federal student loans is that bankruptcy won't affect them. They do have various deferment plans, but those can keep the interest ticking along, which can be harsh if loans are large. So: my question is: does readyforzero.com have any plans to work on student loan debt in the future?