I’ll confess. I switched majors my freshman year of college from business to English, just because my advisor told me I had to take another two semesters of accounting.
But keeping track of your personal finances doesn’t have to mean reams of paper charting tiny rows of decimals with the scary columns of credits and debits that never seem to add up.
With new online tools like Mint.com, Equifax’s Debt Wise and Quicken Online, much of the work of tracking your money is done for you. With all the time we spend sitting in front of our computer screens and tapping away on our Blackberrys, why not fold our financial lives into the web 2.0 world? What services do these products offer, and do they really make things easier?
Equifax Debt Wise, $14.95 per month
The newest product offering from Equifax, Debt Wise includes many features you may have to pay for from other places. With Debt Wise, you get access to your credit report and FICO score, and four copies of Score Power – a report that explains the components of your credit score, what makes it higher or lower, and how lenders might respond to your score.
But you can get the credit report for free once a year and all the other stuff if you sign up for credit monitoring or any of Equifax’s other services. With Debt Wise, Equifax is getting into the business of helping you figure out how to pay your bills and get out of debt faster. Sure, pay your bills on time, and pay at least the minimum or whatever extra you can afford that month. Debt Wise takes those basic principles and applies “debt stacking” to figure out which debts you should pay off first and in what order, to get out of debt faster and save on interest payments.
Because Debt Wise is tied to your social security number, all of your debts will pop up. Click off the debts you want to pay down (only the ones you want to pay off, not the credit cards you still use), and then plug in all the extra information the program requires, including interest rates, monthly payment amount, and any extra you can afford to pay. Debt Wise will then spit out a payment plan.
The “target account” – the account you’ll focus on paying off first – is usually the account with the highest interest rate. While you’re throwing all the available cash you have toward the target account, you’ll continue to pay the minimum monthly amounts due on all of your other accounts. When the target account is paid off, the next debt moves up to the target spot and more money (whatever you were paying on the former target account plus the minimum you’ve been paying on the new target account) is dedicated to that payment. One at a time, you’re knocking out your highest interest rates. Later debts get paid off even faster as you increase the cash for each payment.
It’s a debt-payment strategy that you could probably figure out yourself, and there are many articles on ThinkGlink.com advocating the very same thing. But when you’re staring at a stack of bills, not knowing which one to pay first, it’s nice to have something like Debt Wise take the guesswork out of it for you.
When I plugged my debt into the Debt Wise program, it managed to slice off 22 months and $2,886 in interest payments. Now I don’t have any credit card debt, just a lot of student loans and a medical bill I’m still paying off. But if it can help me save more than $2,000 on a fixed interest rate, fixed term loan, I can only imagine what it could help do with a pile of credit card debt.
Another thing I really loved was the “Commitment Calculator.” I can’t afford any more than the required monthly payments right now, but I might be able to pay more next year. The commitment calculator asked me when I wanted to be debt free. I plugged in 2015 as my desired debt-free day, and it told me that I need to pay an extra $240 a month. Good to know.
Equifax Debt Wise doesn’t track your bank accounts or daily purchases like some of the other free online tools. But this paid service does give you access to your credit report and score and uses the information coming in from the credit report to hold you accountable to paying off your debt according to plan. If you can afford the $14.95 per month, it may be worth it to get the personal planning advice and credit report tracking. And by consistently paying off your debt, you’ll probably see your credit score start to rise.
Note: This product was very recently launched by Equifax, so there are a few bugs still in the system. I got everything to work well for me after a few attempts, and Equifax should have everything ironed out in a few weeks.
Free Financial 2.0 Websites, Mint.com and Quicken Online
If you’re looking for something that just helps you track your expenses and keep tabs on various accounts, you might want to look into some of the new free online programs. With Financial 2.0 companies like Mint.com or Quicken Online (www.quickenonline.intuit.com), I can see all of my accounts in one place, instead of checking five different sites for my balances and expenses. Instead of having a checking account here, a credit card over there and a loan with that other company, all money coming in and out is kept track of in a “Transactions” ledger.
If you have previous experience using other Quicken versions, you might be more familiar with the Quicken Online set-up. However, Quicken did too much for me. The software inaccurately tried to predict upcoming expenses, and skewed my monthly budget.
Mint.com works well for the major banks and credit cards, but I had trouble getting my small credit union to set up in the program. When I first got a Mint.com account a few months ago it worked OK, but then my credit union changed its logon process and Mint.com hasn’t changed with it. I requested an update, and got a prompt response from the customer service department, but I still can’t access those accounts. So if it’s bill-paying time and you were depending on Mint to keep track of things for you, you might want to have a back-up plan.
My favorite part of Mint.com is the budget bar chart. Set different categories for things like utilities, rent, shopping, entertainment and groceries – or create categories of your own like “Cupcakes” or “Scuba Diving Lessons.” With at-a-glance color-coded bars telling you if you’re close to the limit you can easily reduce or expand your budget as your spending needs demand it.
Quicken does have a “My Wallet” account where you can record your cash transactions – one of the little devils when it comes to tracking your money electronically.
Another bonus: Mint and Quicken Online will send you email reminders when your bills are due or your account balances are getting low.
But neither Mint nor Quicken Online currently have a tool that will help you figure out how to pay down your debts in the most cost effective way possible.
When it comes down to it, all these new programs and software are just keeping up with everything else in our lives. We want online access and iPhone applications for everything we do, including managing our money. The best part about Mint and Quicken Online is that whatever they currently provide is free. All it costs is the time to set it up. And over time, maybe both Intuit and Mint will figure out even more tools that will be useful.
Conclusion: All of these tools can help
Take advantage of these new online tools. They’re useful. They can help save you some financial headaches, and they’re from reputable companies like Quicken and Equifax, so you know your personal information is safe. But just do some common sense checking: Keep an eye on your finances, even if you run everything online, because only you are ultimately responsible for them.
Can you make payments of the debt wise homepage online or do I have to set up payments myself