A Review of DebtGoal.com

Miriam Thanks for reviewing DebtGoal.com. I think you gave a fair assessment of the service. We're clearly in alpha and I think we do have warts we're working out and I think you did a good job of pointing them out. We've actually used your feedback to guide our product development work. We have just added the ability to see the full payment schedule. Our experience with people and their debt is that things never go according to plan--people put a charge on their account or maybe even pay a little bit more one month--so it doesn't take much to put a static plan out of date. We felt that because of this there was little value to putting up a schedule. But your review and some feedback from users convinced us that we should expose this to users and we have. I think it's a good change. We have some features with our tool that differentiates us from all other solutions available. All tools out there simply give users a payment schedule which quickly gets out of date. Our plan constantly readjusts to optimize the current payments, given the amount the user has committed to pay each month and the payments on each account. We think that this makes DebtGoal more flexible and reinforces the methodology so that it resonates more with users. We even adjust the payment schedule for card spending to keep people on plan by adding spending during the month to the highest-interest account. We know that not everyone will make this full payment, but it's an important psychological reinforcement that card spending doesn't fit well with debt reduction. As you mention in your article, we also try to put motivational hooks in at every point possible. We'd love to change the mindset of a borrower with bills from one of dread to one of excitement about making payments--some of that money goes immediately back to them as principal reduction and this has a really high return. Our optimistic hope is that we can get people excited enough about paying bills that they literally get excited to see their statements in the mail. It's an aspirational goal, I know. Your thoughts on the 401(k) are really appropriate. Especially in this economy, this option has a downside if you are at risk of losing your job (if you can't pay it back, you'll take a distribution with tax hit) or at risk of declaring bankruptcy (you're shifting assets away from sheltered assets toward liability that would be forgiven / modified in bankruptcy). So even though it may make mathematical sense, we agree that it's fraught with danger. We feel that we owe it to users to provide a fair assessment of the options and a guide to when it would be appropriate. Based on your feedback on this, we're taking a look at the way we provide advice to call out even better when it would be appropriate. Again, we want to provide an honest assessment of the options. As an aside, I used to work at a major bank (in credit card marketing) and I know from experience at my bank that many people who take out home equity loans / HELOCs to pay down higher-interest debt ran up unsecured debt to nearly the same level within 2 years. For this reason, we are very aware of the risks associated with any of the debt restructuring options. You point out (and we agree wholeheartedly) that there are no magic bullets--it all starts with fixing the behaviors that led to the problem in the first place. We're in the process of redesigning the site and reconfiguring the workflows. I think it will be an improvement. As part of this, we'll be adding in technology to automatically update user account information and later, to execute payments directly from the application, making it easier to stick with a plan. We hope you'll continue to stay in touch and keep DebtGoal on your radar screen. We're one of the few companies I know that is truly customer centric. We're not trying to sell them a product that might create a conflict of interest. We're simply working to help people get out of debt. Our users have entered more than $110M in debt on the site and have already paid off more than $1M in debt. We know that we have a long way to go with the service, but are happy that we're starting to make a difference. Thanks again for your thorough and honest review. I think you're doing a good service to your readers.

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