Co.Design

ReadyForZero Helps You Fight Debt, Using Clever Mind Hacks

ReadyForZero wants to help you get out of debt. And while they're at it, they want to modernize the credit industry.

It is hard to pay off debt. Our better natures are constantly at war with our impulsive desires. It’s hard to feel in control and it’s all too easy to fall back into the habits that got us into trouble in the first place. Loren Baxter, Director of User Experience at ReadyForZero says that when they spoke to friends facing debt problems, there were three basic strategies in play: 1) Ignoring it (calling this a "strategy" is generous). 2) Making random payments over the minimum. 3) Creating and maintaining a complicated spreadsheet.

"We thought, 'Why isn’t there a better tool for this?'" says Baxter.

ReadyForZero is intended to be that tool. It’s a free service that aggregates all your debts in one place, and then gives you a plan for how to pay your way out of them. It’s an automated version of those complicated spreadsheets that some of Baxter’s friends were using.

When you sign up, you give ReadyForZero access to your accounts, so it can pull your data and monitor your progress in realtime. You then get a page with sliders where you can set how much per month you want to pay or a deadline for when you want to be out of debt. As you drag those sliders around, numbers change automatically, showing you the effects that your choices will have on your debt levels. Based on all that information, ReadyForZero generates a personalized plan (with a payment schedule you can sync to your calendar) designed to get you out of debt as quickly as possible. At any time, you can go back in, change the sliders around or schedule extra payments and see the results of those actions. You can also track your progress.

So far, so good, but these are the basics.

The real challenge, says Baxter, is in changing your financial behavior between visits to the service. "What about when you’re at a cash register, about to make an impulsive purchase on your credit card? How do we help you then?"

ReadyForZero is experimenting with a whole range of different techniques to help their users stay on track. Some of them are simple mind hacks. For instance, they offer free stickers to cover the magnetic strip and the numbers on your cards. That way, you get a reminder about your better intentions. They also offer to send automatic reports to someone you trust, to enable some positive social pressure. And they have piles of checklists.

People like checklists, says Baxter. We’re motivated to fill them out. In a recent update they added progress bars, intentionally modelling them on Zynga’s addictive games (think FarmVille and Mafia Wars). "A key difference here," says Baxter, "Is that we only want to help encourage people to do things that they already want to do."

The key to all of this is breaking bad habits by setting psychological traps. Many of these features have been implemented in the last month, so it’s too early to say whether they are working, says Baxter, but this is a big part of how ReadyForZero designs. Their emphasis is on rolling out new features to users as quickly as possible, and then testing the results. "We don’t run big usability studies, we simply put people in front of the product and see what happens."

To this end, they’ve taken the unusual step of keeping customer support in the hands of the CEO, CTO, and Baxter. This approach has significant disadvantages and it’s not clear how it scales (for example, when they launched, they ended up spending five days doing nothing but answering support email) but Baxter says that it’s worth it as a fantastic source of usability testing. "Have you ever emailed a company with feedback, and heard back from the lead designer, 'That’s a great idea, we’re designing it now. Would you be willing to review the design with us before we build it, to make sure we got it right?'"

Which brings us to the question of business model. How do you run a profitable company by giving away free tools to help people get out of debt?

If you’ve ever been in debt, you’ve probably had a lot of thoughts about your creditors, many of them unprintable. I wonder, did you ever stop to think about the state of their tech? It isn’t pretty, says Baxter. The processes they’re using are from 50 years ago. "I’m talking huge call centers, antiquated proprietary software, data that gets reported once a month."

In an early blog post, CTO Ignacio Thayer explains, "We believe that the current options are so bad, so predatory, so unaligned with consumer interests, and so inefficient, that there is a valid, honest business in helping people get their balances back to zero."

The opportunity lies in the gap between what current lenders know and the kind of information that organizations like ReadyForZero can gather about your situation by having realtime access to your accounts and spending. Right now that gap is being filled by predatory debt consolidation services or by hilarious failures of risk assessment. ReadyForZero thinks they can do better. In other words, getting out of debt in a sane and orderly fashion may be worth it, but ReadyForZero isn’t really free. You’re paying with your data.

ReadyForZero doesn’t sell your data directly. Their business model is similar to Google’s model for selling ads. With access to realtime information about your situation, ReadyForZero can do a better job of matching offers to users than its antiquated competitors. Like Google, ReadyForZero doesn’t share this information with its (paying) customers. Instead it operates as a more effective matchmaker. Currently, they are working with LendingClub who offer debt consolidation services. "There could be more in the future," says Baxter, "but we’ll only work with reputable companies."

[Image: Stephen Coburn]

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11 Comments

  • vaxo

    I'd be very, very curious how the payback of debts can be reconciled for a freelancer with highly variable income, not the predictable income of people with 9-5 jobs....  I 'd love to see an algorithmic approach, rather than just an admonishment-oriented approach.... i.e. math rather than nagging....

  • Loren Baxter

    Thanks for the writeup Tim!

    I just want to add some clarification on one point: "You're paying with your data."

    I suppose that could mean anything, but it's important to note that ReadyForZero does not ever sell user data. The service is private; currently, we make money if we can help someone get access to better products that save them money.

  • Lady of The South

    Mint.com does this, as well as allows you to set budgets.  It sends me reminders to pay my bills, etc.  This sounds fantastic and much more focused, but it's another website that makes me share more personal information.  I would hesitate to do it again...add another password to my life and put me in a more vulnerable situation. 

  • ElJefeMasGrande

    I am not very comfortable "linking" my accounts. I understand their need to get such information, but they should have a lower commitment level for us more paranoid people. Years of security training and multiple identity thefts later I am VERY suspect if anyone wants anything from me. I am not saying that these guys have any ill intent, but I am cautious. Great idea! I like that it can apply some checks and balances as well as exert a little positive peer presure for those who need motivation.

  • mrh7184

    Agreed. I'd like to know more about their security practices before giving them log-in information.

    The key solution is for banks to offer API's to your account to pull read-only information rather then passing log-in credentials.

    Then if someone is mistreating my data, I can block a specific API key that I gave that website.

  • Alf

    "We don't run big usability studies, we simply put people in front of the product and see what happens". Mmmm, that's what a usability study IS...

  • Midwest Guest

    There are other online tools that are out there already where you don't have to submit your personal data elsewhere - therefore remaining completely anonymous...it takes a bit of back end work on your part to put in all the numbers and set up the scenarios (pay off in xx amount of time, pay off by paying xx amount per month or letting it calculate for you how much you would actually pay if you only paid the minimum and how long it would take you).  We've put this together for our remaining card balances and it's very workable from existing sites - plus it puts us in charge of actually knowing and OWNING the responsibility to them - it makes it all the more real when YOU have to manage them versus outsourcing it.  If you are comfortable using this tool (and sharing what info is needed to make it work) and are able to responsibly take ownership of the plan, then it seems great.  What I have found in the past is, out of sight, out of mind, especially when it comes to debt...unless you take it head on and personally manage a plan or get the instruction on how-to, it remains that monkey on your back.

  • Tiffany Otten

    hmmmm.... I would be tempted... but how "don't be evil" is this - I get that data is gold in this new world.  And if my data is anonymous - trending, behavior - that's fine.  But if it's specifically about me, and what I spent where that is shared... then I'm more comfortable with my antiquated spreadsheets, thank you :)

  • Sunny Balliette

    this is great. i can't believe no one came up with this sooner. i would love to have something like this.