As of June of 2010, the total U.S. consumer debt was $2.40 trillion. As much as 98% of the revolving debt in the U.S. is credit card debt, and the average household carries about $8000 in credit card debt. As daunting as those statistics are for the country as a whole, the choices faced by the individuals who are in debt and who want to eliminate it are just as depressing.
Information about debt reduction can be difficult to find, and there are plenty of questionable practices by banks and by debt consolidation companies that just serve to muddy the waters.
So making the task of tackling your debt easy and transparent is a big part of the mission of the YC-backed company Ready for Zero. Ready for Zero a free service with a very simple interface that helps clarify your financial status and plan your way out of debt.
Much like Mint.com, you sign up and link your credit card information, and then Ready for Zero offers you counselling based on your interest rates, balance, and target date for being debt-free.
The emphasis here is on transparency and interactivity, and users can see how adjusting payment amounts, for example, change their status. The software also offers other advice, including tips on how and when to approach a bank to renegotiate your interest rate.
Launched last month, Ready for Zero co-founder Rod Ebrahimi says that the system is already tracking $29 million in credit card debt.
But it isn't simply a matter of tracking - and helping users track - debt. Ready for Zero has recently partnered with the peer-to-peer lending network, Lending Club. By monitoring its users debt and their work towards paying it off, Ready for Zero can give a snapshot of one aspect of someone's financial health, and Ready for Zero makes it easy to share that with potential lenders at Lending Club. This means that people can apply for P2P debt consolidation loans at rates that are typically far lower than other banks and lending institutions.
As the startup expands, Ready for Zero says it plans to eventually give users the option to make payments, not just monitor payments, through their interface. "We're just three guys and we're a technical team," says Ebrahimi. But the startup is hoping that by merging that technical expertise with more open data, that Ready for Zero can scale up while helping the rest of us scale back our debt.