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Pay Down My Debt

7 Financial Startups That Want You to Get Out of Debt

Geeting advice on future investments

Updated October 25, 2017
There has been a wave of new financial startups in recent years. From incredible investing apps to innovative money software, it seems like the sky is the limit when it comes to what entrepreneurs can create in terms of financial services.

Of course, some of my favorite financial startups are the ones that directly help consumers get out of debt. Credit card debt is a massive problem in the United States. There is so little financial education about getting out of debt and with interest rates skyrocketing, uninformed consumers could be paying off their debt for a very, very long time. Fortunately, innovative financial startups have started to address how to help Americans ditch debt.

Ready for Zero

I currently use Ready for Zero to assess my student loan debt. What I like about Ready for Zero is that it syncs with your actual accounts so there’s no disconnect between the debt you think you have and the debt you actually haRFZve.

I entered in the user name and password for my federal student loans, and Ready for Zero showed me just how long it would take to pay those bad boys off by paying the minimum. Move the circles to the left or right to adjust the numbers and find out how much you will save in interest by paying above the minimum. Although I knew empirically that I needed to be paying above the minimum, Ready for Zero was a real wake up call for me and showed me that I really needed to get on track and put more efforts towards my loan payoff.

Payoff

Payoff is an incredible financial services company that helps you payoff your credit card debt. Basically, it takes all your information and they offer you a consolidation loan so that instead of worrying about 9 different credit cards with varying interest rates, you can instead just pay one monthly fee.

The negatives of Payoff is that they are only for credit cards at this time so if you had several personal loans or several student loans, they can’t offer you a consolidation loan for those.

Payoff does a soft pull of your credit report to determine your loan rate. A soft pull means it won’t hurt your credit score to find out your loan rate. Payoff provides loans at rates between 5.99% & 24.99%. The rate you’re offered in prequalification is subject to change, but it gives a good sense about whether or not moving forward with Payoff would be right for you.

You also get to talk to a real person when you call Payoff, which can’t always be said of your credit card company’s customer service.

SoFi

What I like about SoFi is that they refinance student loans, issue personal loans, and mortgages.

One of the interesting things about SoFi is that it offers a valuable network of entrepreneurs. If you borrow money for your MBA, it actually offers complimentary career coaching for SoFi members. The only downside is that it’s only available at specific universities. So, if you are thinking of going into debt for school, just know there are other options and customizable solutions to reduce the impact of that debt, ones that actually include career counseling like SoFi as opposed to a random bank or federal loan with minimal customer service.

[Read the full SoFi review here]

Upstart

Upstart offers personal loans for a wide range of different credit profiles, but they primarily target recent graduates and those that might not have had the time to develop a strong credit score. Instead of relying on the traditional indicators of financial health, such as your credit history and available credit, they use a proprietary algortihm that determines worthiness based on education, career, job history, and standardized test scores. For recent graduates that might have debt they want to consolidate but also have a limited credit history, Upstart provides financial options that previously were out of reach.

[Read the full Upstart review here]

Earnest

I love Earnest because it’s another loan company taking much more into consideration than just your credit score. It’s refreshing to read about a company that wants to get to know its customers. After an extensive process reviewing your financial and work history, Earnest will offer you an interest rate for your personal loan based on your total picture. They even check out your LinkedIn profile as part of its process!

Earnest favors borrowers who don’t max out their credit card and who are well educated. Unfortunately their loans aren’t available in all 50 states, but they are growing. Right now, Earnest is offered in the following states: California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Utah, Washington, Washington D.C., and Wisconsin.

There no penalty for pre-paying, a major plus for those dedicated to digging out of debt fast. You don’t need a lengthy credit history. You just have to be a responsible person and be able to prove it.

[Read the full Earnest review here]

Gradible

Many millennials complain that they can’t find work they love or that they don’t earn money to make extra payments on their student loans. Gradible is changing all of that. It partners with different companies (like Craigslist or market research firms) to offer tasks its users can complete.

These tasks pay around minimum wage depending on how quickly you work and the money is applied directly to student loans. You can post things on Craigslist on behalf of companies, you can write articles for blogs, or you can simply “like” a few businesses on Facebook. There are countless tasks to choose from and you can work as much or as little as you like. The best part is that there is no agonizing over whether you should pay towards your student loans or something else because Gradible sends your payment directly to your student loan provider for you.

[Read the full Gradible review here]

Use These Tools to Earn Freedom

So, if you are currently in debt, whether it’s student loan debt like me or extensive credit card debt, there are so many tools to help you get out of it. Whether you consolidate your debt or just become more aware of the impact of your interest rate, use the companies above to help you meet your goals and get on the path to financial freedom.

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Retirement, Strategies to Save

Why You Should Open Up a Roth IRA for Your Kids

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

A Roth IRA is probably one of the most powerful retirement vehicles available on the market. Unlike a traditional IRA, the contributions made to a Roth IRA are pre-tax, which allows you to withdraw your money tax-free after age 59½ .

When it comes to a Roth IRA, it’s important to think of how you can use it in other ways too, namely, how your kids can use one to become financially successful one day. There are two ways unique ways you can use a Roth IRA to help your children.

The first way is to open one in their name that they can use to save for their eventual retirement. The second is to use a Roth IRA in your name as a college savings account.

Both of these options come with pros and cons, and it’s important to know them before deciding if either of them is right for you.

Opening an IRA in Your Child’s Name for Their Retirement

The challenge of opening an IRA in your child’s name is that in order to open an IRA in your child’s name, the child has to have a paycheck. You can see exactly what qualifies as earned income here. It might seem like this is impossible, but it’s not. Entrepreneurial parents all over the country who see the value in early retirement savings are taking advantage of this.

For example, if you run a business, you can employ your children to stamp your mail, be models for your brochures, and even manage your social media. As long as you issue them a 1099 or a W2 for their work, they are eligible to open a Roth IRA.

Another negative is that you can’t supplement your child’s income to reach the $5,500 cap on Roth IRA contributions. They can only put in what they earn up to $5,500. So if your child only earns $1,500 from working part-time at an ice cream shop one summer, they can only invest $1,500. However, if they earn $6,000 from that same ice cream shop, they can only invest $5,500.

When children have a Roth IRA in their names, the money is officially theirs. This is different from earmarking a savings account for them in your name. Instead, this is money that they earned going into an account that can benefit them in retirement. The biggest pro is that this is an awesome teaching tool for them. You can really show them how their money can compound and grow over the years.

Even if you start the Roth with a small amount and never touch it again, a one-time $5,500 investment (the current Roth IRA contribution limit) can grow to over $100,000 at a 6% return if your child lets it grow from age 12 to age 62. Fifty years of compounding interest will do that!

What an awesome gift that would be if your child never touched this until they were at their retirement age and got a bonus six-figure payout from work they did when they were a kid. That’s a good memory to leave with them.

Opening a Roth IRA in Your Name as a College Savings Account

Many people don’t realize that another great benefit of a Roth IRA is that you can use it as a college savings account. You could use a Roth IRA in your child’s name for their college savings, but let’s say your child doesn’t work, or if they do, you’d rather they kept the IRA for their own retirement one day.

If that’s the case, you could use your own Roth IRA for their college savings, and here’s why. According to Certified Financial Planner, Matt Becker, “If the money is used for higher education expenses for you, your spouse, your child, or your grandchild, there is no 10% penalty.” (Usually, if you withdraw earnings from a Roth before age 59 ½ there would be a penalty, but not if the money is used for college.)

The downside to all this is that if you use this money for your child’s college education, then you’re not saving it in your Roth for your own retirement someday, and that’s pretty important! The pro is that your money isn’t locked into a 529 plan where you have to use the money for qualified higher education expenses. Another interesting pro is that 529 assets are counted toward your Estimated Family Contributions on the FAFSA, but investment accounts, like Roth IRAs are not.

That said, it’s important to look very closely at the differences between 529 plans and Roth IRA plans if you want to use your Roth as a college savings vehicle. Additionally, if you are a high-income earner, you might not be able to contribute to your own Roth IRA unless you do what’s called a backdoor IRA. The current 2017 income limit for Roth IRA contributions is a $186,000 annual income for those who are married and filing jointly or $118,000 for those who are single.

As you can see, Roth IRAs are great accounts for a variety of different savings purposes, and you should try to think outside the box when it comes to using them to help your children create a bright financial future.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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College Students and Recent Grads, Strategies to Save

5 Ways to Make Extra Money That Don’t Take Much Time

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We all want to make a little extra money, whether it’s to pay off debt, go on a vacation, or just have a little bit of a cushion. The problem arises when people have very little time to work on the side due to family responsibilities or other obligations. To combat this issue, I’ve compiled a list of ways to make extra money that don’t involve a lot of time.

1. Do One-Time Gigs

Sometimes it takes a long time to build up a substantial side business. Whether you are a freelance writer, car detailer, or dog walker, you often have to work for a few months to build a client base, which takes significant time and energy.

Instead of doing that, Grayson Bell of the blog DebtRoundUp recommends that you look in the Craigslist Gigs section. When Grayson was paying off $50,000 of credit card debt, he looked at his local Cragslist Gigs section every weekend. He said, “I would help people move, pull weeds in lawns, and remove stumps. These gigs can be almost anything and they don’t require you to invest any money, just look and find something you want to do. It also doesn’t require an ongoing time commitment. It’s not passive, but you can find ways to earn cash when you have free time.”

As always, when using Craigslist, use caution when applying for work and make sure the person offering the work is legitimate and safe to work for. Whether you want to clean houses, do yard work, or paint walls, there are probably many opportunities available in your town on any given weekend.

2. Give Your Opinion

Everyone loves giving his or her opinion, right? Well, it’s much better to actually get paid to give your opinion! Chonce, a writer at Single Moms Income has had extensive experience working as a secret shopper, survey taker, and in focus groups.

Her favorite focus group was when “a few other ladies and I met in a beautiful building in downtown Chicago where we received food and drinks while discussing several different hair care products. I answered questions based on my own personal experience and chimed in whenever necessary. After an hour long discussion, we each received $100 and went on our way.”

You can find these opportunities on Craigslist or on a website like Find Focus Groups. Although they do take time to complete, they are usually enjoyable, pay a high hourly rate, and don’t require any preparation.

3. Play Sick

My husband is in medical school and he often works with standardized patients when practicing for large board exams and also in the exams themselves. He just flew to Atlanta to take an 8 hour-long board exam where he had to work with 7 different patients, who were all actors. If you like to act, you can get paid to do this too.

Katharine Paljug is a freelance writer but she’s also an actor who has worked as a standardized patient before. She says “the companies that staff [the patients] want a diverse group to pull from. Best of all, they don’t require any specialized skills or experience, and they can pay anywhere from $15-$60 per hour! When I worked as a standardized patient, I earned $25 per hour, and every month I got to choose how many days I wanted to work.”

To get standardized patient jobs, follow the steps in this post. Essentially, you can look for jobs on Indeed.com or contact the medical schools near you to inquire about opportunities.

4. Work While You Run Errands

One of the best ways to make money without a lot of time investment is to get paid to do the chores and errands you’re already planning on doing that day!

For example, Gretchen of the blog Retiredby40 (and MagnifyMoney contributor) never pays for an oil change. She says that anyone who owns a Chevy, GMC, or a Buick can do the same. Essentially, she works at as a secret shopper using a company called Bestmark. She takes her car to get the oil changed and gets reimbursed for it and paid to write a review.

She says, “In my area oil change or tire rotation secret shops reimburse up to $45 and pay between $25 – $35. This means that you will have to pay out of pocket for the oil change at the location you’re assigned, but Bestmark will send you a check for the cost of the oil change, up to $45, as long as you complete the shop correctly.”

5. Sell Your Junk

Everyone knows that having a garage sale is a great way to make extra money. However, the time commitment involved in setting up the sale, advertising it, and pricing everything seems exhausting. Don’t worry though; there’s a way you can have a garage sale without much headache. Holly Johnson of ClubThrifty recommends that you piggyback off of your neighbor’s sales. Let them set up the signs and put in the work to advertise, and all you have to worry about is setting out your stuff. She also recommends grouping items that are the same price so that you don’t have to spend time individually pricing them.

Using these ideas, you’ll be well on your way to making some extra cash without the intense time commitment. It takes significant time build a side business in addition to your full time work and other responsibilities but with the tips above, you don’t have to!

Finally, Eliminate Credit Card Debt

If you have credit card debt, you are likely paying a very high interest rate to your credit card company every month. The average interest rate is 13%, and the average household has more than $10,000 of debt. That means the average household is likely spending more than $1,000 of interest every year. Another way to put extra money into your pocket quickly is to reduce the amount of money you give to credit card companies. There are two good strategies to reduce your interest rate. One way is to transfer your debt from a high interest rate credit card to a low interest rate credit card. You can find deals with 0% interest for 15 months, with no fee. The best balance transfer deals are updated here.

Another option is to consolidate your credit cards into a low interest rate personal loan. Interest rates start as low as 4%, and (unlike with balance transfer credit cards) you can shop around for the best interest rate without hurting your credit score. You can find personal loan companies here. You will probably discover that reducing your credit card interest rate gives you the biggest savings.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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