Can You Dig Yourself Out of Debt With an iPhone? The Debt Free App from Mobile Solutions Tries to Be Your Shovel

NEW YORK (MainStreet)–About four years ago, I caught up with the 21st century and moved my banking onto the iPhone. Bill pay, credit cards and account transfers all made the jump onto my handheld device, and although the change didn’t change my life like online banking, it’s been incredibly handy.

But think about the impact of leveraging technology to help you manage your debt. Instead of covering run-of-the-mill banking needs, this could save you from your ever-worsening financial ruin by serving as a financial coach and scheduler in your pocket. At least, that's what Mobile Innovations hopes it has built with its Debt Free app.

Aimed at tech-savvy 20- and 30-somethings, Debt Free tries to help you pay off your loans and credit cards by organizing them all for you under the “snowball method,” an accounting gimmick that essentially means paying your bills one at a time. The timing of this couldn’t be better, as consumer debt has continued to hit young people particularly hard. In a 2009 survey Sallie Mae reported that undergraduate students carry an average credit card balance of $3,173, a number which jumps to $4,100 by graduation. It’s an issue that debt specialists and lawyers have begun seeing on an increasingly frequent basis.

“Most people have large credit card debt, or debts that they owe to large vendors,” according to Ed Grossman, executive director of the Chicago Legal Clinic that runs the Legal Advocates for Consumers in Debt program. Grossman noted that people often don’t necessarily seek out help when they need it, saying that his clinic often has to reach out actively to the community it’s trying to serve.

“In general we have a population that comes based on where the service is,” he said. “We have several programs…we call them circuit rider programs, where we go to them.”

This is where Debt Free comes in--to save those in debt the hassle of trying to get a handle on their financial woes. Unfortunately, the app functions with mixed success. An easy-to-use piece of software that mostly works as it’s designed, Debt Free is ultimately undermined by a constant impression of corners cut and features missing.

The Good

What Debt Free does it generally does well. Published by the company National Debt Relief, the app works as a financial planner. After I plugged in my data on credit cards, auto loans and student debt that still keep me up at night, it spit back out a payment schedule in a clean format and offered to send me a reminder before each approaching payment due date. With nearly half of all iPhone users between the ages of 25 and 44, the population hardest hit by debt collectors, this is a particularly helpful feature to keep up with how we’ve all begun to do business.

For many of us, alerts and electronic calendars have become the new note on the refrigerator.

With the exception of occasional typos and the fact that it only recognizes 28 days in a month, Debt Free has a polished, professional look. After I finished setting it up, the app planned out various payment schedules according to a series of personal preferences and told me when I would be paid off and how much I would spend on interest in that time. A separate financial calculator section largely duplicates these feature but without asking for past payment information, letting you map the lifetime of a loan. It’s a small but nice feature.

The main page’s Quick Summary guide presents a good at-a-glance of your numbers, with totals, payments and a paid-by date to give you hope. It also tells you how much you’ve saved in interest over time through the aforementioned snowball method. A series of amortization tables gives you monthly data regarding principle, interest and payments.

Overall, Debt Free is a simple, clean way to get a glance at your debt situation on your iPhone.

The Bad

That’s also the problem. Debt Free does nothing to take advantage of its platform or try anything particularly sophisticated. While the app did save me from having to calculate compound interest, an achievement to be sure, it achieved little else that I couldn’t have with a calculator and a trip to the accounting section of Wikipedia; in fact, it pulls its help section from that same source.

Options like calculating monthly payments based on an end date, for example, or seeing debts relative to my assets aren’t on offer here. More importantly, the app is missing any of the features that elevate an iPhone over something like Quickbooks or Excel. While Debt Free can sync up with other wireless devices, it offers no option to link up with a bank account, no connection to any financial software on your computer and no in-app ways to schedule the payments it so carefully plans. You even have to update your credit card bill with every purchase, because the app can’t connect to those services.

According to a report by Compete Mobile, almost 60% of smartphone owners use mobile banking features on their devices. That’s a huge population that accesses money through a mobile gizmo, yet Debt Free doesn’t try to accommodate this demographic. Instead it forces the user to take notes, close out of the program and try again somewhere else.

Debt Free couldn’t even back itself up to my laptop, but rather in the dedicated "Backup" section recommended that I “eamil [sic] your self [sic] the latest backup file.” Considering that Google already knows my name, blood type and childhood fears, maybe my financial data isn’t that big a deal. Still, we’re long past the day when software should come with instructions on how to use GMail as a backup plan.

Overall

Debt Free does one thing, and it does it relatively well. If you want to see how your monthly bills will look under the snowball accounting method, this app will run the numbers and spit them all back out in a quick, easy to read presentation.

Unfortunately that’s all this app does. Mobile Innovations made a nice but very limited program, one that leaves out most of the features that make banking on a handheld actually useful.

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