3 Ways to Take Control of Your Finances in 2012

BudgetAfter the overspending, overeating, and general overextending of December, it's hardly surprising that so many people choose to spend January turning over new leaves. But even beyond the month of new diets, new workout programs, and new strategies for resisting the siren song of cheesecake, the beginning of the year is the perfect time to try out new ways to manage your money.

Admittedly, personal finance websites are hardly new: For years, Mint.com and similar sites have offered users a centralized place to view their accounts, manage their money, and -- in many cases -- even pay their bills. But for many of the new entries to the game, online money management isn't just about watching accounts and moving money: It's also about changing the way people look at and manage their finances.

As anyone who has ever tried to quit smoking can attest, changing basic behaviors is hard, and a method that works for one person may be ineffective for another. The three websites below -- LearnVest, Payoff.com and ReadyForZero -- use very different approaches. In the end, though, they all have the same goal: Helping you take control of your finances.

The Personal Trainer: LearnVest

LearnvestWhen Harvard business school student Alexa von Tobel decided to create a website to help people manage their money, she set her sights high: "I wanted to build a Weight Watchers for personal finance."

At the time, von Tobel notes, there were sites that aggregated accounts, sites that offered news-based investing advice, and sites that led users to large banks, but she wanted something a bit more user-oriented. "I wanted a site that would give trusted, straightforward financial planning help that was unbiased and not news-focused."

LearnVest, von Tobel's site, is certainly straightforward. In addition to providing a space where users can link their bank accounts, it also offers a variety of free resources, including three newsletters and a selection of seven "Bootcamps," educational programs that help users tackle very specific problems, like buying a home, building credit, or preparing to have a baby.

"The bootcamps are very goal-oriented," she says, "They have very specific to-do lists."

In addition to its free offerings, LearnVest also offers personal financial counseling at prices that, von Tobel claims, are far below the market rate. The site's basic budgeting plan costs $69, for which users get a one-time phone consultation with a financial planner, a customized budget plan, three months of e-mail access to the planner, and enrollment in a budgeting course. For $229, users get a five-year financial plan, access to all of LearnVest's courses, an additional phone check-in to consult with their planner, and an additional three months of e-mail access to the planer. The website's premium offering, the $349 "Complete Financial Plan," includes six more months of e-mail access and two more phone check-ins.

Providing affordable financial planning advice is a major part of LearnVest's purpose: "The average financial planner in America charges between $150 and $250 per hour, and setting up a full financial plan can take ten hours or more," von Tobel says. "Our goal is to make financial planning available to millions of people who couldn't afford it otherwise. If you don't have a lot of money, you probably need financial planning more than somebody who does."

The Best Buddy: Payoff.com

Financial planning can often feel like visiting the dentist: a moderately painful, but necessary, chore.

"Most money sites are utility-oriented," says Scott Saunders, founder and CEO of Payoff.com. "We wanted to create a site that is lighthearted and fun."

And when Saunders and his partners were building Payoff.com, they quickly discovered one reason why money management has gotten such a negative reputation: banks.

"You don't hear from your financial institution unless you've done something wrong," Saunders says. "We wanted to change that. We want to motivate users and applaud their good behavior."

Payoff.com Product Explanation from Payoff.com on Vimeo.

To achieve that goal, Saunders consulted with game designers, behavioral psychologists and academics to create a fun, engaging site. "We use games, awards and community support to help motivate our users," Saunders says. "We help them set goals and dreams, which they can then share on Facebook and Twitter. We try to create feedback loops to encourage good behavior."

One of the site's techniques should be familiar to any fan of Foursquare: It awards badges for financially responsible behavior. "We give users badges for anything that we can verify," Saunders says. The site also regularly quizzes users about their finances, generating pop-up questions about everything from credit card balances to the cost of recent purchases. In return for correct answers, users get points, which can then be applied to prizes.

Underneath the fun, Payoff has a serious goal. "On a foundational level, we want to help individuals get out of debt," Saunders stresses. With that in mind, his site tries to offer the kind of support that banks rarely provide. "We want to treat money management through preventative medicine. Instead of waiting for customers to get in trouble, we want to work with them from the day after they sign a loan. We want to root for their success."

Payoff directly links a user's spending to specific retailers, like Starbucks and Target, instead of lumping it under broad categories like "restaurants" and "department stores." Partly, Saunders suggests, this is because it more closely mimics the way people view their expenses -- while they might not be aware of how much money they spend on "snacks," they probably know how often they go to McDonald's.

Beyond that, Saunders hopes to partner with retailers: "If companies care about your well-being, they can build long-term relationships with you." In order to help these relationships, Payoff is trying to get retailers more closely involved with users. "We've put together a financial ecosystem in which any interested party can participate toward the financial betterment of their customers."

The Nagging Mother: ReadyForZero

When it comes to financial planning, some people need a little more structure. That's where ReadyForZero comes in. "Debt is complicated, and it's easy to become overwhelmed," says Rod Ebrahimi, the site's co-founder and CEO. "We're trying to take the thinking out. ReadyForZero gives its users highly-opinionated advice about what you should do with your money."

The idea for the site came from Ebrahimi's experience counseling his girlfriend. "When she got out of college, she had a ton of debt," he explains. "She thought about going to one of those guys on the radio who promises to clean up your finances. When she got all the paperwork back from him, we found that it was confusing and full of charges." To help out, Ebrahimi created a spreadsheet that helped her understand her debt, and plotted a way for her to improve her finances. The program he created became the earliest version of ReadyForZero.

Ready for Zero

Simplicity is key at ReadyForZero. One thing the site does is add up all of its users' debt -- including credit cards, mortgages, student loans, and auto loans -- into a single, easy-to-understand number. It then lets users know how much they are paying off every day, as well as how much money they are paying in interest.

Unlike LearnVest and Payoff, which address financial education and motivation, ReadyForZero is narrowly focused on paying down debt. "When you're ready to tackle your debt, this is the place to go," Ebrahimi says. The site regularly reminds users of their finances, payment due dates, and the effect of their purchases through e-mails and text alerts. The site even offers users special stickers to cover the numbers and data strips on their credit cards, which make them harder to use. "You'd be surprised at how effective the stickers are," he says. "When you're standing in line, pulling the stickers off your cards, you think twice about using them."

ReadyForZero has been in business for a year; in that time, Ebrahimi claims, it has helped manage more than $150 million in debt. "According to our records, regular ReadyForZero users get out of debt twice as fast," he says. For that reason, the site has also drawn the attention of banks: "We change people's payment behavior and keep them out of trouble. We've been approached by banks who are trying to partner with us to help create incentives -- like better interest rates -- for our users."

While they use different methods to help users deal with their finances, von Tobel, Saunders and Ebrahimi all agree on one thing: Understanding your finances is the key to getting them in order. As Saunders points out, this means being honest with yourself: "You need to make realistic assumptions -- not wildly optimistic assumptions -- about your expenses."

Bruce Watson is a senior features writer for
DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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January 24 2012 at 6:26 AM Report abuse rate up rate down Reply

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January 23 2012 at 3:23 AM Report abuse rate up rate down Reply

Change your currency back to real money is the first and best choice you can make now. The State of Utah HAS MADE GOLD AND SILVER COIN LEGAL TENDER! There are private banks in Utah that will take your REAL MONEY deposits and pay interest at full value in fed res notes and convert your real money to what ever fiat tender you need when you need it and even offer debit cards! You are good around the world and all 50 states. There are 12 more states in the process of doing the same. Also buying and selling gold silver coin is extremely easy! The price of gold eagles is over 1600 dollars an oz because first people are buying at that price. DEMAND ALWAYS PRECEEDS PRICE! Further I grocery shop and fill my gas tank with silver eagles every week. Just discuss with the business manager/owner you will be overwhelmed by the favorable acceptance and even gratitude you will get! My favorite service station owner LOVES reporting he sold a tank of gas for face value of one dollar and then selling that dollar for 40 res notes and rising. I help reduce his tax liability greatly and I do the same for my family Dr and my barber! Its the most fun you will ever have teaching folks how to be free of the evil fed res! Have fun and do your part to spread freedom! Got gold?

January 17 2012 at 12:16 PM Report abuse rate up rate down Reply

On Jan. 1, 2012 a brand, new mobile smoking cessation app became available on all Anrdroid devices (Apple to follow). This app, named, "Quit Smoking, Start Now," is powerful, comprehensive, easy-to-use and intuitvely based. The app program is based on psychological theory, brain science, and, proven behavioral modifcation techniques. It even has a unique "panic-button" feature that can quell an urge to smoke at an inappropriate time, or, after the quitter has quit and is in danger of relapsing. The app is also very inexpensive.

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January 15 2012 at 7:36 PM Report abuse rate up rate down Reply

It is frustrating reading that you cannot get credit because you must 'borrow' to do it. When we were young and had no extra money, I would deduct from our checking account each time that I used the credit card. At the end of the month, I always had the money to pay off the card. I never paid a penny in interest to credit card companies, but our credit is pristine. We have only had 2 home loans for a total of 3.8 years over a 30 year period. Everything that we did, we paid for with credit cards that were paid at the end of the month. Our credit rating for both of us is over 850. You never have to 'borrow' to have a great credit score, just use credit responsibly.

January 15 2012 at 2:34 PM Report abuse +1 rate up rate down Reply

Poor banksters boo hoo, leave the thieving fed res system and exchange their worthless paper for real gold/silver money! We can fire them by our choice of currency! Got gold?

January 15 2012 at 2:33 PM Report abuse -1 rate up rate down Reply

Poor banksters boo hoo, leave the thieving fed res system and exchange their worthless paper for real gold/silver money! We can fir them by choice! Got gold?

January 15 2012 at 2:32 PM Report abuse -2 rate up rate down Reply

All my savings is now in mostly silver coin and some gold. Fed res fiat is failing. Got gold?

January 15 2012 at 12:02 PM Report abuse -1 rate up rate down Reply
1 reply to Mike's comment

No evidence whatsoever that the monetary system of this country is failing. But hey, no sense spending any time in the real world when you can just stay in Oz..

January 30 2012 at 11:02 PM Report abuse +1 rate up rate down Reply
Delia Hill

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January 14 2012 at 1:31 AM Report abuse rate up rate down Reply