November 19, 2013

How Cloud Helps Pay Off The Mortgage

By Steve Prentice

How Cloud Helps Pay Off The Mortgage

A great deal of the buzz surrounding cloud technology has to do with business-related issues such as data storage, security, and mission-critical business applications, but sooner or later every person who works directly with cloud technology, as well as every other person who doesn’t, has to go home to their house, buy some groceries and pay some bills. One of the largest and most important bills required to be paid by many of us is the mortgage, a delightful word that comes from ancient French and which means “dead pledge,” or in other words, being dead is not an excuse for missing a payment to the bank.

A mortgage is a trade-off: a 30- or 40-year commitment to a bank in exchange for a comfortable place to live. In the post-war years when a substantial middle class existed, it was the dream and expectation of anyone living in a reasonably prosperous country to work hard, and pay down the house loan and its interest diligently and regularly, so by the time retirement came around, the property would be owned fair and square.

In this new age of foreclosures and of an evaporation of both the middle-class and of job-security, the concept of signing half or more of one’s life away to a bank seems daunting or impossible for many. But this is where cloud technology comes to the rescue. Computer technology and specifically cloud-based technologies have opened up alternate channels for personal financial management, specifically in the area of online debt-reduction solutions.

Traditionally when people hear the term debt-reduction, they think of credit counselling services. And when they hear online financial software, they think of online banking or tax filing applications.

But online financial management applications are neither of those things. Instead, they act as advisors, calculating just how much spare money exists between the amount brought home as salary, and the amount paid out as bills and expenses. Whatever is left over can then be applied, entirely or in part, to paying down the high-interest long-term obligations such as credit card debt and the mortgage, often using prepayment privileges and other techniques to maximize the power of each repayment dollar and to eliminate the debt many years faster. Ultimately, these cloud-based applications help pave a road map to debt freedom through strategic repayment planning.

Three of the most popular of these apps are Mint.com, owned by Intuit, InterestBLOCKER, and Mac/iPad-based MoneyWell/DebtQuencher.  All of these applications seek to identify where the money goes and how it can be applied to debts..

Cloud-based financial management applications represent both a challenge and an opportunity for consumers looking to alleviate their debt load. The opportunity lies in the sophistication of these online apps – the power of a financial manager at one’s fingertips, with the added benefits of applying what-if scenarios that allow users the opportunity to envision a number of strategies for using their hard-earned cash, as well as the proactive approach to assigning money in real-time rather than waiting until month-end or until payments become overdue.

The challenge, though, comes from implementing these apps and in sticking with them. Many consumers are unwilling to truly accept the dire financial situations they find themselves in, and prefer to operate in a more fatalistic fashion. Also the discipline required to keep books in this way is daunting; consumers have been conditioned from an early age to feel intimidated by the seeming complexity of personal financial management.

All three of these applications therefore seek to counter such resistance and reluctance by fostering a sense of community, including reminder emails, achievement recognition, and gamification-type rewards, to keep  users motivated and focused.

We seek to give our customers a type of financial GPS,” says Derik Rehou, President of OneLife Financial, the creators of InterestBLOCKER. “We focus solely on the numbers, but we can do this at a much higher level – a ten-thousand foot view of the landscape, which helps guide our customers along a path that would otherwise not always be visible.”

The gradual acceptance of cloud-based financial management software represents another world-changing concept, in that its effects are felt well beyond its own customer base. Many traditional banks are now responding by offering greater flexibility and service in the way they offer financial services; and when a bank blinks like that, something has definitely changed.

(Image Source: http://www.realtytrac.com)

By Steve Prentice

Steve Prentice

Steve Prentice is a project manager, writer, speaker and expert on productivity in the workplace, specifically the juncture where people and technology intersect. He is a senior writer for CloudTweaks.
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