Mint.com unveils online debt reduction contest

Think you have what it takes to be the biggest loser when it comes to reducing your debt? You're in luck.

Mint.com, an Intuit-owned online start-up that offers free financial advice and easy-to-use budget planning tools, recently launched its "Drop Your Debt Challenge" urging debt-cutters to team up with folks in their city to reduce their debt. The idea is for people to work together by sharing savings techniques and offering each other support during the process.

After six months, the city team that trims the most fat from their debt will snag one of four $1,200 cash prizes. There's a $5,000 prize for the most referrals.

"Think about it as 'The Biggest Loser' for debt -- adding competition and teamwork to help people deal with something they need to undertake," says Aaron Patzer, vice president and general manager of Intuit Inc.'s Personal Finance Group and founder of Mint. "Every day, competition motivates people to lose weight, win at sports, or grab a parking spot before the next guy. This is a chance to have a positive impact on your finances."

According to the release, challengers will receive regular updates through Facebook on their city's progress and get money-saving tips from others on their team.

Click here for the details.

Protect yourself from phony debt collectors

Is your phone ringing off the hook with a so-called debt collector contacting you about a debt you don't owe?

It may be a case of mistaken identity or an honest mistake. But, there's a new wave of fraud is impacting those still struggling in this post-recession economy. Scammers are calling unsuspecting people and falsely claiming that they have defaulted on payday loans and are in danger of being arrested.

The callers have been telling their victims that they're in positions of legal authority representing organizations with official-sounding names such as the "Financial Accountability Association" or the "Federal Legislation of Unsecured Loans." They threaten that adverse action will be taken if they don't pay immediately.

However, in reality the callers are just trying to get their victims to disclose their credit card numbers and bank account information to make payments on their phony debts. To make their stories more convincing, some of the scammers have managed to secure personal details about their victims such as identification numbers and previous addresses.

“Because the scammers have so much information about potential victims, BBB is concerned that this may be the result of a data breach,” says Steve Cox, a Better Business Bureau spokesperson, in a statement.

The first line of protection is to avoid giving out financial information over the phone unless the are sure the transaction is secure.

Are you being pursued for a debt you don't think you owe? The BBB offers five tips to help consumers to fight back against erroneous debt collectors here.

CONSUMER WOES: Digging deep into the debt hole

Why do Americans continue to dig themselves into a hole?

Back in the day, people set money aside for personal purchases and saved for surprise expenses. Today, the average American household carries $8,565 in credit card debt, a 15% increase from the year 2000.

In total Americans have $2.56 trillion in consumer debt, up 22% since the year 2000 according to the Federal Reserve Board. For some reason, debt is increasing as most American's incomes are not. We have grown into a consuming society that believes it is OK to be in debt, in order to have that new phone, new outfit, or new car.

Disposable income that must be used for debt (credit card payments, car loans, mortgage interest, principle) is up to 14.5% from 11% just 15 years ago.

The New York Times tells the story of Diane McLeod and her debt hole.

McLeod began debt free, but a divorce caused her to spend and rack up $25,000 in credit card debt. She bought a home soon after with a $135,000 mortgage. Five years later illness and irresponsibility caused McLeod to owe $237,000 on her mortgage.

Now in foreclosure, it is hard for her to see light at the end of the tunnel.