These days, the average American is practically drowning in debt. Whether it’s credit card spending or large, once-off purchases, statistics from CNBC claim that the everyday American is roughly over $90,000 in debt! With these staggeringly high numbers and amounts, it’s easy to see why many are desperate to find any reliable and viable way to help cut down on debt as quickly as possible. One lady recently managed to find a way to help pay off $11,000 in debt using AI like ChatGPT. Let’s find out how AI can help you manage your debt.
Mounting Debt
Over the years, according to CNBC, the amount of debt that people owe is going up. On average, baby boomers and Gen Xers tend to have the highest amount of debt, reaching an average of $135,000 to $96,000, respectively. However, millennials seem to have the highest rate of growth for debt, as their average debt climbed from around $49,000 five years ago to a whopping $78,000 in more recent times. This climb shows that more people are relying on borrowed money, which is increasing their total debt.
Fewer People Paying
According to the New York Fed, America’s total credit card debt sits at $1.2 trillion right now. Another study from the Federal Reserve Bank of Philadelphia claims that the number of people who have delinquent accounts (people who haven’t made a payment in over 90 days) sits at around 0.9%. They also claimed that the number of people making the minimum required payment on their debt has gone up from 10.75% to 11.12% in the last year, indicating that people are struggling to maintain payments comfortably.
Mounting Difficulty
The fact that more and more people are paying less towards their credit card debt is a sign that consumers are feeling the pinch right now. With the rising cost of living, the average household is spending more and more to maintain its living needs. This generally means that people have less and less money to pay their debt when payment time comes around each month. As a result of this, many people are trying to get creative about how they find ways to manage and pay off their debt.
AI as a Debt Tool
Recently, realtor and content creator Jennifer Allan posted a series on TikTok about how she decided to use AI tool ChatGPT to help her pay off her debt. While the idea started as a sort of fun idea, it quickly revealed the power that AI could have in helping people come up with effective strategies for managing and even funding their debt problem. Let’s take a look at Jennifer’s journey and how AI helped her pay off a massive chunk of her debt.
Prompts for Success
Jennifer approached the problem logically. She stated to ChatGPT that she had a total of $23,000 in debt and wanted to find ways to help clear this. The AI came up with a number of different suggestions, some of which ranged from practical and logical to more zany and ‘out-there’ advice that still proved effective. She tracked her process over the course of 30 days and kept prompting the LLM every day to try and get more tips and advice on her debt.
Practical Advice
One of the biggest advantages of this approach, Jennifer claims, is that she went from barely acknowledging her debt to making it the main focus of her day, every day, for at least 30 days. This helped her focus her mind on her goals and work towards paying off the debt on a daily and realisticbasisy. According to the earlier statistics from the Philadelphia Fed, avoidance and ignorance are among the main mistakes most credit card debt holders make.
Check Old Accounts
Some of the most practical advice that the LLM gave Jennifer was to go back and check on old accounts. Checking her old Venmo account, she found just over $100 sitting in the account and immediately sent it off to help clear a chunk of her credit card debt. Then she started discussing the topic with her husband, and he mentioned that they had an old brokerage account that hadn’t been used in a while. Allan found another $10,000 sitting in the account, which helped clear a lot of her debt.
Zany Debt Art
However, not all the advice that ChatGPT gave was what one would consider ‘conventional’. The LLM actually suggested that Allan make ‘debt art’ and try to sell it to help pay off her debt. The model instructed her to take a watermelon, write her debt total on it, and try to auction it off for a profit. Allan decided to take up the weird challenge and actually found a lot of success. Her post went viral, reaching over 2 million views quite quickly, and she wound up selling a photo of the watermelon for just over $50!
Debt Under Control
Right now, Jennifer has a large chunk of her debt under control and basically managed to bring the total down to half of its original amount. This is a pretty significant reduction and will definitely make life a lot easier for her to manage in terms of her monthly payments. Since then, she has gone on to say that she highly recommends using AI to help manage and structure your debt repayments. It can essentially act as a kind of debt counsellor, making things a lot more manageable.
AI for Debt Management
While AI is a vastly powerful tool, Noelle Carter, president and CEO of Parachute Credit Counseling, claims that it should strictly be used as a tool alone. She claims that while AI is hugely helpful and can be incredibly rewarding when it comes to structuring debt payments and even coming up with ways to pay off debt, it’s important to still also seek the advice of humans as they can often spot things the AI might miss or think about the problem a little more laterally.
The Future of Credit Control
AI will help people in the future by being able to do things like scheduling automatic payments for monthly debt, creating helpful automated reminders about debt payments, or other news related to the industry, like interest rate hikes or even new legislation that could affect debt repayment. It also acts as a kind of debt consolidation expert that can help you package or structure your debt in a more manageable way, making it easier to handle. If you liked this article, be sure to check out our site for more like it!