As you make the life altering decision to rid of your debt, the next question is: what now? No worries; we’ve got you covered. Below is access to the debt reduction calculator, along with directions on how to use it. This calculator will not only help you become debt free, but also explain the different options available to get you there.
Enter the name of your credit card debt, the balance, and the available credit. Find a statement and determine the amount of interest and enter your monthly payment from your budget. If you haven’t established a budget, enter the amount you can afford to pay each month; just make sure to pay at least the minimum amount due. Need a budget? Click here.
Debt Free Estimator
The debt free estimator gives you important information on the total amount of debt you have, the weighted interest rate, the amount of interest you would have paid along with the amount of interest you’re saving by going with your payment plan. Right above the debt free estimator, you will see the date you will be debt free!
***Be sure to adjust your starting date; it determines your debt free date!***
Credit Score Tracker
The credit score tracker is just that. Keep in mind the reduction of your credit card debt will have a positive effect on your credit score. If you use a credit score monitoring program, feel free to enter your score as it changes in this area.
One of the coolest things about our spreadsheet is the “pick payment option” selection. This selection will help create your debt repayment schedule that appears on the next page, based on the option you’ve selected. These are the 4 options available along with what they mean to you.
The Snowball method requires you to pay your debt from smallest to largest. After you enter the debt you have, the payment schedule will arrange your debt from the least amount you owe, to the most and will show you how to roll your payments from card to card. Make monthly payments, and when your first card is paid off, done you move payment to your second card, then the third, and so forth. The payments will “snowball” and cause payment amounts to increase on the final cards until they’re all paid off.
The Avalanche Method will organize your debt payments from the card that has the highest interest rate, to the lowest. This repayment option reduces interest payments, saving you money in the long run. Similar to the snowball method, once you’ve paid off your first credit card, the payment will roll to the next card, and the next, until your cards are completely paid off.
High/Low or Low/High Method
The High/Low or Low/High method is one that allows you to pay your debt based on chronological order in the spreadsheet. The sheet allows for up to 20 individual debts to be listed, and you can pay first to last, or last to first. Just that simple!
The last page is the repayment schedule, and shows what you need to pay each month towards each debt. This schedule is cool because it does the hard work of allocating funds for you and shows you what to pay on each debt each month. If you decide you’d like to add extra payments each month, there’s even an option to add extra payments! The schedule will also show you how many months needed to pay off each debt, and the total amount of interest you will have paid.
I love this calculator because it kept me focused and on top of my game. I also found myself getting excited as I paid off each credit card; I kept making steps towards my goal of being debt free! Avoid using your cards during this process, and be sure to do all you can to get your desired results! Nothing is impossible and that includes you being debt free.