Debt Reduction Calculator | Friday Favorite

Honestly, I’m really surprised this wasn’t one of the first Friday Favorites I wrote. If you’ve read any of my debt-related posts, you’ve probably seen me pitch this Debt Reduction Calculator. Well today, I’m going to go in-depth about why I constantly recommend it. For the sake of abbreviation, I’ve going to reference it as DRC.
 
First of all, the DRC is freaking amazing. I use it to track my progress towards becoming debt-free. I love that I only had to enter the majority of the information once and then just update the principal balance and date.

Vertex42 Debt Reduction Calculator
 

About the DRC

The DRC is a spreadsheet with the all the necessary formulas to create a time table for your combined debts, including individual pay-off dates and an amortization schedule. There are two tabs (or pages): one where you enter your debt information, and one containing your amortization schedule. Both pages provide an incredible amount of information.
The first page shows a general overview of all the information, including final pay-off date or each debt and total interest paid. You can enter a total monthly payment you can contribute across all debts (including minimum payments plus any extra). The first page also has a handy drop-down menu with different repayment method options (Snowball, Avalanche, Custom Entry Highest or Lowest).
The second page offers a long-term look at your remaining payments, including how adding one-time payments can effect the life of the loan and the overall interest. For instance, if you save up to make a large payment at the end of the year, you can see how that payment will change things.

Example:

Let’s say you owe $80,000 at 4.00%, paying $600 each month, and it is currently April. If you add an extra $5,000 to your payment in December, you’ll reduce your pay-off time by over a year! You’ll also save over $3,500 in interest payments over the course of the loan.
Or let’s say you want to add an extra $20 to your monthly payment. That will shave 8 months off the life of the loan and save you $1,200 in interest.

 
Another fantastic thing about the DRC is that you can download and save it, so you don’t have to re-enter your information into an online calculator every time you want to check on your status.
Or better yet, you can use this calculator to show you which method of repayment will work best for you (Avalanche Method, Snowball Method, or custom).
This calculator gives you all the tools you need to see how much extra you can put towards your debt to eradicate it as quickly as possible! Add an extra $20, $30, or even $50 a month and see what happens to the interest and pay-off date!
 

To Review

  • Downloadable-You only have to enter your information once
  • Strategy Compliant-You can see how the Snowball Method, Avalanche Method, or other methods effect your debt
  • Clean, simple design
  • Ability to see how additional payments change your pay-off date & interest
  • Ability to change both the monthly payment total and add one-time payments
  • Amortization Schedule to show monthly changes to the principal total

 
 I hope you enjoyed this! I’ll see you Monday with the next DRS post, How to Calculate Your Debt-Free Date!

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