This video shows how to use the Vertex42 debt reduction calculator to create a payment schedule for reducing debt. It also focuses on getting you the lowest possible interest exposure by structuring your debt efficiently.
This spreadsheet was created by Dr. Wittwer at Vertex42, an online resource featuring dozens of different financial calculators.
Make the investment in your financial future – buy the Vertex42 spreadsheet today!
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More information about debt reduction calculators:
Debts are a serious problem that many men and women face throughout their life. From the low interest student loans and mortgages to the high interest credit cards, debts can easily get out of control. Fortunately, a debt reduction calculator can help create a plan to reduce and eventually eliminate debts according to personal budgeting and ability to repay.
The Template
The way a debt reduction calculator works is through a spreadsheet template that helps organize the information and get everything together in a single location. The debt reduction template starts with a simple spreadsheet. The debt information is filled in on the spreadsheet according to the directions. Information used in the debt reduction template include the debts, the interest rate, the monthly payment and the other vital information about the debts. The calculator will then issue a report of the current situation.
Once the spreadsheet has the initial information, it then has a second page that works out a repayment plan. The repayment plan on the second page is a type of snowball reduction plan. This debt reduction calculator works out when it is possible to fully repay the debts by starting with the lowest debt amounts and working toward paying off small debts gradually. As the smaller debts are eliminated, more funds are put into the larger debts until the full amount of all debts are repaid in full.
How the Calculator Helps
The calculator helps by creating a workable and realistic payment schedule. The schedule works on gradually reducing the debts according to payment ability and the minimum payment amounts on all of the entered debts.
By following the guidelines set forth by the reduction calculator, it is possible to fully manage all the debts and get out of the debt much faster. The purpose is getting rid of small debts until the amount is easily managed and more money is available each month for eliminating the problem as soon as possible.
Since it uses a snowball method of getting out of debt, it is often a workable plan that most individuals are able to manage. Even a little extra cash added to small debts each month adds up and reduces the total. Eventually, the amount of money available to pay the rest of the debts adds up and makes it simple to manage.
Calculator Simplicity
The simple plan of action is one of the reasons the calculator is useful. The downside is that it does not factor in any potential complications that might arise. Complications like increases in interest rate for existing debts or similar factors will require going back and re-calculating the situation.
The calculator is a simple method of getting out of debt through snowballing. While it can provide charts showing progress and is user friendly, changes to the situation are not possible to factor into the calculation. If changes occur, it is the responsibility of the individual to update the information in the spreadsheet so that it is accurate. The calculator is merely a tool that can make the process easier, but it will not work properly if the information is not accurately filled in and updated when necessary.
Reducing debts starts with creating a plan that is possible. Since this is not always easy, using a spreadsheet calculator can help. The calculator uses information provided to work out a snowball plan to reduce the debts and improve the situation. When used appropriately, a debt reduction calculator will help reduce the debts until eventually the consumer is able to become debt free. This is the ultimate goal of any debt reduction plan or calculation.
{ 6 comments… read them below or add one }
Excellent advise – I hope it works for me! I was told to put all my money into my mortgage which has a redraw facility which will make the interest payment lower as inerest is caculated daily and you are only charged interest on the amount owing and at the end of the month when the interest payment is taken out then pay my other debts. To have money to live on for the month just take it out of the mortgage account as you need it. Or the other way is to use the credit card for living and paying bills and at the end of the month pay it off.
This was great it allowed me to enter my debt and interest and finally get a friendly to view way to reduce my out standing debt and then which outstanding bill should have the “snowball” effect payment placed on it further reduce out standing obligations faster.
The printed sheets are very clean and easy to read.
Well done and thank you for providing a free to use feature.
Great calculator! It has been a great help over the past few months getting my finances in order! Thanks so much!
Xena
This was a wonderful tutorial for using the worksheet. I greatly appreciate you taking the time to explain how to use it! (And I also appreciate Dr. Wittwer making this available for free.) Truly a wonderful resource, and I’ve shared it across my FB, Twitter, and will soon do a post on my blog.
Thanks again.
This calculator was exactly what I was looking for! Thanks for posting the video.
This exercise of yours is just Great.. It is a very good Financial Tool. Thank you so much for sharing and for your time. You know I work as Financial Analyst and I have Interest and Indirect Costs calculations and the approach you use is very simple and practical, I am going to make a good study of it and I am pretty sure, there are some principles and concepts that can be applied to my job. You are great, I’ll keep you posted, Luis