February 22, 2024

How to Eliminate Your Debt

How to Eliminate Your Debt

Debt can be a big source of stress if you don't have a plan to become debt free. Whether it's for your student loans or credit card debt, we’ve developed this free, easy-to-use debt elimination calculator to help you become debt free. 👉Click here to get access. 👈

Getting Started

Once you get access to the Google Sheet (it may take a while for the email to be sent), you must first make a copy before you can edit it with your own information. When inputting your information, be aware you should only input values in the yellow highlighted boxes - everything else will happen automatically!

The first place to begin is the Your Debt section. Enter each debt into its own row. Choose any name for them, select the type of debt (select Other if none apply), and enter the amount and interest APR %. Lastly, you need to enter in the minimum payment structure. This usually comes out to a percentage of the outstanding debt amount, but for some debt like a car loan it can be a simple flat monthly payment. After choosing the relevant type, the calculator will tell you the minimum payments based on today's values.

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Paying it Off

Moving onto the Your Payment Plan, you will first see a sum of all the monthly minimum payments you entered in the last section. You now need to input how much additional you can contribute every month. This part is very important for eliminating debt: it is generally advised to not only make minimum payments as this may significantly increase the time it takes to become debt free.

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As you can see above, the debt elimination calculator has 2 debt repayment strategies: Snowball and Avalanche. The debt snowball strategy, popularized by personal finance expert Dave Ramsey, involves paying off debts in order from smallest to largest balance, regardless of the interest rate. The debt avalanche method, on the other hand, prioritizes paying debts with the highest interest rates first, with the goal of minimizing the total interest paid over time. The debt avalanche method will save you more money in the long run by tackling high-interest debts first, but it may take longer to feel like you're making significant progress compared to the debt snowball method.

Use this calculator to compare the numbers and pick what's right for you. It will tell you which debt you should pay off next, how long it will take to pay off that debt, and how long it will take for you to become completely debt-free. Keep in mind the calculations assume that as you pay off debts, you are putting their former minimum payments into paying off the next debt. This is very important to drastically reduce the amount of time needed to become debt free!

Additional Tips to Eliminate Debt

Consider if you’re able to negotiate a lower interest rate or consolidate your debt, both of which will help lower the payment rate and overall payment. If you’re in a real financial pickle, you can also reach out to your creditors to discuss hardship options and see if you can get lower rates that way. But if you’re unable to lower your interest rates, there’s always the old tried and true method of cutting your ancillary expenses. Consider reducing expenses such as dining out, entertainment, or subscription services until you've made significant progress on your debt, after which you can slowly add them back in as you feel more comfortable with your debt. Or, if you don’t have expenses to cut you could increase your income through side hustles, freelance work, or overtime, or learning skills that could boost you into a higher paying position.

Dealing with debt can be challenging, but with our debt elimination calculator and enough discipline you can take control of your finances and build a brighter financial future.

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