If you’ve been looking for ways to get out of debt, then maybe a debt reduction spreadsheet might be the perfect tool and solution for you. There are plenty of free downloads available, as well as some excellent professional debt elimination calculators designed for spreadsheets. For additional ways in which you can reduce your debts, visit our previous post HERE.
The idea behind using a debt reduction spreadsheet is to give you an accurate picture of your current financial situation. As you work towards repaying your debts, you enter the changes into the spreadsheet so you can track your progress.
It’s also a good idea to enter any changes to your income or expenses so the calculations inside your spreadsheet can make the necessary changes. Depending on the type of program you’re using, you might find that the calculation can change the estimated date that you could be debt-free, or it might amend the amount of money you have to spend in your budget each week. Ideally, you would maintain a separate budget so that you know where your money is going as well as how much is coming in. Without a budget the debt reduction will be extremely tough, and you will more than likely fail at achieving your goals in a timely manner.
When you’re working hard to get rid of your debts, finding ways to keep yourself motivated so you’ll stick to your goals is important. This is where finding a good program to help you monitor and track your progress can be most beneficial. You can actually see the progress you’re making, which can help to keep you focused and on track.
Not all debt reduction spreadsheets are the same. Some are designed to work with very different debt reduction strategies. Perhaps the most popular of these is the snowball method. This is where you aim at paying down the debt with the smallest balance first, regardless of the interest rate you’re being charged. The object is to give you a sense of achievement to help motivate you to aim at the bigger debts in line. The snowball method works really well with the help of a spreadsheet designed to show you where you need to focus and what debt to pay down first.
Another popular method is opting for paying down the high-interest debt first rather than the smallest balance. In my snowball spreadsheet, you can actually do either method as that is a matter of how you approach the listing of your debts in the sheet itself. For a copy of the Snowball Debt Reduction spreadsheet developed by me, click Snowball.
The most important factor in using a debt reduction spreadsheet is remembering to enter any changes in your situation on a regular basis. The more often you remember to enter new balances or changes in interest charges or income levels, the more likely it will be that you’ll continue to find the motivation to keep going. Keeping the spreadsheet and your budget up to date is vital for your success.
Many of the spreadsheets have in-built calculators that can show you how long it will take you to pay off your current debts based on the numbers you’ve entered. This is usually a trigger for many people to look for ways to reduce their expenses a little further, so they’ll have more income available to put towards debt reduction. When you make those changes in the spreadsheet, you’ll instantly notice how much faster those little changes will help you become debt-free. Again, this is where a detailed budget will be beneficial in knowing what you can afford for your snowball payment level at the beginning and throughout the process. To purchase a copy of my spreadsheet that is a detailed budget with a net-worth calculator, click Budget.
Of course, you can customize your debt reduction spreadsheet, so you get to choose which debts you want to focus on paying off first. No matter what your preference, download a calculation tool that’s designed to help you get back in control of your finances today. For my suite of spreadsheets that will assist you in many areas of your finances including the snowball and budget sheets, click Financial Suite.
If you need any assistance and live in the Metro-Nashville area, feel free to contact me directly. For those outside middle Tennessee or who feel more comfortable with someone closer, seek out a qualified Registered Financial Consultant (RFC) near you who preferably is a fiduciary and fee-only.
