Debt Reduction Calculator

Calculator2008 was not a very good year for a lot of people, including us, in terms of finances. We watched our net worth slowly shrink down due to a variety of reasons. Our 401ks seemingly stopped growing because a large chunk of our allocations where on riskier but higher return investments such as stocks. The DJIA at this point  last year was double of what it is now. The USD which was very strong for several years took a nose dive against asian currencies. Coupled with unforseen circumstances and our relocation last year, we found ourselves with a pretty significant amount of debt.

Thankfully though, I feel we are still on track on paying off our debts and at the same time growing back our savings. Also, we did manage to pay off  our subdivision lot and car back home last Jan, so this cleared some of our income to be dedicated for debt payments. A very nifty application which I am using throughout this process is the Debt Reducation Calculator.

Basically, this excel file filled with an unbelievable amount of macros and formulas will allow you to input several accounts so you can manage your debt payments. It features several strategies on paying of your loans, credit cards, etc. so you can see which is the better way of paying things especially if you have accounts with different interest rates.

This calculator features the Debt Snowball strategy, which let’s you benefit psychologically in paying off your debt. Basically, it is paying off your smaller accounts so that you can build momentum and see a lot of ‘progress’ early on. Other strategies include, high interest first (which I think is the best one really, feeling good does not put money back in my pocket), no snowball, or custom order.

You can download the tool here.