Debt Reduction Calculator | Fillable | Excel
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There are many different types of Debt Reduction Calculators available at no cost online. Some are designed to consider a situation where you only have one debt, and you’d like to see how you might pay off that debt more quickly. Others consider multiple obligations, and show you the results you can obtain using different payment strategies.
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All of the Debt Reduction Calculators mirror the concept of the time value of money and compound debt, which is the way interest-bearing debt is determined. That is, if you owe $1,000 dollars at 10% annual interest, at the end of one year, if you have made no payment on that debt, you will then owe the original $1,000 plus 10% interest on that $1,000, or $100, for a new debt total of $1,100. At the end of the second year, if you still haven’t made any payments, you will owe $1,100, and this time the added interest is 10% of $1,100, or $110. Your debt will now be $1,100 plus $110, or $1,210.
If you think, “this sounds like a job for an Excel Spreadsheet,” then you are quite correct, as many Debt Reduction Calculators are designed to run on your copy of Excel. There are some, however, that have the subset of a spreadsheet that is needed for this purpose built into them.
A typical Loan statement will include how much money you owe on your debt, your annual interest percentage, and your monthly minimum payment. Our Debt Reduction Calculator will have places for you to type in those values. Once you do so, and hit the calculate button, the program will tell you, in years and months, how long it will take you to pay off your obligation.
How to Use a Debt Reduction Calculator
The Debt Reduction Calculator will ask you, in a second section, how much money beyond the minimum would you be willing to pay in order to retire your debt sooner? For example, if the monthly minimum is $70, and you’d be willing to pay $100, enter $30. After the calculation, the program will tell you how much sooner the obligation would be satisfied.
A Debt Reduction Calculator of this sort can also look at the same issue from a slightly different angle. From the first section of the program, you know how long it will take you to pay off your loan by making the monthly minimum. For any number of reasons, you may need to have the loan paid off sooner. There will be an option in the program to enter the time by which the loan must have been discharged. The program will tell you how much you must pay, beyond the monthly minimum, to achieve this goal.
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