If you’ve already started on your debt-free journey, then you probably have a target debt-free date in mind. Maybe you’re hoping to pay off your student loans before your 35th birthday or pay off your enormous credit card balance before next Christmas.
Your goal date can really motivate you to make sacrifices and do hard things to achieve debt freedom.
What if in addition to setting a magical date you also knew how every additional payment brought that date closer?
What if you could see how future additional payments would affect your debt-free date?
It’s fun to play around with numbers and see all the potential for future success, but most calculators don’t do much more than one-time calculations.
You can do some of these scenarios one at a time with standard debt-free calculators, but I hadn’t seen one that manages multiple scenarios and gives you a place to personalize your big picture and track your progress.
Until just a few weeks ago!
I recently discovered Easy Budget’s Debt Snowball Calculator, a great tool that lets you do all that and more! I would have loved a tool like this when we were paying off six figures of student loan debt.
Seeing exactly how close you are to your goal is so motivating. Knowing the affect your extra payments have on your debt-free date is incredibly exciting.
I’m convinced that the knowledge and motivation this great tool provides will bring your debt-free date closer!
Let me show you how the Debt Snowball Calculator works so you can see what I’m talking about. Then I’ll show you the features I love most.
How the Debt Snowball Calculator works
The Debt Snowball Calculator is based on the idea of smashing your debts, one at a time, in order from smallest to largest (though tool allows you to change the order if you want). Dave Ramsey popularized this method and explains it here. Dave doesn’t have a great tool for actually tracking your debt snowball, so the folks at Easy Budget have built one instead. I’ll show you how to make the most of the Debt Snowball Calculator here, or you can watch the video if that’s easier.
Either way you’ll want to scroll to the bottom of the post where I’m sharing a sweet discount code!
1. Enter your data
First enter each of your debts. In sections 1 through 4 you’ll give each debt:
- A name (i.e. Visa, Honda, FedLoans)
- Current Balance
- Interest rate
- Minimum payment due each month
Then in section 5 enter the month you’re starting your debt snowball. If you haven’t yet made your minimum payments on your debts this month, then enter the current month as the starting month. If this month’s balances already reflect the payments you have made this month, then have next month be the starting date.
Then, enter the standard monthly amount you put toward debt each month in section 6. This includes the total to meet all your minimum monthly payments, plus any additional amount you’re consistently paying toward debt each month.
2. See your current debt payoff situation
Now you can see your debt-free date if you keep making the same regular monthly payments! You’ll also see the debt payoff date of each individual loan in the column to the right of where you entered all of the loan information.
Be sure your loans are entered in the order that you are snowballing them. This can be smallest to largest, highest interest to lowest, or whatever you choose. If you have several debts, try a few orders and see the effect the order has on your debt-free date. You can click on the sorting dropdown arrow under the applicable column title to change the order. For example, if you wanted to sort the debts by balance you would click on the dropdown under “2. Balance” and choose “Sort Smallest to Largest.”
3. Plan for additional payments
The yellow section on the right side of the spreadsheet is where you’ll add and track additional payments.
In section 7 you’ll enter predicted future debt payments. If you have are planning a one-time lump sum payment in an upcoming month, enter it in that month.
Maybe you are expecting a future raise that will increase your monthly payment toward debt. You can enter that in the month you anticipate it starting, then drag and copy the amount into all subsequent months.
4. Track your real progress
In section 8 you can enter your actual amount paid toward debt (including minimum payments) during that month. When a number is entered in this column, it will trump whatever was predicted in section 7. It will also trump what you entered back in section 6.
Note that the calculations assume that you are making at least the minimum payments each month, so the number you enter in section 8 should be at least the total of your minimum payments.
After entering your real total payment toward debt each month you’ll be able to see your current debt-free date that takes into consideration all of your actual payments from section 8 and all of your predicted/planned payments in future months (section 7).
What I LOVE about the Debt Snowball Calculator
In case you haven’t noticed, I’m pretty sold on the awesomeness of this debt freedom tool. I think that having all the information about current debts and payments, and seeing what difference future payments can make, can really help keep up your enthusiasm in a debt-free journey that can be pretty draining sometimes. I’d even say that keeping this connected to your debt will probably make you pay it off faster! If you aren’t convinced, let me share the features I love most.
See the effect of actual payments on your debt-free date
While section 8 of the spreadsheet is considered optional, it’s one of my favorite parts. In section 8, you enter the amount you actually pay toward debt (including minimum payments) during the month. If you’re anything like us, some months are stellar and other months you’ll just manage the minimums. By entering your actual debt payment, you can see how your debt-free date is actually affected.
Predict the effect of future regular or lump sum payments
I love playing with various scenarios as I dream of debt freedom. What if we got a $500 per month raise and put all of it toward debt from here on out? How would that change our debt-free date? What if we put our entire tax refund toward our debt next February? When would our debt-free date be?
Complicated calculations are totally automated
Doing all the math to figure out how each current or future payment toward debt affects your debt-free date is a royal pain. If you have multiple debts at different interest rates, it’s even more complicated. The Debt Snowball Calculator takes all of these factors into consideration and spits out all the information you need (and none of the numbers you don’t need).
If you want to see more of the numbers, check out the “Calculations” tab. You can see the individual balances on a monthly basis for each of your loans and see how your snowball is being applied.
Decide on your debt payoff order
Whether you are paying off loans from the smallest balance to the largest, the highest interest rate to the lowest, or you’re going in alphabetical order, the Debt Snowball Calculator takes care of all the details. You can even use it to decide which approach you want to take. After you have all of your loans put in, you can sort the payoff order with a simple click and see how changing the order affects your debt-free date. You won’t need to wonder if paying off the smallest balance (versus the highest interest) is making a huge difference in the big picture because you’ll be able to easily compare it yourself.
Get your own copy of the Debt Snowball Calculator spreadsheet
Keeping motivation up while paying off debt, especially big debt, is hard! Being able to watch your debt-free date get closer with each additional payment is incredibly inspiring.
Because I think this tool can be extremely helpful for all of my readers who are paying off debt, I talked to the creators of the Debt Snowball Calculator and got them to offer a coupon code just for readers of SixFiguresUnder! (see updated coupon code below) Enter the code SMASHDEBT and get 20% off, making the Debt Snowball Calculator just $13.59.
I know that the motivation you will get from using the Debt Snowball Calculator will be totally worth the cost!
How about you?
Have you set a debt-free date?