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1 | Debt Reduction Calculator | © 2007-2017 Vertex42 LLC | Strategies | |||||||
2 | By Vertex42.com | HELP | Snowball (Lowest Balance First) | |||||||
3 | Avalanche (Highest Interest First) | |||||||||
4 | Balance Date: | 1/1/17 | Order Entered In Table | |||||||
5 | No Snowball | |||||||||
6 | Creditor Information Table | Custom - Highest First | ||||||||
7 | Row | Creditor | Balance | Rate | Payment | Custom | Interest-only | Custom - Lowest First | ||
8 | 1 | Card #1 | 4,400.00 | 13.00% | 50.00 | 2 | 47.67 | |||
9 | 2 | Auto Loan #1 | 3,200.00 | 9.81% | 30.00 | 1 | 26.16 | Getting Started: Visit the web page and watch the video. Click on HELP in cell G2. | ||
10 | 3 | Auto Loan #2 | 5,000.00 | 12.00% | 55.00 | 3 | 50.00 | |||
11 | 4 | Card #2 | 9,000.00 | 13.50% | 110.00 | 5 | 101.25 | Note: This calculator only allows up to 10 creditors. For more, get the extended version. | ||
12 | 5 | Student Loan #1 | 4,900.00 | 4.00% | 25.00 | 4 | 16.34 | |||
13 | 6 | 0.00 | Lowest Balance First: Gives you the benefit of the snowball effect, but you may | |||||||
14 | 7 | 0.00 | pay more interest in the end than Highest Interest First. The main benefit of this | |||||||
15 | 8 | 0.00 | approach is the psychological effect of seeing the number of debts disappear | |||||||
16 | 9 | 0.00 | more quickly. | |||||||
17 | 10 | 0.00 | ||||||||
18 | Total: | 26,500.00 | Total: | 270.00 | Highest Interest First: This strategy results in the lowest total interest, but | |||||
19 | depending on the balance of your higher interest loans, it may take you longer | |||||||||
20 | Monthly Payment | 1,700.00 | . | to see your first loan/debt completely paid off. If the difference in the total | ||||||
21 | Initial Snowball | $1,430.00 | interest is not significant, than you may get more satisfaction from the Lowest | |||||||
22 | Balance First method. | |||||||||
23 | Strategy: | Snowball (Lowest Balance First) | 1 | |||||||
24 | TRUE | Order Entered in the Table: You can use the sort feature (Data>Sort Range) to | ||||||||
25 | Results are only estimates | choose how you want the snowball effect to work. For example, if you want | ||||||||
26 | Creditors in | Original | Total Interest | Months to | Month Paid | to use a combination of Lowest Balance First AND Highest Interest First, then | ||||
27 | Chosen Order | Balance | Paid | Pay Off | Off | first select the creditor information table (B7:F17), then go to Data > Sort Range, | ||||
28 | Auto Loan #1 | 3,200.00 | 43.22 | 3 | Apr-17 | . | and sort by Balance:Ascending and Rate:Descending (or vice versa). | |||
29 | Card #1 | 4,400.00 | 200.65 | 6 | Jul-17 | . | ||||
30 | Student Loan #1 | 4,900.00 | 118.64 | 9 | Oct-17 | . | Warning: If you are careful, you can rearrange the order of the entries in the | |||
31 | Auto Loan #2 | 5,000.00 | 521.54 | 12 | Jan-18 | . | creditor table by copying or cutting and pasting, but if you insert a row above | |||
32 | Card #2 | 9,000.00 | 1,486.13 | 17 | Jun-18 | . | row 1 or after row 10, the formulas will be messed up. | |||
33 | 0.00 | 0.00 | 0 | . | ||||||
34 | 0.00 | 0.00 | 0 | . | No Snowball: Select this option if you want to see how long it will take to pay | |||||
35 | 0.00 | 0.00 | 0 | . | off the debts without maintaining a constant monthly payment. In some cases, | |||||
36 | 0.00 | 0.00 | 0 | . | you may find it will take more than 30 years (resulting in errors in the spreadsheet). | |||||
37 | 0.00 | 0.00 | 0 | . | ||||||
38 | Total Interest Paid: | 2,370.18 | (Lower is Better) | Custom-Highest or Custom-Lowest: You can manually control the order the | ||||||
39 | debts are paid by entering numbers or formulas in the Custom column. For example, | |||||||||
40 | Debt Reduction Calculator by Vertex42.com | if you enter the values 1,2,3,5,4 then rows 4 and 5 will be swapped. You can enter | ||||||||
41 | your own formulas as well, whatever they might be. | |||||||||
42 | ||||||||||
43 | [42] | Minimum Payments: This calculator does not provide the option of making only | ||||||||
44 | the minimum monthly payments on credit cards or lines of credit. See tip #3 below. | |||||||||
45 | ||||||||||
46 | Tip 1: If you want to use the Lowest Balance First method and you have two debts that | |||||||||
47 | are close to the same balance but have very different interest rates, you may | |||||||||
48 | see a substantial reduction in the total interest paid if you change the order of | |||||||||
49 | the two entries so that you pay the higher rate first. In that case, try using the | |||||||||
50 | Order Entered in the Table strategy. | |||||||||
51 | ||||||||||
52 | Tip 2: Like Tip 1, if you want to use the Highest Interest Rate method, and you | |||||||||
53 | have two debts with similar rates but very different balances, you may want to | |||||||||
54 | change the order so that you pay off the lower balance first. This may make very | |||||||||
55 | little difference in the total interest, but it can make you feel better faster. | |||||||||
56 | ||||||||||
57 | Tip 3: Update the Creditor Information Table every few months. Your minimum | |||||||||
58 | payments may change over time as the balance in your accounts change, or if your | |||||||||
59 | interest rate changes. You may be able to further reduce your overall interest and | |||||||||
60 | reduce the time to pay off your debts, by re-adjusting your minimum payments | |||||||||
61 | every few months. This would mean starting over with a fresh template, entering | |||||||||
62 | the new Balance Date, and updating the Creditor Information Table. | |||||||||
63 | ||||||||||
64 | Tip 4: Snowflaking is a popular new term given to making occasional extra | |||||||||
65 | payments above the normal monthly payment. You can add debt "snowflakes" in the | |||||||||
66 | PaymentSchedule worksheet. | |||||||||
67 | ||||||||||