Calculate Your Way to Being Debt Free

by Site Manager on December 3, 2014

picture 2Calculate Your Way to Being Debt Free

If you are interested in paying off debt, it is essential that you utilize a debt calculator in order to determine how much you will need to pay each month, based on what you owe and the interest rate associated with that debt. For each month, the debt calculator calculates and adds the set interest that is accrued during that time period to the amount that you owed during the prior month. The monthly payment is then subtracted in order to determine the new debt amount that is owed.

If you are interested in paying off debt, this calculator may be used to play with various figures in order to determine the proper amount that needs to be paid each month in order to achieve your goals. By using a debt calculator, you will be able to successfully determine the monthly payment that you must pay – once and for all – that will allow your debts to be completely paid off within the amount of time that you designate for yourself.

In addition to utilizing a debt calculator, there are many strategies that may be used to achieve success in paying off debt. The following techniques have the ability to assist you in this challenging endeavor:

  1. The first and most important step to paying off debt is to eliminate the little habit of only paying what you have to pay. In most instances, a minimum payment equals up to 3% of the total balance owed with a creditor. By taking as long as possible to pay off your debt, you end up paying tremendous amounts of interest. In essence, that leaves you with less money and leaves your creditor with more money. By making a few monetary sacrifices each month and putting a little extra money towards the debts that you possess, you will find that it is easy to pay off what you owe, faster than you originally planned.
  2. The next step to paying off debt is to snowball the payments that you are responsible for. Essentially, you should review all of your credit cards and determine which one has the lowest interest rate. If you have credit available on that card, you should transfer your debt from your other credit cards to that one. This is an effective way of not only making one payment a month, but saving the amount of money that you accrue in interest charges. Once the card with the lowest interest rate has more room available, continue moving higher-interest rate debts to that card and continue to pay on them.
  3. If you have a 401(k) plan, you may borrow against it in order to pay off your debts. Most of these plans allow you to borrow up to 50% of the total value of the plan. The interest rate that you will pay on what you borrow is typically much lower than that associated with credit cards. In addition to this, the interest that you pay will go right back into your account, not the pockets of lenders.

By following the tips outlined in this guide and using a debt calculator in order to determine the most appropriate monthly payment that needs to be made, based on the amount of money that you owe to creditors, you will find that paying off debt is not as challenging as you may have once thought it to be. All it takes is a little dedication and creativity and you will be on your way to a debt-free life.

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