debt tracker

Tools for Debt Management Planning

Plan Your Debt Exit

Debt Management Planning Tools

Are you struggling with debt and looking for ways to manage it effectively? Whether you’re dealing with personal finance or running a small business, debt management can be a daunting task. But with the right tools and strategies, you can take control of your finances and work towards becoming debt-free.

In this comprehensive blog post, we’ll cover a wide range of debt management tools and techniques that can help you pay off your debts faster, lower your interest rates, and create a customised repayment plan that works for you. From debt payoff calculators and budgeting software to debt consolidation and repayment plans, we’ll explore the best debt management tools available for both the UK and US markets.

Managing your debt can be overwhelming, but it doesn’t have to be. With the right mindset and tools, you can take charge of your financial situation and work towards achieving your debt payoff goals. So, let’s dive in and explore the world of debt management tools and techniques, and discover how they can help you become debt-free.

Debt Management Strategy

When it comes to managing debt, having a solid strategy is key. Here are some sub-sections to consider when creating a debt management plan.

Before You Payoff Any Debt…

Before you start paying off any debt, it’s important to take stock of your financial accounts and credit report. This will give you a clear understanding of how much you owe and to whom, as well as your credit score and credit utilization. By knowing this information, you can create a plan that is tailored to your specific financial situation.

I’ve created a load of spreadsheets over the years – each one was was intended to get me more organised than the last…!

A spreadsheet is unfortunatly only as good as the data you put into it, so keeping it simple but making sure that it tells you an accurate stroy about your money is key to making this work.

I’ve made a few credit card trackers and budget sheets that you might find useful for this part of your journey, especially my little credit card tracker with charts…

credit card tracker

This Custom built interest calculator lets you list your credit cards or loans with their outstanding balance and the amount of interest you have been charged for that month. The calculator will then return the annual interest rate that you are being charged. This is especially useful when you are deciding which of your debts to pay down 1st (tip – the most expensive!!)

Creating a Debt Reduction Strategy

Once you have a clear understanding of your debt and credit situation, it’s time to create a debt reduction strategy. This should include a plan for paying off your debts in a way that makes sense for your financial goals and budget. Consider using a debt payoff planner or calculator to help you determine the best approach.

Lower Interest Rate

One way to pay off debt faster is to lower your interest rates. This can be done through negotiating with credit card companies or by consolidating your debt. By lowering your interest rates, you’ll be able to put more money towards paying off the principal balance.

Debt Reduction Plan

A debt reduction plan is a specific plan for paying off your debt. This plan should include a list of your debts, the interest rates, and the minimum monthly payments. You can then prioritize your debts based on the highest interest rate or the smallest balance. Consider using the debt snowball or debt avalanche method to help you pay off your debt faster.

Debt Consolidation

Debt consolidation is the process of combining multiple debts into one loan with a lower interest rate. This can be a good option for those with high-interest credit card debt. However, it’s important to do your research and make sure you’re getting a good deal before consolidating your debt.

Create a Customized Debt Plan

Creating a customized debt plan is key to successfully paying off your debt. This plan should take into account your income, expenses, and financial goals. Consider automating your debt payments and setting up payment reminders to help you stay on track.

Use a spreadsheet or an online tool that can give you a good idea of what your target looks like, how far away it is and what impact small payments can have in the longer term.

I have a built little calculator that can show you how just an extra few dollars / pounds / euros etc added to your regular payment can really impact the time it takes to get debt free and the interest that you pay by the end.

Try it out online or download it for later – I promise you will be suprised!

Money to Put Towards Your Debt

Finding extra money to put towards your debt can be a challenge. Consider cutting back on expenses, increasing your income, or using windfalls such as tax refunds or bonuses to pay off your debt faster.

No suprise here, I made a spreadsheet for that…I am getting predictable yet??

This sheet shows you side by side what your current budget looks like and what your “potential” budget could look like, let me explain..

If you have a clear view of all your expenses and income on one side and on the other you can cut some off your sky / cable bill, reduce your grocery spending by 10%, cancel a few subscriptions etc – this sheet will show you how much of an impact these changes will make on a weekly, monthly and annual basis – cool eh?

cut the budget

It takes your spend & income & instantly shows you exactly where your money is going by week, month & year

It will show you how much you really need to make ends meet and what you can do to get so much more out of what you already have.

There is even a 26 page manual on how to use it spep by step…!

This version of the budget planner allows you to put in both your spend and income TODAY and what you might be able to adjust it to going forward.

Repayment Plan

A repayment plan is a specific plan for paying off your debt over time. This plan should include a timeline for paying off each debt, as well as a plan for how much you’ll pay each month. By sticking to a repayment plan, you’ll be able to pay off your debt faster and more efficiently.

By following these debt management tools and strategies, you can take control of your debt and work towards becoming debt-free. Remember to stay disciplined and committed to your plan, and don’t hesitate to seek professional help if needed.

Debt Management Tools

If you’re struggling with debt, there are a variety of debt management tools available to help you get back on track. Here are some of the best debt management tools to consider:

Debt Management Software

Debt management software is a great tool to help you stay on top of your finances. With debt management software, you can track your spending, create a budget, and monitor your progress towards your debt payoff goals. Some of the best debt management software options include Quicken, ZilchWorks, and Undebt.it.

I use “Pocketsmith” for my personal accounts and “Freeagent” for my businesses. These are both great tools but they do take a bit of getting used to. If you don’t have the time or the inclination, using a spreadsheet for a while until you feel the need for a more tech based solution could be the way to go.

Excel Debt Payoff Planner

If you prefer to use Excel, you can create your own debt payoff planner. This allows you to create a customized plan based on your debt and repayment goals. You can use an Excel template or create your own spreadsheet to track your progress.

Printable Debt Planner

If you prefer to use pen and paper, a printable debt planner can be a great option. You can find free debt planner templates online or create your own. This allows you to track your progress towards your debt payoff goals and stay on top of your finances.

Making debt payoff into a bit of a game really does help a lot of people and there are loads of options available on Amazon & Etsy, you are sure to find one that works for you if spreadsheets & software apps are not your thing.

Track Your Progress

No matter what debt management tool you use, it’s important to track your progress. This allows you to see how far you’ve come and stay motivated to continue paying off your debt. You can use a debt payoff calculator to see how long it will take you to become debt-free, and track your progress towards that goal.

Different Payoff Methods

There are several different debt payoff methods you can use to pay off your debt. The debt snowball method involves paying off your smallest debt first, while the debt avalanche method involves paying off your debt with the highest interest rate first. You can also consider debt consolidation, which involves combining all of your debts into one loan with a lower interest rate.

Debt Management Plan

If you’re struggling to pay off your debt, a debt management plan can be a great option. This involves working with a credit counseling agency to create a repayment plan that works for your budget. The credit counseling agency will work with your creditors to lower your interest rates and create a payment plan that you can afford.

Remember, there are many debt management tools available to help you get out of debt. Whether you choose debt management software, an Excel debt payoff planner, a printable debt planner, or a debt management plan, these tools can help you pay off your debt faster and become debt-free.

Money Management

Managing your money is an essential part of debt management. It is important to create a budget and track your spending to ensure that you are using your money wisely and making progress towards paying off your debt.

Creating a Budget

Creating a budget is the first step towards managing your money and paying off your debt. A budget is a plan that helps you manage your money by tracking your income and expenses. It helps you identify areas where you can cut back on spending and allocate more money towards paying off your debt.

To create a budget, start by listing all your sources of income and your monthly expenses. This includes your rent or mortgage, utilities, groceries, transportation, and any other bills or expenses you have. Once you have a clear picture of your income and expenses, you can determine how much money you have left over each month to put towards your debt.

Track Your Spending

Tracking your spending is another important step towards managing your money and paying off your debt. It helps you identify areas where you are overspending and make adjustments to your budget. There are many tools and apps available that can help you track your spending, such as Mint or YNAB.

When tracking your spending, be sure to categorize your expenses so you can see where your money is going. This will help you identify areas where you can cut back and allocate more money towards paying off your debt. For example, if you notice that you are spending a lot of money on eating out, you can make adjustments to your budget and start cooking at home more often.

Overall, creating a budget and tracking your spending are essential steps towards managing your money and paying off your debt. By doing so, you can identify areas where you can cut back on spending and allocate more money towards paying off your debt.

Debt Payoff Methods

When it comes to paying off debt, there are several methods you can use to help you reach your goals. In this section, we’ll explore some of the most popular debt payoff methods and how they can help you become debt-free.

Debt Snowball

The debt snowball method is a popular way to pay off debt. With this method, you focus on paying off your smallest debt first, while making minimum payments on your other debts. Once you’ve paid off your smallest debt, you move on to the next smallest debt. This method can be effective because it gives you a quick win and helps build momentum as you work towards paying off your larger debts.

Debt Avalanche

The debt avalanche method is another popular way to pay off debt. With this method, you focus on paying off your debt with the highest interest rate first, while making minimum payments on your other debts. Once you’ve paid off your highest interest debt, you move on to the debt with the next highest interest rate. This method can be effective because it can save you money on interest in the long run.

Custom Plan

If neither the debt snowball nor the debt avalanche method works for you, consider creating a customized debt payoff plan that works for your unique situation. This could involve prioritizing your debts based on factors such as interest rate, balance, or creditor.

Debt Payoff Goals

Setting debt payoff goals can help you stay motivated and focused on becoming debt-free. Consider setting specific, measurable goals for paying off your debt, such as paying off a certain amount of debt by a certain date.

Payment Reminders

Setting up payment reminders can help you stay on track with your debt repayment plan. You can use a calendar or a budgeting app to set reminders for when your bills are due, or you can set up automatic payments to ensure that you never miss a payment.

Automate

Automating your debt payments can help you stay on track with your debt repayment plan and avoid late fees. You can set up automatic payments through your bank or credit card company to ensure that your payments are always made on time.

By using these debt payoff methods and tools, you can work towards becoming debt-free and achieving your financial goals. Remember to track your progress and adjust your plan as necessary to ensure that you stay on track towards your debt-free future.

Credit Report

Your credit report is an important tool for managing your debt and staying on top of your finances. It provides a detailed overview of your credit history, including your credit score, credit utilization, and information on credit bureaus and credit card companies.

Credit Score

Your credit score is a number that represents your creditworthiness. It is based on your credit history and helps lenders determine how likely you are to repay your debts. A higher credit score can lead to lower interest rates and better loan terms, while a lower credit score can make it more difficult to obtain credit.

Credit Utilization

Credit utilization is the amount of credit you are using compared to your total credit limit. It is an important factor in determining your credit score, as high credit utilization can indicate that you are relying too heavily on credit. To improve your credit score, it is recommended to keep your credit utilization below 30%.

Credit Bureaus

Credit bureaus are companies that collect and maintain information on your credit history. In the UK, the three main credit bureaus are Equifax, Experian, and TransUnion. In the US, the three main credit bureaus are Equifax, Experian, and TransUnion. You can request a free copy of your credit report from each bureau once a year.

Credit Card Companies

Credit card companies are the lenders that provide credit cards and other forms of credit. They report your credit history to the credit bureaus, which affects your credit score. It is important to make your payments on time and keep your credit utilization low to maintain a good relationship with your credit card companies.

Overall, your credit report is an essential tool for managing your debt and staying on top of your finances. By understanding your credit score, credit utilization, credit bureaus, and credit card companies, you can make informed decisions to improve your credit and achieve your debt payoff goals.

Frequently Asked Questions

What are the best debt management tools for personal finance and small businesses?

When it comes to managing debt, there are various tools that can help you stay on track. Some of the best debt management tools for personal finance and small businesses include debt payoff planners, budgeting software, and debt consolidation services. These tools can help you create a customized plan to pay off your debt, track your spending, and lower your interest rates.

What is the most effective debt payoff plan for both personal finance and small businesses?

The most effective debt payoff plan for personal finance and small businesses is the debt snowball or debt avalanche method. The debt snowball method involves paying off your smallest debts first, while the debt avalanche method involves paying off your debts with the highest interest rates first. Both methods can help you pay off your debt faster and stay motivated to reach your debt payoff goals.

How can debt management software help with budgeting and money management?

Debt management software can help with budgeting and money management by providing you with a clear overview of your financial accounts and debt repayment plan. This software helps you track your progress and stay on top of your debt payments. With features like payment reminders and custom plans, debt management software can help you stay organized and in control of your finances.

What are the benefits of using a debt payoff calculator for personal finance and small businesses?

A debt payoff calculator can help you create a repayment plan that works for your personal finance or small business needs. By inputting your debt information, interest rates, and payment amounts, you can see how much you will need to pay each month to become debt-free. A debt payoff calculator can also help you compare different payoff methods and determine which one is right for you.

How can a debt management plan help individuals and small businesses get out of debt faster?

A debt management plan can help individuals and small businesses get out of debt faster by consolidating their debts into one manageable monthly payment. With a debt management plan, you can negotiate lower interest rates and fees with your creditors, which can help you save money in the long run. Debt management plans also provide you with a clear repayment plan and help you stay on track with your payments.

What are the advantages of debt consolidation as a debt management tool for personal finance and small businesses?

Debt consolidation can be a useful debt management tool for personal finance and small businesses as it allows you to combine multiple debts into one monthly payment. This can simplify your finances and lower your interest rates, making it easier to pay off your debt. Debt consolidation can also help you avoid missed payments and late fees, which can negatively impact your credit score.

Tools for Debt Management Planning Read More »

Master Your Finances With This Simple Budget Planner Template to Track Income & Expenses

All Things Budgeting

Master Your Finances With This Simple Budget Planner Template to Track Income & Expenses

Simple Budget Planner

Subscribe below for your FREE copy now.

What It Does

Expenses

Add expenses by week, month or year and the monthly average will be calculated for you.

We've listed some common expenses to help you on your way but feel free to add your own

Don't forget to give your expense a "category" so it can be summarised in the totals

Income

Now add your income.

This could be from just one source or multiple.

add by month week or year and the sheet will calculate the monthly average.

Summary

Now see the summary on the front page

View all your monthly expenses, your monthly income and how much is left over in a single sheet.

Change any of the numbers in either sheet and hit refresh to see the new totals.

CLICK the button below for a detailed description of how it works.

Subscribe for a FREE Copy!!
See How It Works
"If you just want a really simple way to add up all your expenses and income every month - this is for you!! Sometimes, simple is all you need."
elisa bowman
Elisa Bowman Risk Specialist & Business Coach

We’re always making new tools to help you manage your money and your debt in the best way you can.

Check out ALL the tools

Master Your Finances With This Simple Budget Planner Template to Track Income & Expenses Read More »

Simple Debt Tracker Template

Plan Your Debt Exit

Simple Debt Tracker Template

Do You Need to See All Your Debts in One Place?

It’s amazing how much time & money you can save with just a simple spreadsheet!

Subscribe below for your FREE copy now.

What It Does

Credit Cards

Use the cheap ones and pay off the most expensive!

I have way more credit cards than I should do, even though some of them are empty, this sheet helps me to keep track of the expensive ones and their credit limits so that if I do have to use one of them I can make sure is a cheap one!

Even better - if I have money to pay off my debt - I use this to pay off the ones that are costing the most!

Assets

Debt can actually be worthwhile if it is in an asset that is generating more cash for you overall than it's actually costing you in debt.
It's a complex balancing act but this sheet will give you an overview of your net worth (assets - debts) so you can see if you are coming down on the right side of the scales!

Ratio

Pick your lenders!

Some lenders use your debt to asset ratio to decide if they want to lend to you - this is automatically calculated for you on this sheet so that you can gauge the best lenders to apply to, before you waste your time with the application.

Cost of Debt

Knowing where to throw your spare cash or which card you absolutely must switch to 0% asap could save you $'000s!
How much of your monthly payments actually pays off the outstaning balance? Any ideas?
You might think you are paying $500 off your debt every month but $400 of that might be the cost of debt (i.e. interest & charges).

Current (checking) Accounts

Keeping track of debt balances alonside asset balances can get really complicated.
Is it better to use cash and assests to pay off debt or save the cash for a rainy day?
Seeing it all in one place and how much its costing you can help with that decision.

Subscribe for a FREE Copy!!
See How It Works
Using this debt tracker has been a game changer for stopping that nagging feeling of finance fear and overwhelm. Lindsey's resources on the whole have been invaluable in seeing what I've got and making the most out of my finances and I recommend these resources to all of my clients who want to master their money."
elisa bowman
Elisa Bowman Risk Specialist & Business Coach

We’re always making new tools to help you manage your money and your debt in the best way you can.

Check out ALL the tools

Simple Debt Tracker Template Read More »

How To Use The Debt Tracker

Plan Your Debt Exit

How To Use The Debt Tracker Spreadsheet

To Calculate your Debt to Income Ratio & Total Cost of Debt.

Listed below are 6 easy STEPS to filling in your new download….

and what you might want to do when you get the results…..!

Click Here if you don’t have your downloads yet

Before we start – this tool is for you if you want to:

  1. Know how much ALL your debt is costing in interest charges every month / year
  2. View your TOTAL monthly payment for ALL your debt in a single sheet and how much of that goes to pay the interest
  3. Analyse at ALL your credit cards, loans, mortgages AND assets and/or equity on a single balance sheet
  4. See ALL your debts and total assets in one place
  5. See which debt is costing you the most so that you can create a payoff schedule that minimises your interest charges and pays your total debt down faster
  6. Offset the interest or income the you EARN against the total COST of debt
  7. Calculate exactly how much money you will save every month by using your cash balances to pay off expensive debt.
  8. See how much $1 of debt costs you EVERY year in your current debt structure.
  9. See your mortgage loan to value percentage (LTV%)
  10. Calculate how much you can save by switching high interest debt onto 0% or lower debt vehicles (cards or loans)
  11. Evaluate the best way to restructure your debt so that you pay less for it, even if you can’t pay anything down.
  12. Get a snapshot view of your debt and credit situation right now

This tool is NOT for you if you want

  1. A loan amortization schedule
  2. A snowball or avalanche payoff schedule tracker
  3. A loan or credit card interest calculator
  4. A retirement planner
  5. A minimum payment calculator
  6. A budget management system / planner
 
NOTE: if you have something very specific in mind and we haven’t got what you need here, check out the FREE downloads at Vertex42. they have some great spreadsheets that do some pretty complex stuff so it’s worth a shot. If you are still stuck, please get in touch with us and we will see what we can do for you.
 

This sheet has been designed to help you to answer a number of questions that you may have about your current debt situation, but I personally developed it for myself so that I can feel more organized with my debt. Quite often if we have a number of cards, a few loans, a mortgage (or two) and possibly the odd store card hanging around, it can feel too much of a mountain to climb. Who wants to start a journey when you don’t know how far you’re going or how long it will take you to get there?? I’d be willing to bet that not many people would sign up for that field trip!

If you are suffering from debt overwhelm, or you’ve had to take on more debt than you’re comfortable with during the current crisis, I really think that this tool will help. It might also benefit you to look into some form of counselling, or even just join a group online for some moral support, you really have nothing to lose and potentially a hell of a lot to gain from the experience.

 

I recently watched this excellent video about managing debt and money – it’s and interview with the new york times best selling author Ramit Sethi – Totally brilliant!!

How to Use The Total Cost of Debt Calculator

I am a very simple being at heart so this tool has been created to take in just the relevant information to enable it to calculate the outputs that we need, namely the total cost of debt, total of all minimum payments each month and the total outstanding balance over all your debt.

Step 1 – Credit Cards & Loans

debt calculator credit cards

Pick a card, any card……(preferably not the ace of spades though!)

Write a description of the card in the description column, in the example I’ve used here is “card 1”, not particularly imaginative I admit, but you get the idea.

Next add in the total balance that you owe on that card as at your last statement in the “balance owed” column

From that same statement add in the “minimum payment due” amount into the next column and the interest rate.

The sheet will now calculate your monthly interest amount so you don’t need to add this manually. Don’t worry if it’s a little out from your statement, for these purposes is just needs to be close enough.

Finally, if you have a promotion on this card, write in the end date so that you can easily see which cards might be falling out of their 0% introductory period soonest.

A quick side note here, in my experience, most credit card companies don’t like to make the “promo end date” clear on their statements, I guess because they want you to forget and end up paying interest. You might have to call or email them to get confirmation of the EXACT date you need to pay the card off before they start to charge you their standard interest rate. Also, don’t worry too much if this is a pain to find, you can always revisit it later.

Now pick another card…..and do the same again

Keep going until you have listed ALL your debts. If you need more lines, just right click on one of the rows, and insert a row.

When you have done this, copy the formula in column F to calculate the monthly interest charge :

The totals row will now reflect the total of all your balances owed, the sum of all your minimum payments and the sum of monthly interest charged. All these values transfer to the summary box at the side of the sheet.

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The total interest rate is an AVERAGE interest rate. There is an additional hidden calculation that takes into account the balances owed on each card and the respective interest rate for each one to give you a more accurate average rate. You can test this by changing your interest rates and total balance value and watch what it does to the numbers. You will see that even a small balance at a high interest rate can have a large impact on your over cost of debt.

Step 2 – Mortgages and secured loans

debt calculator

If you don’t have any mortgages or secured loans, please move onto step 3, but if you do; take a look at your last mortgage statement for your interest rate, product end date and balance owed.

It might have been a while since your last mortgage statement, so you will need to work out an estimate for how much you owe now.

To do this, there is a second tab in the workbook (DELUX version only) where you can add in the balance owed at your last statement, the payments you have made since this statement was issued and the annual interest rate. There is an option to change the annual interest rate as you may have dropped off an introductory rate and onto a standard variable rate or even a new product rate within this time line.

Once you have an idea of your current amount owed, come back to the main sheet and add this number into the balance owed column.

Next add your monthly payment amount and your CURRENT annual interest rate. The monthly interest charge will then be calculated for you.

Step 3 - Assets & equity

debt calculator

For many of us, this is the simple bit. If you have more than 1 property or you have a number of assets that you wish to include, please add them up separately and put the total value into the “current property value” box.

The “cash in asset” will be automatically calculated by taking the total balance owed in the mortgages and secured loans column, from the current property value amount.

Step 4 - Current accounts, savings and investments

debt calculator
debt calculator

Many current accounts pay interest on positive balances up to a particular value. Its also interesting (pun intended!) to note that these rates are often higher than so called savings accounts so it’s worth looking into this if you have any cash lying around in zero interest accounts that could be earning you some money.

Write in here any current account balances that you have. These will of course fluctuate throughout the month but write a balance in here that you feel reflects your average for each account.

If you are lucky enough to have money in a current account OVER the amount that you receive interest on  (i.e. they pay you interest on anything upto a $2k balance and you have $2.5k), list the account twice.

i.e. say you have an account that pays you 2% annually, calculated daily on any balance up to $2,000. This would mean that if you consistently have about $2,500 in the account, $2,000 of it will earn interest and $500 would not. List these as 2 accounts, one with a balance of $2,000 and an interest rate of 2% and the second with a balance of $500 and an interest rate of 0% – make sense?

Repeat this process for any savings and investment accounts that you have.

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Step 5 – the summary

OK, so now you have accounted for ALL your debt and ALL your positive balances, equity and assets which are summarised in the blue section at the side of the sheet.

debt calculator summary

The top part of the summary includes any balances from property. This is especially useful if you are considering a re-mortgage. If this box is green and your mortgage LTV rate % (loan to value) is LOW then it could be worth looking a new mortgage product that would release capital from your property(s) and enable you to pay off some expensive debts. If this is something that you are considering READ more about your options here before you jump in.

debt calculator summary 2

The next part of the summary shows you the numbers excluding the property, i.e. no fixed assets or mortgage values are included here.

This will show you your total positive balances from all your accounts and investments and the total negative balances from the 1st step: credit cards and loans. The resultant balance, shown here in RED is basically your liquid (or illiquid) position. If you have more cash in your accounts and investments than you have debt, this number would show up GREEN.

Your total credit payments and charges are displayed next, then your total interest received.

The reason for this part of the summary is to show you that if you have investments or accounts that are EARNING you more than your debt is COSTING you then you’re still winning!

I’ve written a post on “How to use debt to make money” – you might want to check this out next!

If however your debt is costing you quite a bit every month and you have savings sitting in an account that are earning you next to nothing (or actually nothing!), you can see quite clearly that using those savings to pay off the debt would be the most cost effective course of action.

The last 2 rows here give you an annualised impact of your debt structure. These figures EXCLUDE property and mortgages but I think that it demonstrates quite well how a few $ in interest charges every month might not seem like an awful lot but when you see that sum over 12 months you can really see the damage that it could be doing and how you can make a HUGE impact with small changes.

Test this out

When you have completed your sheet, take a copy of it and in your new version, change some of your interest rates to 0%, then compare the outcome summary with your original copy, it will surprise you just how much some simple changes could save you.

Lets say, for example that I manage to switch “card 3” on the test sheet from its current apr of 22% to 0% card. It’s a high rate card and the balance on it accounts for 40% of my overall debt so you’d expect a decent size impact but in actual fact it drops my annual cost of debt from $ 4,057.74 to $ 1,963.34 !! that’s a massive 52% reduction in COSTS. Imagine how much faster you can pay down your over all balance when you are SAVING $2,094.40 in a single year.

The more astute amongst you might notice that this “annual cost of current debt” calculation is not strictly accurate as it is based on a the assumption that your balances and interest rates would not change over the course of the year. Whilst this of course would not be exactly true as you would be making the minimum monthly payments and receiving interest charges and fees, for the purpose of this exercise the difference that it would make is very small.

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money mindset

Just incase you are panicing a bit at this point, PLEASE remember – You don’t have to do this alone, there are a debt charities, councelling sevices and skilled therapists that can help you deal with this. It takes strength to ask for help, it’s not a weakness. Don’t ever think you have no options, there are always choices.

Step 6 - Using The Debt to Income Ratio Calculator

(or Debt to Asset / Debt to Equity Ratio)

debt to asset ratio

The debt to asset or debt to equity ratio at the top of the debt calculator spreadsheet uses the following formula

total liabilities (divided by) total assets

In this sheet the TOTAL LIABILITIES is the totals from the credit cards and loans section PLUS the total from the mortgage and secured loans divided by TOTAL ASSETS; i.e. property value plus current accounts, savings and investments.

If you just want it to show the debt to INCOME and not include any assets, leave any asset values out of the sheet.

It may be that you are looking for a different debt to income calculation, one that takes into account your weekly, monthly or annual budget. If this is the case, take a look at our budget sheet HERE and consider opting in to our list as we are constantly developing new tools and we send them out for free to our existing subscribers before we make them accessable on line.

Many credit providers like to see that you have a healthy debt to asset ratio before they offer you any kind of credit facility. A low ratio implies that you have more assets either in cash or some form of saleable entity than you have debts or liabilities, therefore you are seen as a much lower risk and they will likely offer you a better rate.

However a lack of credit can also count against you as the provider can’t see your track record, they like to see debt that has been or is being paid off as this again makes you look like a nice low risk for them.

You might not think that your credit rating really means that much, especially if you rarely apply for credit or just leave your mortgage product with the same company year after year, but it could save you thousands. A good credit rating is like the best image filter you’ve ever seen, it makes you look so shiny and nice that companies will be falling over themselves to give you money at nice low rates.

Plug some test numbers into this sheet and see how much just getting a few % better rate on a mortgage, loan or credit card could save you in 1, 5, 10 or 20 years, it really does add up!

Now what?? - Should I consolidate my credit card debts?

So you’ve completed the spreadsheet and don’t know where to go from here. Well, depending on what surprises this has thrown up for you, you have a number of options. the posts listed below will help you to get some clarity on your next steps……however if you feel like your spreadsheet needs more umph….like your still missing some key parts to your debt story, please check out our shop for an ever increasing range of downloads, I’m sure you will find something that works for you!

If you are looking for a payoff strategy and have heard that the snowball method is best……please take a look at our case study before you make a decision. Now that you have all your debts organised in one place you’ll be able to test out the benefits of each method before you start down the wrong path

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Your first point of call should always be to check your credit score and make sure that ALL 3 agencies hold the CORRECT data about you. It’s surprising how often this is out of date and it limits your choices for cheaper debt massively so please don’t apply for any new credit until you’ve checked this is all ok.

Second point would be to restructure what you have, either through 0% or lower interest cards or a consolidation loan. Take a look at our article on consolidation options first though.

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If you have high interest cards and can’t get any free or cheaper credit, then you might want to consolidate or re-mortgage. Don’t take the first offer on this, shop around as much as you can, use comparison sites and do your research. If you are taking a new loan over a much longer time, make sure you run the numbers, just because the rate is lower it might still be more expensive if you’re paying it for a longer period of time.

Make a few copies of the debt calculator spreadsheet and test a few different scenarios to see what the end result might look like.

If you have a mortgage with a low LTV rate and high interest cards, this again could be an option but look closely at the numbers and if possible, get some impartial advice before you sign on the dotted line.

How To Use The Debt Tracker Read More »

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