Debt Reduction Snowball Calculator
Download a free credit card Debt Reduction Calculator and Debt Snowball Payment Schedule worksheet for Microsoft® Excel® and OpenOffice.org. This spreadsheet allows you to choose different debt reduction strategies, including the debt snowball effect (paying the lowest balance first) and highest interest first. Just choose the strategy from a dropdown box after you enter your creditor information into the worksheet.
This page also includes debt reduction information and resources, as well as descriptions of the different strategies you might want to try out with the worksheet. For example, you absolutely must make a budget. Read our review of the best tool for creating and managing your budget.
Debt Reduction Calculator
for Excel & OpenOffice
Microsoft Excel® 2002(XP) or Later
License
Personal Use Only
Questions / Support
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Testimonial
"We have multiple rentals, and so mortgage loans. We were paying down each loan, distributing our liquid cash among all the loans evenly. When we fond the debt reduction calculator we ran multiple preprogramed scenarios, and a couple of our own and discovered the optimum method for us. The Debt Reduction Calculator saved us hours of time, a quarter of a million dollars and will result in our paying off all loans in 1/2 the time. Thanks for sharing a great way to evaluate and strategize debt reduction."
- Morgen Kimbrell & David Hayhurst
Use our free Debt Reduction Calculator to help you eliminate your credit card, auto, student loan, and other debts. Easily create a debt reduction schedule based on the popular debt snowball strategy using this free spreadsheet.
The first worksheet is a simple calculator where you enter your information, choose your total monthly payment, and see a summary of the results based on the strategy you choose.
The second worksheet is a payment schedule designed for you to print so you can keep track of your progress. You can also see how the snowball increases as you pay off your debts.
The download includes 2 Excel files: The debt-reduction-calculator_10.xls file lets you list up to 10 creditors. The debt-reduction-calculator_20.xls file lets you list up to 20 creditors. The .ods files included with the download are for OpenOffice.org users.
3/17/09 Update (version 1.2) - Now includes a Snowball Growth Chart so you can see how the snowball increases and your interest due decreases over time (only in the Excel versions).
1/29/10 Check out our new Credit Repair edition of this calculator.
"No Installation, No Macros - Just a simple spreadsheet - An original creation by Dr. Jon Wittwer of Vertex42.com"
What is a Debt Snowflake? How to Calculate the Monthly Payment to Reach Your Payoff Goal
Rate and Review this Debt Reduction Calculator
Using the Debt Reduction Calculator
This is how the spreadsheet works:
First, enter abbreviated names for your the credit card or lending institution, the current balances, and the interest rate information for all of your current debts (including home equity lines of credit or second mortgages).
Next, enter the minimum payment you will make each month for each debt. You may need to verify with your lending institutions what your current minimum payments are. Also, keep in mind that your minimum payment may change over time, depending on interest rates or other issues.
Then, choose the maximum monthly payment that you can pay each month towards your debts, based on your home budget. The difference between the total minimum payments and your total monthly payment is your initial snowball. This initial snowball, or "extra payment", will be applied to the first debt, depending on your chosen strategy.
When your first debt is completely paid, the remainder of your snowball is then applied to the NEXT debt, and so on, until all the debts are paid.
Debt Reduction Strategies
This section describes the different strategies that you can choose within the debt reduction spreadsheet. You may also want to see our Credit Card Payoff Calculator for more information.
Unless you choose the "No Snowball" option, ALL of these strategies make use of the snowball "effect" where after you pay off your first debt you roll that payment into helping pay off the next one. For more information, see Dave Ramsey's article on the debt snowball effect, or read his book, "The Total Money Makeover".
- Debt Snowball (Lowest Balance First): This method is the official debt snowball strategy. The benefit of this method is the psychological effect of seeing the number of debts disappear quickly. According to Dave Ramsey, it's important to build momentum and see success early on. After all, if it was easy to pay off debt, you probably wouldn't need this calculator. :)
- Highest Interest First: This strategy results in the lowest total interest, but depending on the balance of your higher interest loans, it may take you longer to see your first loan/debt completely paid off. If the difference in the total interest is not significant, than you may get more satisfaction and success from the Lowest Balance First method.
- No Snowball: Select this option if you want to see how long it will take to pay
off the debts based solely on the individual payments you specify (i.e. no snowball effect). In some cases, you may find it will take more than 30 years to pay off some debts.
- User-Specified Order: There are three options for choosing the order that you want to pay your debts. You can choose "Order Entered in Table", which is self-explanatory. You can also use the Custom column to enter your own formulas or your own ranking and choose "Custom-Highest First" or "Custom-Lowest First". I'd suggest ranking each row using values "10, 20, 30, 40, etc." . The reason to enter the order by 10's or 100's is so that you can easily switch the order. For example, you can move the one marked "30" ahead of "20" by changing the 30 to 19. You can also use the built-in SORT command via the Data menu.
- Debt Snowflaking: This is a term for making extra debt payments above the normal monthly payment (above and beyond the normal snowball). You can add "snowflakes" for any given month, using the "Additional" column in the PaymentSchedule worksheet. See the article What is a Debt Snowflake? to see how to add snowflakes to the debt reduction calculator.
Variation on the Debt Snowball Strategy
If you choose the "Lowest Balance First" method, and two of your balances are roughly the same amount, but have very different rates, you might want to switch the order that you pay them off so that you pay the higher rate first. It might not make much difference in how long it takes to pay them off, but it could make a difference in how much interest you end up paying.
To use this approach in the worksheet, you'll need to choose the "User-Specified Order" methods described above.
Debt Reduction Resources
- You Need a Budget - Read our review of the #1 budgeting tool.
- Debt Snowball - The Truth About How to Get Out of Debt at daveramsey.com - A must-read article.
- Choosing and Using Credit Cards at www.ftc.gov.
- Choosing a Credit Card: The Deal is in the Disclosures at www.ftc.gov
- Free Secure Online Debt Reduction Calculator at www.PowerPay.org - I used this to compare with the spreadsheet. It allows a few more options for minimum payments.
- Use the Snowball Calculator to Pay Off Debts - at LifeHacker.com - Many comments from people who have used the technique.
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