The agencies help the borrower in clearing off their debt by either negotiating with creditors over reducing the original debt amount or decreasing interest rates, waving off of late payment charges, etc.
Credit counseling agencies
A good credit counseling company not only helps the debtor in clearing off the debt but also help them in controlling expenses and managing their finances. In exchange for the services provided by them, most of these agencies charge a monthly fee (around $50) to their clients.
Managing debts can be a very stressful job, especially for those who do not have a financial background. The debts can be of medical bills, unsecured loans, and most common credit card bills. If you are a person who believes in overcoming hurdles all by yourself, then you may opt for a DIY. In other words, you can create your very own debt management plan.
The most common thing that scares an individual as far as managing finances or paying off debt is concerned is the ‘calculations.’ Examples are: calculating the interest levied, the ratio of income to expenditures, total savings needed on a monthly basis for settling debt, etc. can be quite tiresome. There is no need to be disheartened, however. Technology has debt management much easier. Several spreadsheets are available on the internet that can help you in creating your own debt-settling plan and also in planning your credit repair strategy.
Use a debt reduction spreadsheet
Besides being easy to use, these debt reduction spreadsheets are available for free. They can be used with Google Sheets, Microsoft Excel, or Open Office Calc. They come with built-in formulas. This means the user doesn’t have to do any calculations; the spreadsheets take care of it. But before you start your journey of creating and executing your debt management plan, you will need two essential things.
Firstly, you need to be determined to get rid of your debt. The duration of a debt management program can last over 3-5 years. During that period having control over expenses and a motivation to save more money is very crucial. Until and unless you are determined to clear off your debt, overcoming the temptation of purchasing could be quite difficult.
Secondly, before you start planning, you need to have a clear understanding of the total bills or loan installments pending on your behalf. For this, you need to ask all the creditors to provide the bills and statements. Once you have all the required financial details, you can start by filling those details in your spreadsheet.
As discussed earlier, numerous budget worksheets to get out of debt are available in the market. These help you in planning a strategy for paying off your debt. The Debt Reduction spreadsheet from Squawkfox is one of the most famous strategies, and it can be easily downloaded from the internet. Two of its most popular versions are:
1. Debt Reduction Spreadsheet 2024
This 2024 version is highly advanced. It includes graph representation of your impending debts concerning the individual creditor.
This Debt Reduction Spreadsheet 2024 is very helpful in planning repayment strategies. The only thing you need to do is enter your debt details. This includes:
- Name of creditors
- Balance amount
- Interest rate charged
- Required monthly payment
This helps you identify the creditor with maximum debt, minimum debt, highest interest rate, etc. Based on this data and the available extra repayment amount, you prioritize which debt you want to clear off first.
Also, using these spreadsheets, you calculate total debt, average interest rate, average monthly interest amount, and total monthly payments. Once you have entered your pending payment details, you list down the saving amount that you will use to clear off the monthly debt. Easily calculate this saving amount by finding the difference between your monthly income and expenditures.
If the saving amount turns out to be negative, then it is a major point of concern. This shows that there is some problem with your financial planning. The amount left after paying off the monthly payments can be used to make extra repayment. You need to rework on your strategies and try your best to increase these extra-repayment amounts.
2. Debt reduction Spreadsheet Original
This version of debt reduction is quite simple to use. You just need to enter the necessary debt details like the name of creditors, balance due, the interest rate levied by each creditor, and monthly payments. After that, you use the spreadsheet to calculate the following:
- Total debt
- Average Interest Rate
- Average Monthly Interest
- Total monthly installments/payments
- The monthly amount available (income – expenses)
- Extra repayment amounts available (amount available-monthly payments)
Entering details like interest levied and monthly payment further help you in taking important debt settlement decisions such as “Which debt do I pay off first”. The aim is to analyze the debts and the extra amount available and to work out a strategy to clear out debts as soon as possible.
Benefits of using a Debt Reduction spreadsheet
First of all, the Debt reduction spreadsheet can be highly beneficial if you are looking forward to paying off your credit card debts, student loan, house loan, medical bills, or any other debts. It helps settle debts faster and in a more efficient manner.
In other words, the spreadsheet helps:
- Organizing all the debts in one place, “the spreadsheet”.
- Determining the order in which the debts need to be paid off.
- Determining the minimum monthly payment that the borrower needs to pay the creditors until the debt is settled.
- Finding out the amount of money the debtor can save by paying debts using the extra repayment amount or, in other words, by prioritizing the creditors as far as debt settlement is concerned.
How to utilize the spreadsheet:
A spreadsheet acts as an essential financial tool to create a debt settlement plan. Because they are so easy to use and available online, they are quite popular among debtors who want to plan their debt settlement strategies.
Moreover, a debt reduction spreadsheet gives the user a detailed description of his/her total income, expenses, repayment income available, creditors detail, and debts detail. Here are some ways you can utilize the spreadsheet for:
The very first step is to get a debt reduction spreadsheet. You select a spreadsheet as per your need and liking. The spreadsheet is easily downloaded from the internet. You don’t have to worry about privacy as the information is stored only at your end.
Add up expenses
The more the information, the better would be the results. Hence, I advise you to enter as many details as possible. You can always start by entering details of all the creditors. This listing needs to be done in the column given on the left side. Once done, continue moving horizontally and vertically.
List of creditors: Enter details of all your debts, including HELOC’s, credit card bills, student loans, medical bills, line of credit, etc.
Following along the name of the creditor, enter the amount due.
Track the interest rate levied by various creditors and list them in the next column. The rate of interest on a credit card debt can go over 18%. Hence, find the details of the interest levied by the individual credit card company.
Maintaining a good credit score is very important. So, list the minimum payments that you need to pay to maintain a healthy credit score. However, if you want to lessen your debts, then you need to increase these minimum installments.
Once you have entered all the necessary information, let the debt reduction spreadsheet do all the calculations for you. It hardly takes any time. After the calculations are completed, you study and analyze the result and use it to make crucial decisions related to your debt settlement plan.
Debtors who end up saving very little or nothing as debt repayment amount, have to find alternatives to either increase their income or increase their savings amount. Some of the options to increase the debt repayment amount are discussed below:
1. Cut expenses
One of the simplest yet not that easy way to increase savings is by controlling your expenses. Cutting down expenses results in adding some extra money to your debt repayment amount. Start by cutting down on your grocery bills. This can be done by buying groceries from places where you can avail the best offer, avoid eating outside, etc.
You further increase your savings by cutting down on expenses like streaming, gym membership, etc. This is the best time to separate your needs from your wants and try to cut expenses that you incur towards fulfilling your wants.
2. Boost income
Earning some extra income is helpful in reducing your debts. You need to find a source through which you can earn some extra money. This can be in the form of working in your free time (freelancing), doing an extra shift, etc.
Another option is to negotiate with creditors or lenders. Ask the lender to reduce the interest rate or give a rebate on the total amount due. Call your lender or credit card company and be transparent about your current financial status. Even if you succeed in getting a smaller rebate, it will be a win-win situation for both parties. The reason for that is that no company likes to have pending-payments as well as those payment reminder calls.
3. Pay off time
The strategy used by the debtor to pay off the creditors also plays a vital role in reducing the debts. Be wiser in selecting the debt which you want to pay off on a priority basis. It can be done in two ways:
Clear the debt with the highest interest rate: In this, the debtors aim at clearing the debt with the highest interest rate as it cost more money and also the fee. Once the debt is cleared, the borrower can start working on the debt, which has the second-highest interest rate, so on so forth.
Clear the debt with minimum amount: Clearing debt with minimum amount would act as a psychological boost for the borrower. The more and more creditors get deleted from the spreadsheet, the higher will be the motivation level. In case there are two creditors with the same amount, then it’s better to clear the one with a higher rate of interest first.
4. Plan better for Debt-Free Day
A Debt Free Day is the date selected by you to become debt-free. For successful planning, having a goal is very important. Debt-free day act as that goal in case of debt reducing planning. Also, our life is not like a Fairy-tale. It has its ups and downs. You never know what would be your financial situation after 3-4 years.
It’s better to try to clear all your debts within 3 years. Also, once all your debts are cleared, you can start working towards other financial needs like a car loan, home loan, saving for a wedding, etc. Mark the date or put a reminder and give your 100% to clear off your debts within the decided time frame.
5. Stick to the plan
Irrespective of the method selected by you to pay off your debts, just make sure you stick your debt settlement plan. After clearing one debt, move forward and start working toward paying off the next creditor on your Debt Reduction spreadsheet.
If you are planning to plan your debt settlement program, a debt reduction spreadsheet can be very helpful. However, it’s advisable once you are done with planning your strategy, try meeting a non-profit debt settlement agency. By this, you can find out whether the strategies planned by you would give you a fruitful result or not.
This is how you use debt reduction spreadsheets to get out of debt and monitor your expenses wisely.
If you’re looking for an all-in-one automated solution to control your finances, check out our spreadsheet-based solution to automate your financial management and track all your business transactions.