Debt calculators: do they really work, and which one is the best?

Credit cards and mortgages are the worst culprits for collecting debt, but are often unavoidable and necessary burdens. Accumulating debt is not great, but there are ways to make paying them off a little easier, so that your life doesn’t seem to be consumed with debt. That’s where the debt calculator comes in handy.

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What are they?
Debt calculators can help keep you posted on if you are on track with your debt repayments. There are a few types of calculators available online that aim to help to help figure out how long it will take to pay off debts, or how much one has to pay per month to pay a debt by a certain date. There are different calculators that work for specific kinds of situations, like credit cards or home mortgages. There are a lot of banks whose websites have debt calculators tailored specifically for the credit cards, loans and mortgages that they offer to help their customers determine how best to pay off their loans within the institution. There are also general, do-it-yourself debt calculators that are customisable to the users’ needs.

Debt Reduction Calculator – Excel
Excel is a good tool to manage finances in general, whether it be keeping track of your expenditure, creating a budget spreadsheet, or managing your debt.

For those unfamiliar with how to use Excel formulas, there is a quick and easy shortcut: a budget planner for Excel. These are easily downloadable from many sites, and generally include three tabs (or worksheets) — Calculator, Payment Schedule and Charts. The Excel budget planner helps manage overall debt by providing space to record the user’s current financial situation, projecting future payments, and allowing customisation options depending on how the user wants to pay off their debt.

Using a simple Excel spreadsheet to lay out your debt management plan is not only beneficial for your own personal records, but it is also a good document to hand over to financial advisors, banks, creditors, and other people with whom you might deal with on a financial level.

Specialised Debt Calculators
Some banks provide debt calculators that are specific to the credit cards, loans and mortgages that they offer, so that the bank’s customers are able to determine how best to manage their debt with the institution. It is also useful for people who are looking for ways to consolidate their debt with the help of a bank.

It is good to have a general financial record for tax purposes, so if you haven’t got an official document of that nature, an Excel file would be ideal for setting one up. Debt calculators set up by banks can be hit-and-miss; while some are genuinely helpful, others can be a bit misleading depending on how they are used. It is best to use a debt calculator in conjunction with a professional financial consultant or a banker.

On the other hand, while the debt reduction calculator on Excel can be useful, it is only as powerful as the person using it. Knowing how to use Excel and mastering certain equations would be handy when using the Excel debt calculator, especially when customising the spreadsheets.

While they no doubt have their place in the world, information from any kind of online calculator should be taken with a grain of salt, and it is really up to the user whether or not to rely on them too heavily. In the end, it is always better to call in the experts to arrange a debt agreement to help you repay your debts in an efficient, timely way.

Melissa Young is a freelance writer who uses Credit Repair to help her with her debt needs.





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