Budgeting software and personal finance do a good job of tracking yours money as you earn and spend. Some also have great debt calculators that help you figure out how to pay off your debts.
Every debt calculator is slightly different. Some suggest a specific way to pay off the debt, while others are simulations that allow you to see how the total amount you pay will decrease if you increase your monthly payments.
Here are a few useful calculators and some guidance on what makes them different.
Straight Deal: Bank
Bankrate is free debt settlement calculator it gives you a schedule to pay off each of your debts. You enter how many debts you want to include, their interest rates, the total amount of the loan and other details. You also enter any new income you expect to receive, such as an annual salary increase or advance payment, and the amount you can put towards your debts. The calculator then provides one payment table for each debt to show how much to pay each month until the debt is eliminated.
Bankrate prioritizes paying off debt with the highest interest rate. Once your first loan is paid off, the money you would have put towards it goes towards your other monthly payments. In other words, as you eliminate debt, the monthly payments on your other debts increase until they, too, are paid off.
Who should use it? Bankrate’s calculator works for people with a lot of debt, and a total minimum monthly payment that is within their financial means. If that’s you, then you’ll find a clear plan – and a schedule – to get rid of all your debts.
Where it comes in short. This calculator assumes that paying off your debt by paying off the one with the highest interest rate first is in your best interest. That is not true for everyone. You may have other options, such as consolidating credit card debt onto a new card with a 0 percent introductory rate or filing for bankruptcy. The bank also doesn’t take into account other personal financial issues, such as other monthly expenses that pay off your first debt — Bankrate tells you to put that money toward your highest interest debt. You may be better off putting it in a retirement savings or emergency fund.
The Big Picture Guide: NerdWallet
NerdWallet is free debt load calculator determines your debt burden as a percentage of your income. The resulting debt burden is classified as low (less than 36 percent), high (37-42), or high (43 percent or more). Based on the results, NerdWallet recommends a method to eliminate your debt, which you read about in the educational article below the results.
Who should use it? This calculator helps you get a bigger picture of your debt. If you have a lot of debt, it is important to rule (or rule) the option of declaring bankruptcy.
Where it comes in short. It’s no good analyzing the finer details of your debt. For example, in a setup, there is no student loan item or mortgage, less than the actual interest rate you pay on the loans. The result is a rough guide rather than a personal strategy.
Automatic Entries: WalletHub
When you sign up for WalletHub (free) and connect your financial accounts, the app pulls real-time information about how much money you owe and your payment history. His debt settlement plan is a calculator that lets you play with the numbers to see what would happen if you increased your monthly payments. How fast can you clear debt? How much interest will you save? You can quickly see the difference between increasing your monthly payment by, say, $50 versus $150.
Who should use it? This calculator is for WalletHub users who have linked their financial accounts. It is most important for people who can afford to pay more than the minimum monthly amount on their debts.
