Finance Tool : Debt Snowball Calculator

Posted on October 31, 2007

Over at What’s The Cost I came across a handy debt snowball calculator. The calculator lets you add up to 20 debts, their interest rate and monthly payment, and asks for how much money you can put each month towards debt. From there it will generate a nice text summary of the snowball calculations, some stats against consolidating your loans, and a nice table that plans out the snowball month by month.

The part that I think is really interesting is that it will let you chose between paying off the highest interest debt first and the Dave Ramsey method of the smallest debt first.

I loaded the calculator with 3 debts which should be a bad scenario for the Dave Ramsey snowball:

10,000 @ 12% for student loans
4,000 @ 5% on a credit card
3,000 @ 1% to finish off a new car loan

The results were interesting. Both methods will take 24 months to pay off the debt, and the Ramsey snowball will pay $254 more in interest($1,661 vs. $1,407). For me, this is more evidence to go with the Dave Ramsey method of changing our spending patterns. This method changes behavior by helping us experience positive change through small debt payoff wins. The amount of interest in the plans is negligible, since most people who are just starting to get out of debt need behavioral changes, not absolute perfect math.

So have fun, play with the numbers, and kick your debt to the curb!

» Filed Under Debt Elimination, Psychology of Debt

Trackbacks/Pings

Become Debt Free Sooner » pantsinacan.com on October 31st, 2007 7:38 am
Carnival of Debt Reduction #112 - Making Progress Edition | Cash Money Life on November 5th, 2007 7:55 am
Green Panda Treehouse » Carnival Reviews: Green Panda Picks on December 1st, 2007 12:28 am

Comments

5 Responses to “Finance Tool : Debt Snowball Calculator”

Chief Family Officer (2 comments.) on October 31st, 2007 11:59 am

There seems to be a problem with the link to the calculator …
The Happy Rock (163 comments.) on October 31st, 2007 12:08 pm

Fixed. Thanks CFO, it seems to have gotten messed up when I fixed a grammar error.

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