Calculating Pay Off and Savings

One way to calculate the fastest way to pay off my debt is to use an Excel Spreadsheet. I have seen this suggestion many times, but I am not that good at creating complex spreadsheets. I really want to be able to plug in the numbers, how much I owe, balances, minimum payments and so on, and then play around with them. I would like to see if it is faster to pay off high interest first or pay off the smallest ones, or the ones with the biggest payments.

So, since creating an Excel spreadsheet is not for me, I went searching on line for a good debt pay off calculator. I found several, but most of them only let me put in 8 or 9 debts maximun, and I have at least 14. The one I decided to try is by CalcXML and seems to be able to handle a practically unlimited number of debts. It will let me rearrange my debt payoff scenario in 3 ways:

1. Lowest to Highest Balance


2. Highest to Lowest Interest Rate


3. Shortest to Longest Payoff Period

The only problem is that once I have entered all my debt, and done my different calculations, I can only save the results to a PDF. So, if I want to come back later and add another debt or change something I have to type it in all over again. But it is a great, free program.

I also have the "Debt Free and Prosperous Living" Debt Payoff Calculator on my computer. That is the one I have been using daily. I got it with the 30 day trial. I sent back all the materials after reviewing them, but I still have this software on my hard drive. It is well worth having if you are serious about doing this because you only have to enter the information once, and it has a lot of different "what if" scenarios you can try out. By the way, I thought the materials they sent were pretty good and I really did study them. But, in the end, I didn't think there was enough in it for me to justify the cost so I exercised my right to cancel and sent it all back.

So, back to using the pay off calculator. Which ever one you choose, they all pretty much work the same way. List your debts, balance, Interest Rate, and Minimum payment. Do your calculations and see how long it will take to pay it all off at your current pace, just paying the minumums. For me it is almost 6 years and 4 months at a total cost in interest of $24,000.

Okay, now I am going to see how much faster I can pay it off without spending any extra. I am going to pay off each bill and then roll over that minumum payment to pay off the next bill. According to the calculator, I would pay off my debt in 3 years and 8 months! That is 2 years and 8 months sooner and I will save $8353.00 in interest. And, that is without adding any extra money.

Let's see what happens when I add the $135 a month that I found by cutting my payments down to the minumum. Now my debts would be paid off in 3 years and 5 months, so the extra money cuts the time down by 3 months. I would save an additional $1,475 in interest. I like the idea of paying it off as fast as I can, but I wonder what would happen if I just saved the $135 a month. I am going to put this into a savings calculator. Let's see what it comes up with.

I am going to use a free Compound Interest Calculator from "The Converter Site". Here is a screenshot

Use the regular deposit calculator and start with zero if you have nothing in savings. I used 1% interest rate, but if you can get a better rate, use that. I put in 4 years, because it won't take partial years, but I should have my debt paid off in 3 years and 8 months. I want to see how much I would have if I saved that amount instead of rolling it into my debt. My regular deposit will be $135 a month.
Here are the results:


At the end of 4 years I would have saved $6,614.00 but it will cost me an extra $1,475.00 interest on my debt. So my net savings after 4 years would be $5,139.00. I am no financial whiz or accountant, but I like the idea of paying off my debt AND having savings, so I think I might do this. What do you think of this idea? Did I do the math correctly or am I missing something?