How to Estimate How Much to Pay Each Month to Clear Debt in Excel

Figuring out how much pay out on debt each month can be a complicated task. On the one hand, paying more each month reduces the amount of interest you'll pay and how much time you'll be in debt. On the other hand, it's important to maintain monthly cash for the necessities of life and other financial goals. Using an Excel spreadsheet will help set a monthly payment target that meets both needs, or at least finds the best compromise amount.

Instructions

1

Download the free Credit Card Payoff spreadsheet (see Resources). Because the spreadsheet uses no macros and has a simple one-page interface, it will save you the time of building a calculator yourself without introducing your computer to any virus risks.

2

Open the spreadsheet and fill your debt info in the Credit Card Info box. While the spreadsheet says "credit card" it can be used for any debt that allows for flexible payments. Enter the total amount of debt and the interest rate. The spreadsheet will automatically calculate your interest-only payment. Note this may be different from the minimum payment set by your debtor.

3

Enter a comfortable monthly payment in box A ("Calculate Months to Payoff"). The spreadsheet automatically counts how many months it will take the debt to be retired at that monthly payment (the years are in smaller text to the right of the box). It also shows how much of the total payoff will be going to interest.

4

Read the charts to the right of the green boxes. The top (blue) chart shows a range of payments by total months to payoff. Make note if a small increase in monthly payment will decrease your total payoff time by six months or more. Identify a payoff goal based on the blue chart. If possible, push yourself to the shortest amount of payoff time possible.

5

Enter your new payoff time in box B ("Calculate Monthly Payment"). This will give you a new target monthly payment, as well as once again giving you information about the total interest that will accumulate. The monthly payments from Box A and Box B now give you a range of payments to make each month. This gives you flexibility from month to month without giving up on your overall debt management goals.