How to Calculate Debt Payments

Consumers struggling with large debt obligations may feel trapped. Having a lot of debt can be overwhelming, but its possible to dig a way out. Evaluate how much is owed and create a plan for paying off debt obligations to make getting out of debt attainable. It wont happen overnight, but over time, debt will slowly disappear.

Instructions

1

Gather your debt statements. Review credit card statements, personal loans and all other debt obligations. Write down the current balance, interest rate and minimum monthly payment for each obligation.

2

Evaluate your monthly budget. Carve out money for debt payments each month. Add up monthly bills and subtract from income. Allocate the amount left over to debt obligations. Also, look for opportunities to cut costs. For example, if the entertainment budget includes eating lunch out daily, consider packing a lunch a few times a week. The money saved can be allocated to debt.

3

Create a target date for paying off debt. For example, if you want to be debt free in 24 months, divide the total amount of your debt over that number. This will provide you the appropriate amount for your monthly debt payments.

4

Calculate debt payments. Calculators, such as the debt free calculator by CNN Money, allow consumers to forecast monthly debt payments and a deadline for being debt free. Enter all debt obligation information, the amount you can afford to pay monthly and deadline for being debt free. The calculator will tell the consumer if the goals are realistic, and if not, what changes must be made.