# How to Make a Debt Calculation with a Debt Payoff Calculator

Debt calculation is the very first thing that you need to do, if you want to reduce and eliminate your debt. You will need to calculate your current debt before you can create a budget that will help you move towards eliminating debt from your life.

Now this might seem very obvious and when you ask most people they would probably say that they know how much money they owe. But more often than not it comes as a great surprise to them when they sit down with a pen and paper to work out exactly what the current debt actually is.

## Reasons to Calculate Your Debts

If you have many debts from many creditors, it is often difficult to remember precisely how much you owe on so many debts. But when you do take account of all the individual debts and add them up you can clearly see the extent of your debt.

Be ready for a surprise because that is what happens most often. It will give you a good picture of why you are struggling to make ends meet each week and why all the income that might seem reasonable isn’t enough to cover your outgoing.

So step number one on managing your debt is to discuss your financial situation and you can do this by calculating all your debts.

## Make a Debt Calculation

When you are making a note of your debt make sure that you put down everything that you owe. You even need to settle small debts because if they are left unpaid they can give you a bad credit rating.

Once you get all of your current debts make a list of all expenses where you know the exact amount that you will be paying each month. If you add up the fixed expenses to your monthly variable expenses you will get the total expenses.

You will be able to compare your monthly spending to your monthly income and that will give you the opportunity to see how much is left over if any to start reducing your debt. This can also help calculate your debt to income ratio so that you can control the ratio in the safe range.

## Use a Debt Payoff Calculator

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The debt calculator allows you to decide the time to pay off your debts. You just need to input your debt balance, interest rate and monthly payment and then simply click the blue button to calculate. You will know how soon you can pay off your debts and the total interest charges paid to your creditor.

Using the online debt payoff calculator you can also simulate your debt-free goal. Just choose the “How to be debt-free after” radio button and fill in your how many years and months you want to be debt-free. The debt calculation result shows you the new monthly payment so you know how much cash to add to speed up your debt repayments.

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How to Make a Debt Calculation with a Debt Payoff Calculator was last modified: May 27th, 2014 by