Payoff Plan for ____________________
Free financial budget worksheet
(3 of 3)
In the last 2 worksheets,
you were given the ability to track your spending, and create a balanced spending
plan. Now that you are making progress on your spending management, it’s
time to start eliminating debt and taking that next step on the path to financial
First, list all of your
debt obligations on the chart below. The list should include any and all people
or companies that you owe money to; credit card balances, store accounts, mortgage,
auto loan, student loans, etc.
As you review the list above,
compare it to your spending plan. Make sure that you have included the monthly
payment amount for each of these debts. If you didn’t, you’ll want
to make those adjustments now so that you do not overspend your income.
Once you have updated your
spending plan, you can now look at how to quickly eliminate these debt obligations.
In the chart below, prioritize the list from above in the order you would like
to pay them off. This can be done by interest rate, or balance owing. We recomend
listing them by interest rate. Place the highest interest rate at the top. Then
list the others in descending order.
Listed in Order of Payoff
1: (debt to payoff first)
Debt 8: (debt to payoff last)
In the chart above, you
probably noticed the extra column titled ‘roll-down amount’. In order
to quickly eliminate debt, you can enlist the debt roll-down principle. When you
pay off the first debt, put the amount of that monthly payment toward the next
debt on the list. For example, if you were paying $75 per month on your American
Express card and that card now has a zero balance, add the $75 to the payment
amount of your Auto Loan, increasing the total from $200 to $275 each month. When
the car is paid off, roll that total into your next debt on the list. By keeping
your overall debt payment amount the same, even after you have paid off some debts,
you can pay off all of your debts very quickly and save thousands in interest.
Accelerator payments are
another method of increasing the rate of your debt reduction. An accelerator payment
is simply an amount of money you take from your other spending categories and
apply it to your debt payments. Applying this increased amount toward your remaining
balance on each debt can shave off years of payments.
To see how the roll-down
principle and accelerator payments work, visit our interactive debt
calculators. The debt calculators will show you how much you will pay
for your debts over time and the effect of different interest rates and payoff schedules.