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Debt Calculator
Many online financial management sites now offer free debt calculators. Think of a debt calculator as an easy-to-use financial tabulator, designed to calculate how much money is coming out of your pocket each month, compared to how much you’re putting in. The best debt calculator I found was on MSN money. The MSN debt calculator is quick, thorough, and could easily be used by a teenager.
The first step of using the debt calculator is to enter the gross monthly income of your household. Next, you’re instructed to enter the list of expenses that you have to pay out every month—these expenses include house payments (rent, mortgage and equity loans), auto payments, credit card payments, personal loans, student loans, alimony payments and the other miscellaneous expenses you pay each month (cell phone bills, cable, subscriptions, etc.)
Once all expenses have been entered, the debt calculator quickly totals up how much of your income is going towards bills and debt, and presents that number as a neat percentage, attached with a recommendation based on how high (or low) that percentage is. When my debt payments were eating up over 50% of my earned income each month, it was recommended that, “You should look at your monthly expenses and consider ways to lower those costs. At your current debt ratio, most lenders would not approve you for a mortgage.” When my debt payments were over 100% of my earned income, it was recommended that I immediately talk to a financial expert or lawyer specializing in credit issues. And finally, when I straightened out my finances (i.e. lied) and got my debt percentage below 50% of my earned income, “You have a relatively low debt ratio that puts you in good stead to make all of your payments.” The recommendations are more varied than my examples of course (the advice actually changes with about every 5% change in debt percentage.) But you get the idea.
No matter what your debt percentage is however, the debt calculator provides a printable page listing all of the information you entered, the calculated debt percentage, and the recommended action for you to take. I hung my own calculation on the wall above my desk as a clear reminder of exactly where my finances are, and where they might need to improve. In addition to the debt calculator, MSN’s site offers similarly useful financial tabulators, including “Savings Calculator,” “Debt Consolidator,” “Time Valuator,” “Second Income Calculator” and a “Spending Quiz,” geared toward helping you determine which of your expenses are needed, and those that can probably be shaved down to help improve your debt percentage. Like the debt calculator, the other programs are quick, easy to use, and are extremely helpful tools for those who are trying to get on top of their debt, or those just hoping to get a solid understanding of their financial standing. Check out the debt calculator for yourself, before you end up paying a financial advisor to do for you what you could do for yourself in minutes.
Topics: Debt Consolidation |
