Download Debt Snowball Spreadsheet
Mathew Letter
Since you are taking the amount you used to pay off the first debt and putting it all + the minimum payment that you were already paying to the second together, you are making more of an impact towards that debt.
Knowing that we are emotional beings, the key is to use our emotions to our advantage. Just like jogging with the wind at your back, it is a nice little boost to use our emotions to give us a little edge. So, rather than tackling the debt like a math problem, we can tackle it in a way that will give us emotional boosts!
This is the advantage of using the snowball approach to paying down debt. If you focus on the highest interest rate, it could be months or even years before you reach that first milestone. Would you have the endurance to keep going that long without reaching that first milestone?
This site contains the lessons we learned on our journey from being stingy, debt-ridden fools, to being able to reach our biggest financial goal of giving $1 million by age 40, having zero debt & a paid off house by age 31, and peace with money in the process.
The debt snowball is a debt payoff method where you pay your debts from smallest to largest, regardless of interest rate. Knock out the smallest debt first. Then, take what you were paying on that debt and add it to the payment of your next smallest debt.
Minimum Payment
This is the lowest amount you are required to pay on a debt every month (includes principal and interest). Pay any less and you might get slapped with some hefty penalties.
Managing debt is a normal part of the modern financial journey. But as interest rates surge along with historic levels of credit card debt, many households are feeling stressed by increasing monthly payments.
A spreadsheet is one of the most helpful tools for planning the best debt payoff strategy for your situation. So here are some of the best free debt snowball spreadsheets for Google Sheets and Excel. Note that some of these help you evaluate the avalanche method as well.
Not a debt snowball spreadsheet, this simple credit payment calculator template can help you calculate the amount of money you must pay each month to fully repay your debt. You can also view the monthly payment amount and the total interest paid if you make extra payments. You can use this tool to change your repayment plan and see how much longer it will take you to repay your loan.
How fast can I get out of debt? How much can I save in interest payments? Use our Debt Reduction Calculator to help answer those questions. Getting out of debt is not easy, but with a good plan and firm determination, it is entirely possible. The debt snowball calculator is a simple spreadsheet available for Microsoft Excel and Google Sheets that helps you come up with a plan. It uses the debt roll-up approach, also known as the debt snowball, to create a payment schedule that shows how you can most effectively pay off your debts.
One of the most powerful things about this spreadsheet is the ability to choose or create different debt reduction strategies, including the popular debt snowball (paying the lowest balance first) or the debt avalanche (paying the highest-interest first). Just choose the strategy from a dropdown box after you enter your creditor information into the worksheet. These snowball strategies could possibly save you $100's or even $1,000's of dollars.
Regardless of the strategy you choose, the first step in a debt snowball plan is to make a budget, then stick to it. The more you can squeeze out of your budget to increase your debt snowball, the faster you'll reach your goals.
You should consider other financial goals and risk factors besides just paying off debt as fast as possible. But, after you've decided what you can contribute to debt payoff each month, enter that amount into the calculator as your total Monthly Payment. This total monthly payment remains the same each month. The thing that changes is the portion of that payment (i.e. the snowball) that is thrown at your current debt target. Continue reading below for more information about the various debt reduction strategies.
"Just wanted to thank you for the debt reduction calculator spreadsheet. It has helped me to get my debt under control and I will be debt free with the exception of my mortgage in a couple months. I started with about $42k of debt and will have paid it off in a little over 2 years with the help of the spreadsheet and insane budgeting."- Lisa
Use our debt snowball calculator to help you eliminate your credit card, auto, student loan, and other debts. Easily create a debt reduction schedule based on the popular debt snowball strategy, or experiment with your own custom strategy.
"We have multiple rentals, and so mortgage loans. We were paying down each loan, distributing our liquid cash among all the loans evenly. When we found the debt reduction calculator we ran multiple preprogramed scenarios, and a couple of our own and discovered the optimum method for us. The Debt Reduction Calculator saved us hours of time, a quarter of a million dollars and will result in our paying off all loans in 1/2 the time. Thanks for sharing a great way to evaluate and strategize debt reduction."- Morgen Kimbrell & David Hayhurst
The snowball effect is the idea that a snowball grows as it rolls down a hill. When applied to debt reduction, the snowball effect refers to how your extra payment grows as you pay off each debt.
As defined above, the snowball is the difference between your total minimum payments and your total monthly debt payment. The total monthly debt payment remains the same from month to month. The snowball is the extra payment that you will make on your current debt target.
After you pay off your first debt, you no longer need to make the minimum payment on that debt. So, that payment amount gets rolled into your snowball. Your new larger snowball becomes the extra payment that you apply to the next debt in the sequence.
There are times when your snowball is larger than the remaining balance on your current debt target. In that case, the spreadsheet automatically divides your snowball between the current and next target.
This section describes the different strategies that you can choose within the debt snowball spreadsheet. Each of these strategies has to do with the order that you target your debts with your snowball.
Unless you choose the "No Snowball" option, ALL of these strategies make use of the snowball effect described above. For more information, see Dave Ramsey's article on the debt snowball effect, or read his book, "The Total Money Makeover".
The stair-stepper strategy, integrated into the Google Sheets versions of the debt reduction calculator, was devised by Carlotta Thompson (carlottathompson.com). It is a clever compromise between the Lowest Balance First and Highest Interest First strategies.
In this approach, the debts are grouped into categories based on the balance ($0-$2500, $2501-$5000, etc.). Beginning with the lowest balance category, you pay off the debts from highest to lowest interest rate, then move on to the next higher balance category.
As you pay off debts, your net cash flow increases, and that extra cash is what causes your debt snowball to increase. Credit cards are typically the first debts to pay off because of their high interest rates, but cash flow is another reason to target the credit cards first.
Unfortunately, the debt reduction calculator only assumes a fixed minimum payment, so you don't see the debt snowball gradually increasing as you pay off credit cards. But, if you are concerned about cash flow, remember that paying off credit cards (or other debts with a decreasing minimum payment) gives you an immediate increase in net cash flow.
On the other hand, most auto and home loans have fixed payments. So, you don't see the increase in cash flow until the entire debt is paid off (or if you refactor the loan to lower the minimum payment).
This brings up the concept of Liquidity Risk, as explained in my article "Is Debt Payoff a Good Investment?" Paying off debt decreases your liquidity (the availability of cash or liquid assets). A decrease in liquidity is a risk because it reduces your ability to pay unexpected expenses or to make a timely investment.
As you make payments on your credit card or other lines of credit, the liquidity risk is lower because you can quickly withdraw the money again if necessary (assuming your credit isn't frozen). That would increase your debt, of course, but it lowers the risk of being unable to keep the electricity running. On the other hand, if your extra cash is used to pay off an auto loan, you can't just get another loan in a couple of hours.
Warning: It may be tempting to put your full financial strength into paying off your debts. Be careful about doing that. You need to balance your debt reduction goals with the need for an emergency fund and other important financial goals. In these cases, it can be useful to seek the advice of a qualified professional.
Help us help others break free from the bonds of debt by spreading the news about this free debt reduction tool. Link to this page on your website, in your blog, via Facebook, etc.
Have a Success Story? We would love to hear it.
A big thanks to Donald Wempe for motivating me to create the original version of this spreadsheet, and for his great suggestions and feedback! And a big thanks to the many others who have offered suggestions and feedback since then.
The debt snowball strategy prioritizes your debts from the smallest to the largest. You'll start by paying the minimum payment on all debts, then putting any extra you have available toward the smallest debt each month. Once that is paid off, you'll take the amount you were paying on the smallest debt and add it to your minimum payment for the next-smallest debt. With each debt you pay off, it creates a "snowball" effect and speeds up the pace of repayment."}},"@type": "Question","name": "What is the debt avalanche method?","acceptedAnswer": "@type": "Answer","text": "With the debt avalanche method, you prioritize your debts from highest to lowest interest rate. You'll pay the minimum payment on all balances every month, then put any available extra cash toward the debt with the highest interest rate. When you finish paying that debt off, you'll apply that payment toward the next-highest interest rate and repeat.","@type": "Question","name": "How do I decide on a debt-repayment plan?","acceptedAnswer": "@type": "Answer","text": "The debt snowball and debt avalanche are just two of the strategies you can use to repay your debts. You might choose to prioritize other debts first, based on the type of debt, the risks involved if you fail to repay, or the emotional stress that some debts create. If you need help deciding on a strategy, consider talking to a debt or credit counselor."]}]}] .cls-1fill:#999.cls-6fill:#6d6e71 Skip to contentThe BalanceSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.BudgetingBudgeting Budgeting Calculator Financial Planning Managing Your Debt Best Budgeting Apps View All InvestingInvesting Find an Advisor Stocks Retirement Planning Cryptocurrency Best Online Stock Brokers Best Investment Apps View All MortgagesMortgages Homeowner Guide First-Time Homebuyers Home Financing Managing Your Loan Mortgage Refinancing Using Your Home Equity View All EconomicsEconomics US Economy Economic Terms Unemployment Fiscal Policy Monetary Policy View All BankingBanking Banking Basics Compound Interest Calculator Best Savings Account Interest Rates of December 2023 Best CD Rates of December 2023 Best Banks for Checking Accounts Best Personal Loans of December 2023 Best Auto Loan Rates View All Small BusinessSmall Business Entrepreneurship Business Banking Business Financing Business Taxes Business Tools Becoming an Owner Operations & Success View All Career PlanningCareer Planning Finding a Job Getting a Raise Work Benefits Top Jobs Cover Letters Resumes View All MoreMore Credit Cards Insurance Taxes Credit Reports & Scores Loans Personal Stories About UsAbout Us The Balance Financial Review Board Diversity & Inclusion Pledge View All Follow Us