Posts Tagged ‘debt management calculators’

How A Debt Management Calculator Can Help You?

A debt management calculator can be a very useful tool for those who are facing great difficulty in managing their debts. Debts are often not as horrible as they look like, especially when you are looking at it as a single big amount. You will find things much easier when you look at it as smaller monthly payments. The basic idea here is that you can make things look less horrible by breaking the big amount of loans into smaller payments. This is where an online calculator can prove to be a great help for you. The calculators do not just calculate; they also help you understand your financial situation in a more practical way. They help you make an informed decision on how to should handle your debt problems. They can even help you choose the best debt consolidation program out of the many options available to you. Following is a brief rundown on it.

Paying Just The Minimum Monthly Payments

A good debt management calculator can help you find out how things will go on if you keep making just the minimum payments every month. Though it is definitely not a wise idea, as this way, you may be able to avoid the actual debt for a few months but very soon things will take a horrible turn when the total outstanding balance will become as big as a mountain. But, at the same time, this option can make a wise move if you are making the minimum monthly payments on a few loans as a short term strategy so that you can save more money to pay for debts that are high priority (such as the loans with extremely high interest rates). Once you pay off the high rate debts, you can stop making the minimum payments on other loans and focus on strategies to pay off the outstanding balances on those loans much faster. The calculator will help you determine if this particular strategy can work in your case and really help you manage your debts successfully.

Compare The Different Payment Options

When you negotiate with your creditors to make the repayment terms a little more favorable, you may be offered different types of payment plans to choose from. Here again, you can use a debt management calculator to find out which plan can be the most suitable (affordable) for you depending upon your specific financial situation. For example, if you want to pay off your credit card debt within a period of two years, you can find it out with the help of the creditor that how much every month you will actually have to pay toward the same to achieve that goal. Likewise, a creditor may offer you two plans – one where you are asked to make higher monthly payments at a comparatively very low rate for a shorter period of time and second where you are asked to make a lower monthly payment at a comparatively very high rate for a longer period of time. The calculator can help you make an informed decision which plan is more affordable for you considering your current financial position.

Prioritize Your Debts

A debt management calculator can also play a very important role in helping you to prioritize your debts. You can do your calculations in different ways keeping different factors in mind and figure out which debts are more important and which ones you can ignore for the time being.

In order to make the best use of these calculators, you must have the basic information ready with you, such as on a notepad or a spreadsheet. It will make things easier for you. You will also need spreadsheet to note down the different figures as per different options so that you can compare the same later and decide the most suitable option. Overall, a debt management calculator is a very important tool for you if you are serious about managing your debts wisely. You do not even need to spend a lot of money to buy these calculators, as they are available free of cost on Internet on various websites (including this one).

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What are the pros and cons of debt consolidation?