Using the Debt Elimination Calculator
The Debt Elimination Calculator is a recently added feature designed to help advisors illustrate strategies for clients who want to eliminate debt.
This tool allows you to demonstrate common payoff strategies such as the debt snowball (smallest balance first) or the debt avalanche (highest interest rate first). By entering a client’s debts and potential extra payments, the calculator shows how quickly debts can be eliminated and how much interest can be saved.
Key Features
The Debt Elimination Calculator allows you to:
• Enter multiple debts such as credit cards, auto loans, or other loans
• Compare debt snowball vs. debt avalanche strategies
• Apply minimum payments or custom payments
• Add extra monthly payment amounts
• Generate payoff summaries and schedules
• Export reports for client documentation
Step-by-Step: How to Use the Calculator
1. Choose a Paydown Strategy
Select the strategy you want to demonstrate:
• Smallest Balance First (Debt Snowball)
• Highest Interest Rate First (Debt Avalanche)
Both strategies can be easily compared by recalculating the results.
2. Set Minimum Payment Options
For credit cards, the calculator can automatically estimate minimum payments.
By default, the system uses 4% of the total balance as the minimum credit card payment.
You can also leave this setting enabled and apply additional payments later.
3. Add Client Debts
Click Add and enter each debt individually.
Examples may include:
Credit Cards
Balance
Interest rate
Loans (Auto, Personal, etc.)
Balance
Interest rate
Normal monthly payment
You can enter multiple debts to reflect the client’s full situation.
Example setup used in the demonstration:
• Credit Card — $15,000 at 28%
• Credit Card — $5,000 at 12%
• Auto Loan — $10,000 at 5% ($460 payment)
• Auto Loan — $5,000 at 4% ($309 payment)
4. Enter Additional Monthly Payments
If the client has extra money available to accelerate debt payoff, enter the additional amount.
Example used in the video:
Additional Payment: $250 per month
This amount will automatically be applied based on the selected payoff strategy.
5. Calculate the Results
Click Calculate to generate a summary.
The system will show:
• Time required to become debt free
• Total interest savings
• The order in which debts will be paid off
You can easily switch between payoff strategies to compare outcomes.
Viewing Reports and Documentation
The calculator provides several reporting options.
Debt Payoff Summary
Shows the overall result including payoff timeline and savings.
Paydown Order
Displays the sequence in which debts will be eliminated.
Debt Elimination Schedule
Provides a detailed breakdown of balances over time.
You can view schedules monthly or annually.
Exporting or Printing Results
Reports can be shared with clients in several ways:
• Print to PDF using the printer icon
• Export to Excel for further analysis
• Print the summary screen to capture the visual results
You can also adjust the text size in reports for easier viewing when presenting to clients.
Demonstrating Different Scenarios
You can quickly show clients how changes impact their payoff timeline.
For example:
• Increasing the extra payment from $250 to $500 per month
• Switching between snowball and avalanche strategies
This helps clients clearly see how small changes can accelerate their path to becoming debt free.
When to Use This Tool
The Debt Elimination Calculator is especially useful when working with clients who:
• Want to eliminate credit card or consumer debt
• Need help visualizing a debt payoff strategy
• Are deciding how to allocate extra monthly cash flow
It provides a simple way to demonstrate the impact of disciplined debt repayment and helps clients understand how quickly progress can be made.
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