Which debt first

Watch

Welcome in. Today your debts: writing them down properly, and then letting the workbook show you the finish date for every order you could pay them in.

Step by step

1. Click the Liabilities Detail tab at the bottom of the workbook
   Every debt from your Accounts Directory is listed here, one row each.
2. Three cells on each row need you
   Click the rate cell and type the interest rate as the bank prints it, like nineteen point nine. Click the minimum payment cell and type what the bank asks for each month. Click the actual payment cell and type what you really pay, if it is more than the minimum.
3. Do that for every debt
   A debt with no rate cannot be planned, so if you are not sure, open last month's statement; the rate is always on it.
4. Now click the Dashboard button at the top of the workbook
   In the list down the left of the screen are Debts and Payoff. Debts shows what each one costs you. Payoff compares the orders you could pay them in. Click Debts first.
5. The Debts screen is called What you owe
   Every debt is here with its balance, its rate, and what it costs you in interest a year, and at the top, Interest a year at today's balances, all of them added up. That last number is the one most people have never seen. Below it, What you owe month by month, drawn from the balances you type on the first of each month, so the line falls as you pay.
6. Now click Payoff
   The screen is called Getting out of it. At the top, Your plan: each month, your minimums added up, your extra, and what is going to your debts. Lower down, under Try a change, there is a box called Extra each month, on top of the minimums. Click it, type an extra, even fifty, and watch the whole screen change.
7. The order, and why
   Click Highest rate first, the avalanche, which costs you the least interest. Click Smallest balance first, the snowball, which gives you the first finished debt soonest. Click My own order to set it yourself. And the right-hand column, paying only the minimums, is what happens if nothing changes. Read the sentence under each; the screen says why in plain words.
8. Debt by debt
   Your debts are numbered in the order you chose, the order the extra goes in. Each one says the month it is cleared and the interest along the way. When the first is cleared, its payment rolls onto the next; that is why the later ones finish faster than you expect.
9. Your plan against paying only the minimums
   Two lines: the months you save and the dollars you save. This is the number to screenshot.
10. Try a change
    Under it, A different payment or rate for one debt. Choose a debt from the list, type the rate to try, say the card company lowered it, or type a different monthly payment, and the finish month moves. Nothing here touches your workbook. Click Reset to My Sheet and your saved figures come back.
11. Pick a debt and click See its month by month schedule
    Click Month By Month, or Year By Year: what that debt is charged and paid, and what is still owed. This is how your plan pays that debt down, month by month.
12. What this screen can show you that nothing else can
    The true cost of paying only the minimum. The month you are debt free. The one debt that is costing you the most. And what fifty extra dollars a month really does. It says it plainly at the bottom: an illustration from your own figures, not a promise and not advice, and your lender's statement is the final word. Update your balances each month and the plan updates with you.

The idea behind it

Worth knowing

Remember