Figuring out what debt you should pay off is hard. I know I struggled with it in the beginning of my journey. It is especially hard if you don’t have the proper tools or know how to build them. This is where I come in! Coming from an accounting background, I know far too well how to create these debt payoff schedules in excel. I am a 100% super nerd. Creating documents like this is a small, strange passion of mine.
Below you will find a link to download one that I created and will be using to show as a reference in this guide. You can also find the template and others located at my Downloadable Template page. After reading this, you will feel confident in your abilities to use the debt payoff schedule and get all the information you need out of it. Giving you the confidence to go conquer your debt world!
What is an Amortization Schedule, Exactly?
An amortization schedule is used to show the variables of debt payoff. It is a table, showing your payment, the interest portion of your payment, what is going towards the principal, along with the beginning and ending balances for that period.
This debt payoff schedule is your best friend in your battle against your debt. Knowing exactly how much of each payment is going towards interest and principal will help you optimize a strategy that will be unbeatable! Make sure you read over the different debt payoff strategies to determine what method will be best for you!
Debt Payoff in Excel: How do I use this thing?
I have done my best to make the template as easy as possible to use. Let us look at it step by step to see how to use it and what information it tells us.
This part in the top right of the excel document is your home base. Having the information in blue is all you need in order to create the schedule of debt payoff in excel. Updating any of those values will update the schedule and give you the information you desire. What does each description mean?
- Beginning Payment Date – The date of your first or next payment, depending on if the loan has started or not.
- Beginning Balance – The starting balance or current balance of the loan, depending on if the loan has started or not.
- Interest Rate – The rate in which the lender is charging you to use their money.
- Payment Schedule – How often do you make payments? The cell will accept 4 different values – Monthly, Weekly, Bi-Monthly, and Twice a Month.
- Years – How long, in years, is the loan for.
- Extra Payment – How much extra will you pay per payment, if any.
All you need to know are those 6 factors and you can use this schedule to your hearts content!
You may notice that the “Number of Payments” and Minimum Monthly Payment” are not highlighted. These values are automatically updated based on the information you enter into the highlighted areas.
What does the Debt Payoff Schedule Tell You?
This Amortization Schedule is your ultimate tool in calculating different scenarios of debt payoff! As soon as you enter the basic information above it will tell you everything you need to know to make educated decisions about your debt balance. Let’s take a look!
- Payoff Date – When your debt will be paid off, based on the variables entered above.
- Number of Payments – How many payments it will take to fully pay your debt off.
- Total Amount Paid – The total of all payments made.
- Total Principal Paid – Amount paid that went to principal. Will equal the beginning balance of the loan entered above.
- Total Interest Paid – The total amount of money you paid on top of what you borrowed to have access to the money.
Everything you need to know all in one place! It can’t get better than that!
Evaluating the Actual Debt Payoff Schedule
This is where the actual magic happens. Enter your information in the cells discussed above and watch it update automatically! But what does this schedule actually tell us? The answer is everything you would want to know about your debt payments!
Starting from the left we have “Payment Number”. This is the number of the payment that is made. So if you are looking at a loan that you have made 10 payments so far, you would be looking at Payment Number 10.
“Date” is also straight-forward. That is the date that the corresponding payment is due.
The “Principal Balance” is the remaining amount of the loan you have remaining, before that period’s payment has been made. The first “Interest” column is the percentage that is being charged each period to have the loan. You may notice that this does not equal the interest rate that you entered. This is due to the rate being entered in as the annual rate. To get the interest on your loan each month, you need to divide the annual rate by either 12, 24, 26 ,or 52 depending on how often payments are made.
“Payment” is the amount you are paying each period on the loan, whether it is just the minimum payment or also includes an extra payment each period. The second “Interest” is the interest balance charged for that period. This is the cost to you to have access to the loan. “Principal Payoff” is the payment minus interest. This is the amount of your payment that gets applied to the principal each period. Finally, you have “Ending Balance” which is the amount you have remaining on the loan after the payment has been made that period.
Why Does This Information Matter?
The most relevant information to you is the amounts in bold discussed above. The actual debt payoff schedule is for you to dig into the numbers a bit more and see how each payment made affects the total balance you have remaining to be paid. If you don’t want to look at it in-depth, you don’t have to! That is why I included the summary information to make it as easy as possible for you to make an educated decision on what you want to do next!
What Should You Do?
Now that you have your debt payoff schedule in excel, what should you do? Play around with it. Using your own loans, try out different scenarios. What’s the difference between no extra payment versus $50 a payment? How much would you save in interest and time? Since I am a super nerd, I LOVE running different scenarios to try to figure out how to better remove my debt burden from my life. If you ask my brother, I love running scenarios for him too! My goal is to help as many people as I can escape from their life of debt and move into their life of riches.
It is only the beginning and there is a long, bumpy road ahead, but we will execute our strategies and reach our dreams, together! Remember, when your debt dies, your life will RISE!!
If there are any other excel templates that will help you in your journey or any questions you have relating to the amortization schedule, please drop a comment below or use the Contact Me page. I will be happy to answer any and all questions! Remember, if you have a question or need an additional template, you probably aren’t the only one. So help yourself and others out!