Google Sheets Budget Spreadsheet

Using a Debt Log and Debt Snowball to Conquer Your Debt

Disclaimer: I have written this post only because I believe in and use Dave Ramsey’s methods and strategies to pay off debt and want to share it with you. I have not been compensated in any way for my thoughts or for this post.

It was so fun to hear all of your feedback on my last post about why I started budgeting! Here is the second post of the “Choices We Made to Get Out of Debt” series outlining how to create a Debt Log and the incredible effects of the debt snowball.

 One of the biggest obstacles that gets in the way for many people reaching their financial goals is debt. It might be a nagging, consistent credit card debt, loans taken out for vehicles, or mountains of student loan. Whatever the circumstances, debt is a monster that has the ability to stall and steal our dreams. When my wife and I started dating, we both had credit card debt, car payments, and a whole pile of student loan debt. We felt suffocated and stifled. We each created a budget to manage where our money was going, but we needed another plan – a plan to pay off our debt. Luckily, we stumbled upon a little miracle worker called the Debt Log!

If you’ve read my post on using Google Drive to enhance communication you already know that I love to use Google Sheets, which is what I used to create both my budget and my debt log, and will be displaying in this debt log tutorial. Getting started will require a little bit of work and research into your debt. The first step is to look up each of your debts so you know the total amount and the interest rate for each one. Once you have this information written down or pulled up on different tabs on your computer, you are ready to start building your debt log.

Step 1:

Getting it all into a spreadsheet! After you have researched and written down your debt, write down your debts in order from least amount owed to greatest amount owed. If you haven’t already done so, open up a new tab on your budget spreadsheet or create an entire new spreadsheet to build your debt log. You can use either Excel or Google Sheets, but again, I will be demonstrating with the latter. In order to keep my debts straight, I include the name of each loan or debt and the interest rate above the total amount owed. When you do this, leave a column in between each debt. I do this so that I can include a column that indicates what my payment is for each loan. This helps me track how much I am paying on each loan, which is important because as I will explain later, the amounts paid will eventually change as you begin to pay off your debt. Below is my initial setup. Leave column A open for now. In cell B1 type in “Payment.” Next to that in column C1, type the name of the smallest loan or debt. My lowest when I started out was a student loan through Firstmark with a 3.3% variable interest rate. In column D1 type “Payment” to indicate the payment amount for your second lowest loan and then in E1 enter the name of your second lowest loan or debt amount, including the interest rate. Repeat this process until you have entered all of your loans and debts. If done correctly, the amount owed will increase as you move to the right. Check yours against the one I have made (Note: I do have more loans than are listed in this chart, but it didn’t fit on the page very well so I left a couple out in the screenshots).

DP4eaaTioF uF SwloGjpFBSC9l uEFkhzsQV2nJvMd61eQ7nXxHajyoYFtLfN O27E8PEw9kBxzv0ANO A24M70Yy2qyuIWM4DKhwYv2I5 EpY6TkO2nfnjBLw wmZ11K8OUbmu - Using a Debt Log and Debt Snowball to Conquer Your Debt


Next, enter the total amount owed for each loan in the cell directly below the name of the loan. Also, under the payment column for each, enter the minimum monthly payment in row three. In order to have your numbers reflect dollars, you will probably need to change the formatting of the cells to currency. To do this, highlight each cell with a number in it, click on Format, go to Number, then click on the currency option you like best. This is a process you might need to repeat for other cells. Once you have all of your debts lined up, the reality of your debt might feel overwhelming, at least it did for me. I knew roughly how much debt I had, but to see it all laid out plainly so I could add it up quickly, felt really daunting. But keep going, it gets better! Again, here is my debt log for an example.


I6R2EuaiBBqO9BMTmE6AaxvNABuo9TnMM4 X1u3NPHZnpDlXr857 uB3CDIXJhp69W2L5VSxnGGQyrNeHL FCUlYkID859wXDUEvcB4KVnOmp YFdVoMON0wKaK4VzrkWaGvpVw0 - Using a Debt Log and Debt Snowball to Conquer Your Debt

Step 2:

Add dates in column A. In order to track your progress, it is crucial to enter the months in column A. Starting with whatever month it is, enter the name of the month and the year in cell A3. For example, if you are starting today, enter August 16. Below that, September 16, October 16, etc. It is a safe bet to keep going for about 5 years worth of months. This is tedious and time consuming. You might need to tinker with the formatting a little, but this step is pretty straight forward. It will look something like this.

qGYXuXhZXeEmu2UcDhXPMhV475gGTcifGhjNTIn7iF2dbV 5C R30SyprklsVMIr5hXJEltHdVgnA9lUX82G55Iq88WpDhb JBHtDYeOCz28M YCx8xfQSYPhNM2nPDOz9d32WW9 - Using a Debt Log and Debt Snowball to Conquer Your Debt

Step 3:

Calculating how much you actually pay off with each payment. Up to this point we have not needed any formulas to help us make calculations. That changes in step 3. We need to calculate the average monthly interest for each of our loans. The formula for this is pretty simple. To do this, take the total amount owed for the loan and multiply it by the interest rate. Once you have done that, divide by twelve to get the monthly interest. If you’re a visual learner like me, that might have been confusing to follow, so we are going to do the Firstmark calculations together. The total amount owed is $1,384.92 as listed in cell C2. If I multiply that by the interest rate of 3.3% (multiply by .033) it equals 45.70 after rounding. Then to get the monthly interest, I divide that by 12 to get an average monthly interest payment of $3.81 (again after rounding). So to calculate how much we actually pay down on the loan, take the total amount owed and subtract the payment amount of $100, then add the interest payment of 3.81 back on to get $1,288.73. This number reflects the remaining balance of the loan after our August payment. Phew! That seemed like a lot of math. After you’ve done the math to get the monthly interest rate, you are ready to enter the formula into cell C3. It is: “=(C2-100)+3.81.” If you’ve done this correctly, it will automatically calculate the new remaining balance on your loan. Now, to duplicate this formula throughout the rest of the C column, click on the cell C3. The bottom right hand corner will have a small blue box. If you click and drag that box down the column, it copies the formula into each box that you highlight, automatically updating the progress of conquering your debt. Drag this box down until the remaining balance becomes zero or negative. Use the same drag down method on the payment columns to duplicate the minimum payment each month. Repeat the process for each of your loans and debts using the appropriate cell numbers. When finished, it will look something like this.
AFxw7zWusm9NOop98ScCKxZpuB2nhaSLby1csrXlzM1niYjbaf7JufibOjGXMZpt6w6GhPC6 KZvkDzC5pzl0o6uHeqDrNh2q9r5MP XfSIg XY M3eJCl0j69EyyyCN7EVAI7pB - Using a Debt Log and Debt Snowball to Conquer Your Debt

Step 4:

Snowball Effect! The best part about creating a debt log is it allows you to easily use the concept of the debt snowball. This is a concept made popular by Dave Ramsey, and it is incredibly effective in paying off debt quickly. The magic begins when you pay off one of your debts. As you can see in the example above, by maintaining a minimum monthly payment of $100 a month, the Firstmark loan on the left is paid off officially in October 2017. This is assuming that I only pay the minimum balance each month. Side note: I highly, highly, highly recommend paying more than the minimum balance if you can. Scrape up every spare penny you can manage and put it towards your lowest balanced loan to make this process go faster (I will have more posts on how to scrape up extra money later). Now that one loan is paid off, I simply apply the $100 I was paying on that loan to the loan with the next lowest remaining balance, the Campus Partners loan making my new payment $185.77. I have now accelerated how quickly I can pay off my loan. The good news is, I can update my formula to automatically calculate my new payoff date. If I click on the cell for November 17 of my Campus Partners loan, the formula will show up in the formula bar indicating “=(E17-85.77)+25.32.” The only change I need to make is to change the 85.77 to 185.77. Then, like before, drag the blue box down until the remaining balance is zero. As I played around with this I was amazed at the difference this extra $100 dollars made on the time table needed to pay off the loan. If I only paid the minimum balance of $85.77, it would take nearly seven years to pay it off completely. However, by adding the extra $100, I could pay it off in only a little over two years!!! That is five years of payments I don’t have to make! HOLY COW!!! Every time you pay off a loan, add the amount you were paying towards your next lowest loan and the snowball keeps growing! If you apply this same concept to each of your loans, you will be amazed at how quickly your loans can get paid off. Jenna and I went from 30 years of paying off loans to five after creating our debt log and using Dave Ramsey’s debt snowball. That is a difference of 25 years!!! A small disclaimer, we did make other choices in our lifestyle to help us pay more than the minimum balance on our lowest loan, but this concept has truly transformed our ability to pay off debt incredibly fast!

Dave Ramsey (and I) recommends paying off the debt with the smallest remaining balance first, regardless of interest rate. It might make more mathematical sense however to pay off the loan with the highest interest rate first to avoid paying more over the long course of your loans. But the truth is, paying off loans isn’t just about math. Paying off loans is also mental and emotional. If you focus your energy on the lowest remaining balance, you will have success sooner rather than later. For us, we scrounged up extra money and paid off our first loan in four months! It was exciting and encouraging! We were so excited that we immediately crunched numbers and made a new goal of paying off our next loan using the debt snowball. We created momentum and belief when that first loan was paid in full. Without that success and belief, we may not have had the same attitude towards our debt. I mean, when we looked at our debt log for the first time, we had nearly $90K of total debt, and it was discouraging to think of how long it would take to pay it off. If we would have paid off the highest interest loan first, we still wouldn’t have paid off a single loan even three years later. It would have been tough to maintain the mental energy and enthusiasm, not to mention, our debt snowball would have taken longer to get rolling.

Wrapping It Up

I believe that it is important to celebrate each milestone in your debt free journey. Even though you are budgeting and counting every dollar, it is still okay to celebrate reaching your goals. It can be something really small like a $10 bottle of wine, going out to ice cream, and at the bare minimum, hopefully a happy dance around your living room  It is important to have fun on your debt free journey and enjoy the little moments. Good luck in creating your debt log and have fun dreaming of being debt free.

Let Me Know in the Comments

I am excited to hear how this process goes for you! How many years will the debt snowball knock off of your journey to be debt free?



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