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A debt calculator is a simple gadget that helps you find out just how much you can save by eliminating already existing liabilities. They can help you with your student loans, auto loans, credit cards as well as other bills. It works in form of a spreadsheet on which one enters the financial information, including the total monthly payments, and the calculator completes the equation for you as you prompt it.
You have to first enter the details on the credit card, that is, the name of the lending institution, the current balances and the interest rates the card carries. You then specify the amount that you tend to pay at the end of each month for each outstanding debt. The amount should be on the minimum side.
You should put in mind that the figure is bound to change due to inflation or changing interest rates. The next step is to enter the maximum amount you can pay towards your liabilities every month. Then calculate the difference between the two figures, that is, between the maximum and the minimum. This amount is what should go towards paying liability number one until it is all cleared.
The next time you do your calculations, that figure should go towards your liability number two. The process continues until all bills are settled. This is known as snowballing and it is only one of the many strategies available through the use of the debt calculators. Other strategies include Highest Interest First, No Snowball, User Specified Order among others.
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