It's been a challenging year and many business owners are taking on new debt to keep the doors open. With businesses getting ready to re-open we thought it would be helpful to have a simple spreadsheet to list all of their debt and develop a repayment plan.
There are two main techniques to be aware of when paying down debt. The debt avalanche method and the debt snowball method.
Both methods require that you list out your debts and make minimum monthly payments on all but one debt. The added benefit of this first step is that this may be the first time that you have calculated your total monthly payments on one spreadsheet. This monthly total represents the amount of profit your business must generate to repay the loan.
Utilizing Dave Ramsey's Debt Snowball Calculator in Excel, you can look at your debt load and make a plan:
After this the methods vary. In the debt avalanche method, you pay extra money toward the one debt with the highest interest rate.
With the debt snowball method, you pay down the smallest debt first and work your way up, regardless of the interest rate.
Deciding which method to use depends on your personal circumstances. By taking the time to list your total debt obligations you will be one step closer to managing your debt.
Click on this link for a downloadable spreadsheet of the Debt Snowball Calculator.
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