Want to know what your debt freedom date is?
It is pretty easy to calculate.
I do want to say, however, that there is one prerequisite to this calculation. You have to STOP signing up for more debt! If you keep adding more debt, the debt freedom date will keep moving away from you!
So, knowing that you have said NO! to debt from now on, here is how you calculate your debt freedom date.
1. List all of your debts on a sheet of paper. – Like in the example below. You will need your debt name, debt balance, and monthly payment you are making.
2. Now, add up all of the balances to obtain a Total Balance. Do the same for your monthly payments to obtain your Total Monthly Payments.
3. Now, let’s pretend you just have one big debt with one big monthly payment. That debt is equal to the total of all of your debts (in this case, 26,445), and the payments are equal to the total of all of your monthly payments (in this case, $1,105). Divide your Total Balance by your Total Monthly Payment:
$26,445/$1,105 = 23.9 months
4. This will get you really close to your actual debt freedom date. Yes, I know I did not include interest rates. I also did not include pay raises, tax refunds, bonuses, money freed up from budget improvements, and sold stuff. For the average person who does this calculation and then goes after this with much intensity – it is actually accomplished in about 2/3 of the time calculated here.
You now have your debt freedom date!!! Post it on the refrigerator! As you pay off each debt, put a big RED line through it. It is OK to yell at your debt!
