Financial Friday: How Much Does Debt Cost You Daily?

How Much Does Debt Cost You Daily?
by Alice Shaffer

As I have been reducing my debts and purchases for 2010 to become more financially healthy, I have subscribed to several other financial blogs. I found one while reading the Budgets are Sexy blog. J. Money posted something on Tuesday about debt motivation. This got me thinking -what kind of motivation do I need to further paying off my debt? Not only does debt cost us interest monthly and yearly...it does affect us daily even if we don't calculate it that way.

J. Money's good blogging friend Matt Jabs has a blog titled Debt Free Adventure, and he came up with an excellent spreadsheet that is simple and easy to show us how much our debt is costing us every day! Yes that is correct.....every day debt costs us money but do you know how much it is costing you? By going to Debt Free Adventure you can open and save Matt's How Much Debt Costs Spreadsheet. You can download it in Excel or an open document format and save it after you punch in your numbers.

Click on the photo and it will take you directly to the spreadsheet. What you need to do is gather your statements for January and February.

1. First thing to do is change the numbers in January's columns to zero so you can start fresh.

2. What you will do is fill in on the left the names of your "debts" I replaced the credit card 1-3 with the names of my credit cards. Some of these will not apply. I just left them blank and had zeros there.

3. Tab over to the Payment amount. Enter the amount you paid

4. Tab over to the Interest and put down how much interest was on that month's statement.

5. I then went back to the Principal column and subtracted the Interest from the Payment. This gives you the amount of your payment that actually goes to paying off your debt.

You will notice on the right side in the upper box that your numbers are calculated for you. This gives you a monthly total of your payments, principals and interest paid.

6. To find out how much you paid that much in interest divide your interest by the number of days (31, 30 or 28).

This number gives me pause to think when I am shopping and what to buy something from my "want" list and not from my "need" list. That purchase price could be going to paying my daily debt. You can print out a copy of your spreadsheet and have it in your wallet to remind you on your "daily debt" you are paying. Print it out and post it on the bathroom wall so you can see.

How does your daily interest debt look?