Many credit card companies use the Average Daily Balance Method when calculating how much interest they charge their customers during a particular billing cycle.  I have created a free-to-download spreadsheet that will help you calculate -

• The Average Daily Balance
• The Impact of Purchases and Payments
• The Impact of Timing Your Payments
• The Amount of Interest Charged During a Particular Cycle

The spreadsheet is free for you to download and is available in two versions:

Be sure that you select ‘save as‘ or ‘save link as…‘  If you select ‘open with’ the file will open as ‘read only’.

Click here to download a version compatible with Microsoft Excel

Click here to download a version compatible with OpenOffice Calc

Here are some screen shots from the spreadsheet and some notes on how it works -

Enter Days In Cycle (between 20 and 31) and Beginning Balance

Enter any Purchases or Payments

In the example below, the billing cycle is 31 days and the beginning balance is $2000.  To keep things simple, I’ve entered just one transaction, a payment made on day 25.

The spreadsheet then uses the information provided to calculate Average Daily Balance and Cycle Interest Charge.  It also details how you can calculate these outputs on your own.

Alongside the first section of data is another section, allowing you to compare two payment plans.  In the example below, I simply made payment on day 5 instead of day 25.

Notice how making the payment earlier in the cycle changes both the Average Daily Balance and the Cycle Interest Charge.

The spreadsheet also calculates the difference between two payment plans.  In this example, making the payment 20 days sooner will result in a savings of $.55.

I hope you will download the spreadsheet and work though various plans.  I used a similar spreadsheet when calculating the impact of making multiple monthly payments when reducing my debt.

Questions?  Find a bug in the spreadsheet?  Leave a comment and I’ll do my best to answer your questions or resolve any issues.

• 3 Comments

In April of 2005, I had an ‘ah ha’ moment.  As I sat staring at the paltry amount of money in my checking account, it occurred to me that I had been working for more than half of my life, and yet, I was broke, in debt, and I had no plan for my financial future.  I had less than $1000 to my name.  I had worked, hard, for more than fifteen years, and yet I had no savings, no emergency fund, and no idea for how I could ever retire or pay for my kids’ college.

Scared, and more than a little frustrated, I made up my mind, then and there, to do SOMETHING about my situation.  I took out a piece of paper - actually, the back of an envelope - and I began to list my creditors.  I then went online and found out just how much money I owed.  The total?  I owed a little more than $11,500.  Now, since that time, I’ve met a number of people who owe much more and and a number who owe much less than $11,500, but, three years ago,$11,500 was a LOT of money.  Remember, I had never lived on a budget, I had always depended on credit cards to get by, and I was used to living paycheck-to-paycheck.

Now, in 2008, my life is completely different.  I am debt free.  I have a fully-funded emergency fund, and I’m working hard, along with my wife, to ensure that we adequately fund our retirement and education savings accounts.

I didn’t type the above paragraphs so that I could “toot my own horn.”  After writing about debt reduction for more than three years, I’ve met people who’s stories make mine pale in comparison.  No, I shared my story for one reason:

You.  Can.

You can get out of debt.  You can save for your future.  You can live on a budget.  You can retire with security.  You can live a more peaceful life.  You can be and do and see and know more than you ever thought possible.

Three years ago, I had the back of an envelope, a desire to get out of debt, a borrowed copy of one of Dave Ramsey’s books, and a silly little blog - but, I also had two more things - the two most important things.  I had determination and I had a plan.

I lined my debts up on another piece of paper - a proper sheet of college ruled, if memory serves - and I began to plan.  I narrowed my focus, I stopped worrying about what other people thought, and I began to work as hard as I could to rid myself of debt.  Even when my son got sick, and was hospitalized for a week, and we used up our entire emergency fund, I would not give up.  Even when my original goal date zoomed by and I was still in debt, I would not give up.  For some reason, whatever fire that was lit in April of 2005 refused to go out, no matter what the situation and no matter what the setback.

I don’t know anything about you.  When you read this article, you might find it inspiring, or corny, or even off putting.  I can’t do anything about your reaction.  All I know is, I’m looking around at a world filled with people who look like they’ve lost hope.  My goal, and it has become the singular goal of my site, is to let people know:  If a dude like me can, anyone can. I’m serious.  There’s nothing special about me.  I’m the most average guy on the planet.  I want my kids to grow up and be happy and healthy.  I want to spend a long, blessed life with my wife.  And, I want to be able to leave a little behind when I pass on.

What is special, however, is what happens when you couple your plan with your determination.  So, if you are where I was, and you’re feeling discouraged or down or depressed, maybe this post will serve as a “pick-me-up”.

Now, go to your kitchen table and sort though that stack of bills.  Take out an old envelope, flip it over, and get to work.  Tomorrow, you change your life.

You. Can.

• 24 Comments

If you want to get out of debt, you need three things - a plan, some money, and lots of determination. I can’t provide you with the money or the determination, but I can give you some ideas for how to create an awesome plan.

• List your creditors, your current balances and your current interest rates.
  • If you want to rid yourself of those pesky smaller balances, regardless of interest rates, list your debts smallest balance to largest balance.  This method is commonly referred to as the Debt Snowball.
  • If you want to ensure that you will pay the smallest amount of interest, over the course of your debt reduction, list your debts highest interest rate to lowest interest rate.  This method is commonly referred to as the Debt Avalanche.  (Source: Consumerism Commentary)
  • If you simply have a debt that you want pay off first, regardless of its balance or its interest rate, list it first.  Then, list your other debts accordingly.
• Make minimum payments to all of you accounts.  For your credit cards, this would be the minimum payment listed on your monthly statement.  For your automobile loan, this would be the monthly payment.  Make a note of these initial minimum payments.

• Make an extra payment to the account at the top of your list.  When sending payment, write “apply to principal” on the memo line of your check.  Using online bill pay (initiating payments from your checking account to your creditors) is a simple way to send extra payments, without having to deal with envelopes or stamps.

• Continue sending minimum payments and your extra payment until the first debt on you list is paid off.  Then, combine your extra payment AND the minimum payment that you were sending to the first account, and send that combined amount to the second account on your list.  This is where the snowball / avalanche effect really starts to work.  Do not relax.  Remember how I mentioned that you needed a plan, money, and determination?  This is where the determination really matters.  It would be so easy to spend the minimum that you had been spending to the first account, but then you would lose the impact of the snowball.  Maintain your intensity and stay focused!

• By now, you have this figured out.  Once you pay off the second debt, send the extra payment and the two original minimum payments to the next debt on your list.  Continue combining these minimums and extra payments until you are debt free!

• Want to do even more to ramp up your debt reduction?  Don’t send one extra payment, send multiple extra payments.  Keep your eyes open for ways to reduce your interest rates.  Consider calling your credit card companies and asking them to reduce your rates.  Carefully consider consolidating credit card debt from higher rate cards to lower rate cards.

Click here to view the No Credit Needed Online Debt Reduction Guide or here to view and download the No Credit Needed Debt Reduction Guide E-Book.

• 19 Comments

I love to play golf.  I also love to save money.  Here’s how to save a few bucks when hitting the links.

• Avoid weekend/holiday rates.  Most public courses offer discounted rates when you play on a weekday.
• Share a bucket of range balls with your playing partner.  Spend a few extra minutes on the putting green instead of the range and your scores will improve.
• Bring your own snacks / bottled water / sodas / etc.  You’ll pay far less than you will if you purchase these items at the course.
• Check out state owned and operated golf courses.  Many of these courses offer summer or winter discount packages and proceeds from many of these courses fund education.
• When buying clubs (and other equipment) be sure to check sites like eBay and Craigslist.  If you are a beginner, this is a fun way to experiment with different clubs without breaking the bank.  I purchase practice golf balls in lots of 100 for much cheaper than I could buy them at the local sporting goods store.
• Pay for a few lessons.  Eight years ago for Christmas, my wife arranged for me to have a series of lessons with a local professional.  Those lessons cost a very minimal amount, but they radically improved my game.  I went from scores in the 100’s to scores in the 80’s.  It might cost a few bucks up front, but you’ll more than recover your money in fewer lost balls, fewer headaches, and fewer moments of shear frustration.
• Skip the gimmicks.  Don’t pay for the latest and greatest gadgets.  Simply spend time hitting golf balls, working on your stance, finding a good putting stroke, and your game will improve.
• Walk the course.  Golf can be a frustrating game, or, it can be relaxing.  The next time you go play, especially if you play by yourself, ditch the cart and walk 18 (or 9).  Enjoy every step.  You’ll save a few bucks, get some exercise, and have time to think about your next shot.
• Avoid the course all together.  I recently purchased a set of junior-sized clubs or my four year old.  He loves just hitting golf balls in the yard.  I’ll grab a pitching wedge, and while he’s pounding massive 25 yard drives with his 3-wood, I’ll practice chipping.
• Play late in the evening.  Many courses offer twilight, all-you-can-play-after-a-certain-time golf.  I’ve finished many a round in the almost-dark.  It’s cool to hit the golf ball, wonder where it went, and then find it pin high.

I usually play at our local municipal course or I’ll play with a buddy of mine at a course near his house.  Golf can get very expensive, very quickly, and it’s also a bit addictive.  But, over the past three years, I’ve learned to put it into perspective, enjoy the game, improve my play, and do so in ways that don’t break the bank.

Please consider stumbling this post and subscribing to No Credit Needed.

• 7 Comments

Welcome to the Carnival of Debt Reduction.  Below, you will find links to articles about debt, debt reduction, credit, credit management, and frugal living.  I want to thank those who submitted articles.

Clever Dude has made a change in his debt reduction strategy.  It’s always good to take a look at alternatives to your original plan.

Fiscal Liberty reminds us to ask ourselves how much we are really spending.  Having an accurate budget will help ensure that you know exactly how much money you have available for debt reduction.

Engineer A Debt Free Life is reducing debt by brown-bagging it.  It’s amazing how little amounts quickly add up.

Fix My Personal Finance has suggestions for dealing with credit card debt.

Free Money Finance has an interesting article about young people and the financial struggles they face.

The Happy Rock has an interesting take on Rich Dad, Poor Dad.

Cash Money Life compares carbs and credit.  Remember when a baked potato was health food?  The good old days…

Credit Addict has some ideas for how to find a zero percent credit card offer.  Surfing your balance can really help to reduce interest, but be careful.

Hello Money finds an online calculator and changes a debt reduction plan.

Ken Nubo has a tongue-in-cheek top 10 ways to reduce debt.

Art of the Coupon reminds us of the power and necessity of the good old Emergency Fund.

Five Cent Nickel has a list of credit cards that will give you zero percent and not charge a balance transfer fee.

Everything Finance writes about your debt free future.

Frugal Dad suggests that it’s a bad idea to pay credit card payments if you can’t pay your mortgage payment.

Tough Money Love jumps into the middle of the good debt / bad debt debate.  I like my rule - No debt!

The Digerati Life (still the coolest blog name around) has some tips for living a debt reducing, frugal life.

Personal Hack has a philosophical post about debt reduction, weight loss, and happiness.

Harvesting Dollars has a very interesting post about which debts to pay off first.  I really, really like this article.

Again, I want to thank those of you who submitted articles.  If your article was not included, one of two things happened.  Either, it was so off-topic that I couldn’t find a way to work it into a carnival about debt reduction, or, I didn’t receive it because Blog Carnival’s site was down.  If you have questions about why your submission wasn’t included, feel free to hit my contact button at the top of the page and shoot me an email.

For those of you who are new to my site, welcome, and I hope you’ll take a minute to view this handy debt reduction guide, complete with a free e-book.

• 9 Comments