It seems like everyone is in need of a good debt tracker – the ultimate tool to corral what you owe. After all, the average household in 2018 had 135,678 in debt. (P.S. Did you know you could buy five Ford Mustangs with that much money?)
But before we can get you set up with your debt tracker, you'll need to decide how you want to tackle your debt. The tool is just for you to track your payments and play around with your final debt pay off date – actually paying it off is up to you.
Debt Reduction Techniques
There are many different debt reduction techniques available. Some of the most common include:
#1 – Snowball
debt snowball: Made popular by Dave Ramsey, (tutorial here) this is where you list your debts smallest to largest and pay off the smallest first – then move along to the next. Once you pay off a card, you still use money for that card’s minimum payment to add onto your payment for the next one (and so on and so on). You’ll save more money in interest by using the Avalanche method (below), but most have great success with the snowball because those small wins keep you motivated for the long term.
#2 – Avalanche
debt avalanche: this works well when you have multiple credit card balances. Unlike the snowball method, you won't be targeting smaller accounts first. Make all of the minimum payments on each account, and then put the remaining money you have to pay off debt with towards the account with the highest interest. This will help you reduce the amount you pay on interest over time.
#3 – Consolidation
debt consolidation: this consolidates all of your debt into one account so you are only paying off one interest rate each month. In theory, this approach can be helpful, but in practice, it can get dangerous. It makes it easy for you to rack up even more on your credit cards and get yourself even more in debt.
No matter what method you choose, a debt tracker can help you get a handle on your debt, because it provides an opportunity to put all of your financial information in one place.
Using the Financial Best Life Debt Tracker
For those working with the spreadsheet, you can list your debts either by balance (smallest to largest) or by interest rate (largest to smallest) depending upon your debt pay off plan.
Then, in the section underneath, track your payments as you make them.
The second sheet in the PDF is for brainstorming two things:
- How you’ll come up with extra income to accelerate your debt payoff.
- What you’ll reward yourself with each time you pay off a balance.
Sounds pretty fun, right?
Why Should I Use a Debt Tracker?
Because there are sound benefits related to getting your debts down “on paper.”
1. It's A “Screenshot” of Your Financial Life
- If you are utilizing credit from many different institutions, it can be hard to know all of your balances, rates, and monthly payments off of the top of your head.
- A good debt tracker will let you input the details of all your loans or credit lines, letting you view your repayment information in one place.
- No more bouncing from app to app or looking through old documents every month.
2. You'll Be Able to Set Reasonable Goals
- You might be tempted to aim high in your debt repayment goals – that’s great! – but it is just as important to set goals that you can reasonably reach.
- While paying off $8,000 of debt in 90 days is realistic for some it may not be an achievable goal for you personally.
- Since you’ll have all your debt info in one place, it’ll be even easier for you to prioritize what you want to pay off first.
3. You'll Stay on Top of Due Dates
- Late payment is a big financial no-no. Not only does late payment affect your credit score, but you could also be paying more because of late charges. It’s amazing the difference just having your dates in one place can be.
- Your debt tracker will help you stay on top of what is due and when.
4. And Keep Motivated
- Debt repayment burnout is real and dangerous. It can start with “Well, I’ve repaid a lot lately. I should treat myself,” and end with “How did I max out my card again?” The trick to avoiding burnout is in not denying yourself rewards – but rewarding yourself responsibly.
- Think of little treats for yourself when you reach a milestone of repayment or other financial goal. Aim to spend no more than 5% of the total balance you just paid off.
- Use cash, obviously.
- Write these rewards down on your debt tracker so that you don’t lose sight of your goals!
How Can I Use a Debt Tracker to Pay Off Debt Faster?
A debt tracker can help you pay off debt faster because it is a visual reminder of what you’re working for. It will help keep you motivated, but it won’t pull in extra money. Below are some of my favorite ways to make extra money so you can log more (or better still – even bigger) payments into your debt tracker.
#1 – Do a No Spend Challenge
Remember after the holiday season when everyone shuts themselves inside the first few weeks of January in an attempt to salvage their finances after a decadent holiday season? Yeah, that can work for any season. Anytime you want to save a little cash is the perfect time to attempt a no spend challenge.
Click here to read how to properly put one together. The key is making sure you prepare properly!
#2 – Set Specific Goals
#3 – Sell Your Extra Items
Kondo mania is sweeping the nation thanks to Marie Kondo’s newest show on Netflix. Declutter your own home and profit by putting no longer used item up for sale on places like Craigslist or eBay. My rule is that if I haven't used it or touched it in a year — get rid of it. You'd be surprised how much you can make just from selling your old items.
#4 – Start a Side Hustle
I’m the queen of side hustles. Or, at least writing about them. See below:
- 10 Side Hustles for Busy People
- How to Hustle Your Next $500, $1000, and $5000
- How to Make Money While You Sleep
- The Guide to Starting Your Own Side Business
- The Grow Your Money Tree Tool Kit
#5 – Leverage Technology to Save Automatically
Technology is a beautiful, beautiful thing and now there are apps that make saving for certain goals, like debt payoff, really mindless. I like Qapital, where you can set it to round up your purchases to the nearest dollar and save the extra. You can also sync up with your friends on the app – keeping you more accountable to your goals and making saving more of a fun, group thing than a solitary endeavor. 🙂 (Psst – these are other saving and side hustle apps we like.)
Debt is one of the great financial white whales – almost everyone has some sort of debt, but repayment seems to be increasingly out of reach for many. Student loans are crippling young adults’ financial wellbeing, while mortgage rates climb and a wider variety of credit options become available. I know that if you're reading this, you're well aware that debt can be a vicious cycle of overuse and slow repayment.
Just remember, you’re doing GREAT work – more than most individuals will do – by downloading the debt tracker and getting ahead of your debt situation now. Once you’re debt free, you’ll have some amazing options and be in a better position to live out your best life.
*this post originally appeared in January 2017. It was updated in January 2019.