How Much Can Cutting One Expense Help Pay Off Debt?Jul 27, 2017
When it comes to debt repayment, we suggest that you start by looking at your budget. Go through it line by line and find any expenses you can trim, or even cut out completely. Keep in mind that cutting certain expenses can have more of an impact than others. If all you did was cancel Netflix, it would take over 125 years for you to set aside $15K to pay off debt.
On the other hand, if you sold your car and used public transit, you could have $15,000 set aside in a year and a half.
Nerdwallet has created a new kind of debt calculator, showing you how a bunch of different budget-trimming moves could help you pay off debt. Some of these costs might not apply, like 401[k] contributions. Some costs may seem a little low for Canadians — can anybody get a fast-food meal for five bucks anymore? The point is, this calculator can be a helpful guideline when it comes to cutting expenses.
And yes, you can calculate more than one budget cut at a time. As soon as you choose one option, another dropdown appears with the heading “I would also…” So in case you were planning to give up Netflix, stop eating fast food and trade your car for transit, you could find out how much those three cuts would save you each month ($931.41).
Use this calculator as a guideline only. It doesn’t display or allow you to input the interest rate on your debt. So really, all it’s telling you is how long it would take to save a certain amount. Because most debts have interest charges added monthly, it will take a little longer to pay off debt than the time Nerdwallet suggests.
However, using this tool can help you adjust your monthly payments in the BDO debt calculator so you can find out how long it would take to truly become debt-free.
What expenses have you cut recently to help pay down your debt? #DebtSolutions