## Restructuring debts for accelerated payoff

The quickest way to retire your debt is to 1) determine what your total debt payment is now, then 2) sort your debts from highest interest rate to lowest, then 3) continue to make the same total payment amount except pay Minimum Payments on all debts except the highest rate debt, then 4) once the highest rate debt is paid off apply those new savings to the next highest rate debt and so on. Use this calculator to determine the interest and time saved using this 'Roll-Over' technique along with the potential increase in savings once all the debts have been paid off. The calculator will sort the debts for you when completing the analysis. You may also apply an extra amount to the total payment to accelerate debt payoff even further.

#### Current Debt Information

CreditorBalanceMinimum
Payment
Actual
Payment
Interest
Rate
(0% to 40%)
Debt-1 (\$)
Debt-2 (\$)
Debt-3 (\$)
Debt-4 (\$)
Debt-5 (\$)
Debt-6 (\$)
Debt-7 (\$)
Debt-8 (\$)
Debt-9 (\$)
Debt-10 (\$)
Debt-11 (\$)
Debt-12 (\$)
Debt-13 (\$)
Debt-14 (\$)
Debt-15 (\$)
Debt-16 (\$)
Debt-17 (\$)
Debt-18 (\$)
Debt-19 (\$)
Debt-20 (\$)

#### Advantages of a Good Credit Score

Interest is the charge added to a loan that makes up the cost of money. Interest is usually expressed as a percentage of the loan principal. The principal is the original amount of the loan. The interest rate tells you what percentage of the unpaid loan will be charged each period. The period is usually a year but may be any agreed-upon time. Here is how it works. Let's say you loan your friend \$100 at 5% annual interest. At the end of a year—the period—you should receive \$105, or \$100 of principal and \$5 interest. Simple, isn't it?

Let's say your friend doesn't repay the \$100 principal, but pays you only the \$5 interest; then the next year your friend will still owe you the \$100 plus another \$5 in interest. The preceding is an example of simple interest. Simple interest is the amount of money to be paid each period on a principal amount due.

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#### How to Conquer Credit Card Debt

While credit is very important to the economy, its abuse is harmful. Credit is extended with the faith that borrowers will repay the debt. Goods and services are provided on credit with the expectation that they will be paid for with money in the future. Credit makes commerce more convenient. When credit is abused, everyone loses. Credit abuse increases the cost of credit to everyone.

One should never use credit to purchase things for which one will not be able to pay in the future. Many impulse purchases are made on credit with little thought given to how the debt will be repaid in the future. If one calculated the true cost of goods bought on credit, one would have second thoughts about making the purchase in the first place. Here is an example: a new television flat-screen HDTV model retails for \$5,000. If purchased on a credit card with a 12% annual percentage rate (APR) compounded daily, and with minimum monthly payments of \$166 paid over three years, it winds up costing over \$5,980. Is it worth almost \$1,000 more to have it now (furthermore, the retail price in 3 years will probably drop)? That is like going into a store that advertised "SALE--ADD 20% TO EVERY PURCHASE."

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#### Credit 101

An important part of personal finance is how you manage your debt. Ideally, you would not have any debt, but in practice, most families do. It is not likely that most persons would be able to buy a car, a house, an education, or even major appliances without having to incur some debt. Sometimes, debt may actually be desirable, especially if you could borrow money at a low interest rate to make a high-interest investment.

Debt makes everything cost more. If you saw a sign in a store window advertising "Sale -- Everything 25% Off," you might be tempted to rush in and buy, buy, buy. But what if the sign said "Sale -- Everything 25% More Than Marked"? That is just what happens when you pay for goods and services using debt. Moreover, you may be using debt without even realizing it.

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This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.