Excel Formula For Number Of Days From Current Date Student Loans – Getting to "Paid in Full"

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Student Loans – Getting to "Paid in Full"

In 1969, Elisabeth Kubler-Ross introduced five levels of grief in her book “On Death and Dying”: Denial, anger, negotiation, depression and acceptance. If you have a large student loan balance, you’ve probably experienced “pain” and you’re not familiar with the five stages. If you are in the “Acceptance” stage, this article is for you!

Being at the Acceptance level is a good place to be. It means: you have discovered that withdrawal and perseverance are not forever (Denial stage), you have stopped criticizing others for getting what you thought was a “free ride” (Anger stage), you have learned that you cannot borrow through bankruptcy (Bargaining stage), you have stopped drinking too much and watching reruns of Gilmore Girls (depression stage), and now you’ve accepted your financial responsibility and are ready to do something about it. You won’t find any “magic bullets” in this article, but you will find an effective plan to pay off your loan in the shortest amount of time.

Step 1 – Prepare the Loan in the Spreadsheet

To better manage your student loans, you need to fully understand what you’re up against. Creating a spreadsheet will give you insight into how your loan is working and show you the best results for making advanced payments. To create an effective spreadsheet, you need to understand the terms of your loan and know how to organize this information into a spreadsheet. If you are not a spreadsheet user, you will find that learning the basics is easy.

To start building your spreadsheet, you’ll need the following information about your loan: current balance, interest rate, payment amount, and how interest is calculated. This will allow you to create an integrated spreadsheet that will calculate how much interest accrues daily and give you a daily balance.

How interest is calculated may need some digging. You will find this information by reviewing your loan documents, going to the lender’s website, or calling your lender’s customer service number. The number of days used to calculate interest on the loan is known as the base. For example, a mortgage is usually calculated using “30/360”, meaning that a year is considered to be 360 ​​days and a month is considered to be 30 days. So, when you make a mortgage payment, your interest will be based on 30 days. Student loans typically use the exact number of days in a month and a 365-day year (exactly/365). Some loans may use a maximum of 365.25; Every loan is different. On a real/365 basis loan, you’ll pay less interest in a shorter month (one with fewer than 31 days) than a 31-day month.

Do you feel lost? Don’t worry, because once we put it together it will all make sense. I’ll explain how to test your spreadsheet to make sure it’s working properly. The initial setup of the spreadsheet is the most challenging step.

At the top of your spreadsheet, enter key information about your loan, such as: initial balance, interest rate, monthly payment, payment date, and interest rate. The interest rate is the interest rate divided by the number of days in the year. Also, every lender and loan type is different as to how many days a year they are used. The information part of the spreadsheet is important because you want to clearly see the variables that affect your loan.

After you’ve entered the main pieces of information, you can start building your interactive spreadsheet. Your goal is to create a spreadsheet that shows when each payment was made, how much each payment applied to principal and interest, and what the ending (or current) balance is. The names of the columns you will create are (from left to right): Payment Date, Principal, Interest, and New Balance. Below is a more detailed explanation of these rows:

• Payment Date – This is the date your payment was posted to your account. This is important because the interest on your student loan is likely to be based on the actual number of days between payments.

• Principal – This will be a formula that equals the amount of your payment less the interest portion of your monthly payment. It is the portion of your payment that will be used to reduce your balance.

• Interest – You need to know how your lender calculates the interest on your loan. Generally, it is based on the actual number of days multiplied by the previous month’s balance multiplied by the interest rate. Your Excel formula will be: (current payment date minus previous payment date) x last month’s balance x interest rate.

• New Balance – This is equal to the previous month’s balance less the principal portion of your current payment.

If your lender has a website that allows you to view information about your loan and/or make payments, set up online access right away. Print your loan balance history and start building your spreadsheet using your first payment as a starting point. The balance history should show how much of each payment was applied to principal and interest. This is how you can test your spreadsheet to make sure it’s working properly. Check to see if the results of your formula match the history on the website. If they don’t match you’ll need to troubleshoot to find out why. It’s possible that the lender made a mistake, but it’s also possible that the error is in your spreadsheet. If you have a friend or family member who is an Excel user, see if they can help you. The web is a great resource as well.

The real power of a spreadsheet is that you can measure what-if conditions easily. For example, let’s say you receive a large windfall of money. You can enter this number into your spreadsheet and easily see what the results of such a large payment would be. You can read that if you make this down payment the additional principal will be paid in ten years instead of 15. You may find this encouraging. However, if you don’t have a tool like a spreadsheet to generate this kind of information, you may want to do something else with your money.

Step 2) – Quick Payment Schemes

Congratulations on building a spreadsheet where you can track student loan balances and payments. Tracking loans in this way gives you control over the loan. Getting a statement in the mail every month and not really understanding why your balance went so low is not encouraging and adds to the feeling of hopelessness (and you really don’t want to go back to cheap beer and Gilmore Girls reruns). Here are some ways to help you pay off your loan faster:

Pay more each month – We’ve heard this before, especially when it comes to mortgages. Well, it’s the same with student loans. When you make a monthly payment, part of that payment is used for interest, and the rest is used for principal. My advice: Pay the amount of additional principal that will cause your loan balance to have two zeros at the end of it. For example, if your balance will be $37,845.21 after you make your next payment, pay an additional $45.21 to make the principal balance $37,800. Getting your loan up to a hundred dollars is a great way to encourage you to pay more each month.

To facilitate this plan, I recommend that you pay your loan electronically. You have no control over when your payment is sent when you send it. When you make an online payment, you usually choose a date for the payment to be posted. Additionally, there will be a section to enter the additional principal you wish to pay.

The advantage of paying more than the minimum payment is that when you make the next loan payment, a larger part will be used for principal and less interest (compared to if you did not pay more in the previous month). If you continue to pay more than the required minimum, this result will be compounded each month. The result is that you will pay off your loan faster than if you made a down payment. That’s because as your balance decreases, the amount of interest you pay decreases. The excess of each payment will be applied to the reduction of principal. This effect is easily seen when you track it in a spreadsheet, which is why doing so is an effective strategy.

Plan to pay off the “extra bulk” regularly – If you get a tax refund every year, apply it to your student loan balance. This will have a big impact on how quickly your loan is paid off. If you get a bonus each year, use that as well. Any spirit, or example of “earning money”, should be used to reduce your balance. It’s not uncommon for people to treat “earned money” differently. “Earned money” is often spent on “splurge” items. Resist the urge! Use any extra money, no matter where or how you get it, to pay off your student loan balance!

In short, the steps needed to help you pay off your loan quickly are:

1) Use a spreadsheet to track your loan to see how much each payment is going toward principal and interest. Do what-if scenarios so you can see the impact of paying off your loan and make a plan to do so.

2) Pay a small amount each month. Another plan is to pay extra so that your balance increases proportionally by $100.

3) Commit to making large payments when you are financially motivated, such as an income tax refund or bonus. While this may not provide an immediate reward, the long-term results will be great. Time really flies, and what may seem like a big balance right now can be reduced to zero in less time than you think, but only if you prioritize and have a goal.

Paying off student loans can seem daunting. However, if you use the strategies provided here, you will learn that you can be successful faster than you thought. You can apply these same concepts to your mortgage and other loans. Managing your money is empowering. And by the way, I started this article by referring to the five stages of grief. If you die, please know that in most cases your loan will die with you – unless you are joined by a spouse. In that case, unfortunately, the loan will remain!

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