Figuring out how much money you should put aside monthly to resolve your debt can be tricky! Fortunately, we can help. UGotiate’s Exclusive Debt O Meter guides you in selecting a Contribution Amount that is budget friendly and realistic enough to reach effective results with your creditors.
If you have an idea of how much you can afford each month, enter that amount into the Debt O Meter. The system automatically selects a time frame of 48 months, but you can change that if you’d like. Next, built in UTelligence analyzes your entries to determine if you are within the “Smart Zone” (represented in Green on the slider). If you are within the Smart Zone, your Contribution Amount and time frame is realistic and favorable. If the slider is more in the red zone, it means that your Contribution Amount and time frame may not result in enough money to resolve your debt effectively. You may want to consider increasing your Contribution Amount if you can. It is always best to Contribute as much as you can.
Whatever Contribution Amount you select, keep in mind that you can add extra money, above your Contribution Schedule, at any time. Remember tax refunds, birthday/holiday money, bonuses, etc. are a great way to save up your funds quicker!
Not sure how much you can afford?
Start by taking a close look at your budget. Take some time to list out all monthly expenses and then compare to your monthly income. Don’t forget to add in things like coffee runs, work/school lunches, haircuts, etc. Those things add up! Be honest with how much you are actually spending so you can commit to a Contribution Amount that you can stick to over time. Once you know your total expenses compared to your total income, you should be able to make an educated decision on how much you can afford monthly towards your debt.
The Details: How to figure out a Realistic Contribution Amount:
For the best case scenario, you should consider a Contribution Amount of at least 2%* of your total debt. So, if you owe $30,000, your monthly Contributions should be around $600. If you can afford a 2% Contribution and you are able to resolve your debt for about 45%*, then your time frame to resolve your debt could be about 22-26 months*. Imagine – being debt free in about 2 years!!! Wow!
Now, if you can’t afford a 2% Contribution, don’t worry. Select an amount that works within your budget that you are comfortable with - it is likely it will take longer to resolve your debt with a lower Contribution Amount. For that same $30,000 total debt amount, a 1.2% Contribution would result in a $360.00 monthly Contribution and term of about 38-42 months* with average settlements of about 45%*.
Take your time to play with the Debt O Meter to consider your different options. Remember: The faster you can save up money, the sooner you will resolve your debt. With that thought in mind, it is always best to contribute as much as you can each and every month.
* All numbers, percentages, scenarios, etc. are for example purposes only and are not to be used as concrete calculations. Each user’s experience will be different. The user is responsible for all decisions about their debt. UGotiate, or anyone else cannot predict what an account will settle for or what will happen while a user is attempting to resolve their debt.