A simple, yet effective way for us to track our debt payoff was to keep a debt thermometer. This free debt thermometer template is easy to use and customize in seconds. It is amazing how something so simple can really impact and provide motivation to achieve your goals.
The Debt thermometer is free and you can download it below. It is easy to use and I will show you just how easy in the steps below. This way there are no excuses when it comes to tracking your debt payoff!
Why Use a Debt Thermometer?
The idea to use a thermometer to track our debt payoff process came from Erin. I really didn’t think much of it at the time but Erin wanted to make one so be it. She searched and searched and really couldn’t find anything decent. She pieced something together in word and let’s just say it did the job.
Paying off debt is hard and you need every advantage that you can get. As much as I love to make spreadsheets a bunch of numbers just don’t have the same impact as seeing the process so clearly laid out on a thermometer like this. In all honesty, if you are skeptical about how helpful this can be, what do you have to lose? This debt thermometer is free and takes seconds to set up.
How We Used It
Since we had $107K of debt we had a long way to go. Every $3,000 we did what we referred to as ‘colored’. I believe the 2nd month we colored one notch on the thermometer. That was pretty darn cool! And it was even cooler the second time we colored! During that timeframe of coloring we paid off our first loan and had make headway on the second (of 15!) loans.
You see, when you are staring down $107K of debt we needed to set as many intermediate goals as possible. For us, each month we aimed to at least pay off a loan, color or reach a threshold such as every $10K increment. If we could do one of those a month it pushed us to reach a little more to hit one of those goal.
What Exactly Do You Track????
The key here is to understand that you are tracking the balance of the remaining principal as you are paying off your loans. That does not include the interest paid. You can’t simply add up the amount you pay each month, you need to add up your remaining principal balance to understand where to color to.
For this we recommend keeping track of each balance at the end of each month. Make a spreadsheet or write it down. Either way, it really makes a difference. This helps you to know exactly what your balance is every month and keeps you that much more focused. You need to be completely engaged in what you are doing here.
As you know, every loan with an interest rate above 0.0% is charged interest each month. When you make a payment your payment first pays off the interest and the remaining amount goes towards principal. To learn more about how interest is calculated I previously explained this here.
The reason why we don’t include interest paid is that it doesn’t reduce your obligation on the loan. It is merely the cost of doing business since you borrowed someone else’s money. Every loan has a pay off balance and that is ultimately what you are trying to get to zero.
Minimum Payments Actually Matter Now!!!
Regardless of the order you are paying off your debt (debt snowball or debt avalanche) you still have to make minimum payments on your remaining loans. The great thing though about those minimum payments is that as you make each one you chip away at that big debt total. Every bit of principal you pay off (even if just $20) is principal that you never have to pay again.
I get it though, when you have a ton of debt and you are endlessly paying these minimum payments just to stay afloat it sure seems like they don’t go anywhere. You could almost swear the amount is going up each month.
I mentioned previously that we colored in our thermometer every $3,000. It wasn’t as is we had paid an extra $3,000 towards debt during that time. We had about $1,100 a month of minimum payments at one point but a few hundred dollars was going toward principal each month. That principal, as small as it might have seemed, really started to add up and be noticed as we colored each increment.
It is tough to describe, but each payment just seemed different once we were tracking our debt against the overall number. Anything we could do to get it past the next notch added up and showed progress.
You Can Track Single Loans Too!
We used it to track our overall total. We recommend you do the same.
Additionally, there is no reason you couldn’t track single loans though. This especially makes a different for the big loans that can be $30K+.
Use this tool to every advantage that you can think of.
With that, let’s get into the thermometer!
Free Debt Thermometer Template
- Step 1: Download
Make sure to save this is a safe place. If you ever lose it for some reason you can always print it again and color it back in. Hopefully you don’t lose it though as we still have ours to this day. It carries a lot of sentimental value.
- Step 2: Infill your total amount to pay off
The great thing about this template is that you simply put one number in and the rest of the numbers auto-fill. By default, it is set to $100,000 but you can make it any number.
I wish we had something this simple when we made our debt thermometer! Additionally, the percentages are already there so you always know where you are at each time you color.
- Step 3: Print
I can’t help you with this. You either have ink and paper or you don’t. It helps if your printer is plugged in too.
It should be obvious due to the text in red but the instructions will not print. There is nothing you need to do when printing. It will automatically not print the red text.
- Step 4: Start paying off debt and get tracking!
This should be self-explanatory but the thermometer is only as good as you are when it comes to taking action.
The first notch is probably the hardest. Each time you color it gets easier. When working towards that first notch don’t worry about the rest. Focus on the task at hand and that is coloring your first increment.
Our Debt Thermometer
So, once we completed our debt payoff we went to Nashville to do our Debt Free Scream in Dave Ramsey’s studio. Our debt thermometer meant so much to us that we had Dave Ramsey sign it.
In order to download the free debt thermometer template enter your e-mail below and a link will be sent to you through e-mail. We won’t sell your information (as if I even know how to do that) and we won’t spam you.