💳 Debt Payoff Calculator
📘 How Debt Payoff Calculation Works
This calculator uses the amortization formula to determine how long it will take to pay off your debt based on your current balance, interest rate, and monthly payments.
Formula used:
- Months to Payoff = -log(1 - (P × r) / M) / log(1 + r)
- Where: P = Principal balance, r = Monthly interest rate, M = Monthly payment
- Total Interest = (Monthly Payment × Number of Payments) - Principal
Even small increases in your monthly payment can significantly reduce your payoff time and total interest paid.
💡 Debt Payoff Strategies
- Debt Snowball Method: Pay off smallest debts first for psychological wins
- Debt Avalanche Method: Pay off highest interest debts first to save money
- Round up your payments (e.g., pay $200 instead of $187)
- Apply windfalls (tax refunds, bonuses) directly to debt
- Consider balance transfer cards with 0% introductory APR
- Look into debt consolidation if you have multiple high-interest debts
🤔 Frequently Asked Questions
What happens if my payment doesn't cover the interest?
If your monthly payment is less than the interest accrued each month, your debt will never be paid off and will actually grow over time. This is called negative amortization.
How much should I put toward debt each month?
Financial experts often recommend putting 15-20% of your income toward debt repayment. However, any amount above the minimum payment will help you become debt-free faster.
Should I pay off debt or save first?
It's generally recommended to build a small emergency fund (1-2 months of expenses) first, then focus aggressively on high-interest debt before building a larger emergency fund and retirement savings.
How do extra payments affect my payoff timeline?
Extra payments are applied directly to your principal balance, reducing the amount of interest you pay each month. Even small extra payments can significantly reduce your payoff time.
What's the difference between minimum payment and statement balance?
The minimum payment is the smallest amount you can pay to avoid penalties. The statement balance is the total amount you owe. Paying only the minimum payment will result in paying much more interest over time.