Debt Payoff Calculator

How Do I Use the Debt Payoff Calculator?

Enter each debt with its current balance, interest rate, and minimum payment. Include all your debts or your payoff date won't be accurate.

List credit cards, personal loans, student loans, and car loans. Don't include your mortgage. Every dollar of non-mortgage debt should be here.

How much extra can you pay toward debt each month beyond minimums? Extra payments speed up your payoff.

Pick either Snowball (smallest balance first) or Avalanche (highest interest first) as your strategy.

You'll see when you'll be debt-free and how much interest you'll pay. Having a target date lets you plan.

Both strategies appear side-by-side so you can compare the trade-offs. Pick the method you'll stick with.

Try different extra payment amounts to see the impact. An extra $100/month can cut years off your payoff.

Should I Use Debt Snowball or Avalanche Method?

Debt Snowball Method

Pay minimums on all debts, put extra money toward the smallest balance first. Once that's paid off, roll its payment to the next smallest debt.

The "snowball" grows as you knock out debts one by one. Watching debts disappear quickly builds momentum. Dave Ramsey promotes this because sticking with a plan matters more than optimal math.

Debt Avalanche Method

Pay minimums on all debts, put extra money toward the highest interest rate first. Mathematically optimal - you'll pay the least interest overall.

A $4,800 credit card at 23.9% APR costs more than an $11,200 student loan at 5.5% APR, so attack the credit card first. Saves the most money but feels slow if your highest-rate debt has a big balance.

Which Method Is Better?

Avalanche saves more money. Snowball provides faster psychological wins.

Struggle with motivation? Use Snowball. Want maximum savings? Use Avalanche. Either method beats making only minimum payments.

The Hybrid Approach

Start with Snowball to knock out 1-2 small debts fast, then switch to Avalanche for remaining debts. Get the psychological boost early, then optimize mathematically.

Why Minimum Payments Trap You

Credit card companies set minimums at 2-3% of balance. On an $8,500 balance at 19.9% APR, minimum payments can take over 30 years and double or triple what you owe. Extra payments escape this cycle.

Debt Payoff Tips

• Stop creating new debt immediately. Cut up credit cards if needed. Don't keep borrowing while paying off debt.
• Build a $1,000 emergency fund first. When unexpected expenses hit, you won't need to borrow again.
• List every debt
• Pay more than minimum on at least one debt. Even $50 extra speeds up payoff substantially.
• Use windfalls for debt: tax refunds, bonuses, birthday money
• When you pay off a debt, roll that payment to the next one
• Call creditors to negotiate lower rates
• Side hustle income goes 100% to debt. Delivering food or freelancing can add several hundred dollars monthly.
• Set up automatic transfers for extra payments
• Cross off each debt as it's eliminated

Debt Payoff Mistakes to Avoid

Paying Debts Randomly

Splitting extra money across all debts feels fair but slows progress. Focus on one debt at a time. Spreading money around means none get eliminated quickly.

Ignoring Interest Rates Completely

A $2,000 debt at 28% APR costs more annually than an $8,000 debt at 6.5% APR. Always prioritize debts over 15% APR - they're the most expensive. Never ignore a 25% credit card to pay extra on a 4% student loan.

Not Building a Small Emergency Fund First

Throwing every penny at debt with zero savings means the first car repair goes back on a credit card, restarting the cycle. Build a $500-1,000 cushion first, then attack debt aggressively.

Balance Transfers Without a Plan

0% APR balance transfers sound great but come with 3-5% fees and 12-18 month limits. If you don't pay off the full balance before 0% expires, you're hit with retroactive interest at 25%+. Only transfer if you'll pay it off during the promotional period.

Debt Consolidation Loans That Backfire

Consolidating $20,000 in credit cards into a 5-year personal loan at 12% seems smart. But if you run up new credit card balances, you'll end up with the personal loan PLUS new credit card debt. Only consolidate if you cut up the cards.

Paying Off Low-Rate Debt Before High-Rate Debt

Putting extra money toward your 3% car loan while carrying 22% credit card debt costs you more money. Pay minimums on everything under 7-8% APR and attack high-interest debt first.

Taking Money From Retirement to Pay Debt

Pulling from a 401(k) triggers taxes, a 10% penalty, and you lose compound growth. A $20,000 withdrawal can become $13,000 or less after penalties and taxes, and you lose decades of compound growth. Rarely makes sense.

Closing Credit Cards After Paying Them Off

Closing cards drops your credit utilization ratio and shortens credit history, lowering your score. Keep cards open with $0 balance. Cut them up if tempted, but don't close the accounts.

How Can I Pay Off Debt Faster?

Find Extra Money

• Cancel subscriptions you don't use
• Sell unused items around your house. You likely have hundreds or thousands of dollars sitting there.
• Reduce dining out by half (saves $200-400 monthly)
• Cut cable and streaming to one service. Easy $100-150 saved monthly.
• Brown bag lunch instead of buying: $150-200/month
• Use credit card rewards for extra debt payments (2% cash back on $2,000/month = $480/year)

Increase Income

• Gig economy work (DoorDash, Uber, Instacart). Ten hours weekly can bring in $400-600 monthly.
• Freelance your skills. Writing, design, or coding side work adds up fast.
• Ask for a raise. A 3% raise on $50,000 salary gives you $1,250 yearly for debt.
• Pick up overtime shifts
• Rent out a spare room or parking space: $300-800/month

Debt Snowball Acceleration

When you pay off a debt, immediately roll that full payment to the next debt. Don't reduce your debt payments as debts disappear - keep paying the same total amount until debt-free. Each eliminated debt lets you put more toward the next one. The final debt gets paid off quickly because all previous payments go toward it.

Negotiate Everything

Call credit card companies - "I'm considering balance transfer to 0% card unless you lower my rate." Some will lower your rate to keep you as a customer.

Medical bills - ask for payment plans, charity care, or cash discounts (often 30-50% off). Hospitals often negotiate rather than send bills to collections.

Student loans - apply for income-driven repayment or deferment if genuinely struggling. Federal loans have options private loans don't.

Settle old collections - many accept 30-50% of balance as settlement in full. Get the agreement in writing before paying.

Should I Pay Off Debt or Invest First?

Always Pay Off First

• Credit card debt (15-30% APR) - paying these off beats any investment
• Payday loans (200-400% APR) - pay these off first
• Personal loans over 10% APR - guaranteed savings beats uncertain investment returns
• Any debt causing severe financial stress - peace of mind matters

Probably Pay Off First

• Car loans over 7% APR - these are expensive enough to prioritize
• Student loans over 7% APR - federal loans are often 5-7%, private loans often higher
• HELOC or home equity loans over 7% - your house is at risk if you default

Consider Doing Both

• Debt between 4-7% APR - pay minimums, invest extra money
• Federal student loans 4-6% APR - especially if pursuing PSLF (Public Service Loan Forgiveness)
• 401(k) match always comes first - that's free money

Always Invest First

• Employer 401(k) match - take employer match before paying off debt under 10%
• After maxing match, then attack debt over 7% APR
• Once debt under 4% APR, invest everything extra

Breaking Down the Numbers

A debt at 6% APR is a guaranteed 6% return by paying it off. The stock market averages 10% with ups and downs. If your debt is over 7%, the guaranteed return beats uncertain stock returns. Under 5%, investing likely wins over time.

How to Stay Debt-Free Forever

Build a Real Emergency Fund

After becoming debt-free, redirect those debt payments to build 3-6 months of expenses in savings. It prevents going back into debt for car repairs, medical bills, or job loss. Most people fall back into debt because they lack a cushion.

Use Credit Cards Strategically

Credit cards can earn you 2-5% cash back, but only if you pay in full every month. Set up auto-pay for the full balance. Cards are tools for rewards, not loans for spending you can't afford. People who struggle with self-control should stick to debit.

Track Spending

You can't manage what you don't measure. Use apps (Mint, YNAB) or simple spreadsheets to track where money goes. People who track spending tend to save more than those who don't.

The 24-Hour Rule

For purchases over $100, wait 24 hours before buying. It stops impulse purchases. After 24 hours, you often realize you don't need it.

Sinking Funds

Save monthly for predictable large expenses: car insurance, Christmas, car repairs, home maintenance. When expenses arise, pay cash instead of going into debt. Car insurance costs $1,200/year? Save $100/month so it's never a surprise.

Live Below Your Means

Don't increase lifestyle with raises. Get a 5% raise? Save 3%, enjoy 2%. You'll avoid lifestyle inflation that keeps people in the paycheck-to-paycheck trap.

Avoid Lifestyle Creep

Got out of debt making $50,000/year? Don't slide back into debt at $80,000/year because you "deserve" a nicer car and bigger house. The debt-free feeling beats any material purchase.

Debt Consolidation: When Does It Make Sense?

What Is Debt Consolidation?

Taking out one loan to pay off multiple debts, combining everything into a single monthly payment. Can lower interest rate and simplify payments, but only if done correctly.

When Consolidation Makes Sense

• You have good credit (680+) to qualify for rates lower than current debt
• You're paying 18-25% on credit cards and can consolidate at 8-12%
• You're disciplined enough to not run up new credit card balances
• The consolidation loan term isn't so long that you pay more interest overall
• You're consolidating to simplify payments (10 cards to 1 loan), not to reduce monthly payment

Personal Loan Consolidation

Banks and online lenders offer personal loans at 6-15% APR depending on credit. Good for consolidating high-interest credit cards. Terms typically 3-7 years. Watch for origination fees (1-8% of loan) that reduce savings.

Balance Transfer Credit Cards

0% APR for 12-21 months with 3-5% balance transfer fee. Excellent if you can pay off balance during promotional period. Dangerous if you don't - rates jump to 20-30% after promo ends and may apply retroactively.

Home Equity Loans/HELOCs

Use home equity to pay off credit cards at 6-9% rates vs 20%+. Risk: Your home becomes collateral. If you can't pay, you lose your house. Only use if you're certain of income stability and won't create new credit card debt.

When NOT to Consolidate

• You have bad spending habits and will run up new debt
• The consolidation extends repayment from 3 years to 7 years (lower payment but more interest)
• Fees and costs exceed interest savings
• You're trading unsecured debt for secured debt (putting your house at risk for credit card debt)

Frequently Asked Questions

How long will it take to pay off my debt?

It depends on your total debt, interest rates, and how much you pay each month. With only minimum payments, credit card debt can take 20-30 years to pay off. Adding extra payments dramatically reduces this time. Use our calculator to see your exact payoff date.

What's the difference between snowball and avalanche?

Debt snowball pays off the smallest balance first, giving you quick wins and motivation. Debt avalanche pays off the highest interest rate first, saving you the most money.

Snowball's better if you need motivation. Avalanche is better if you want to minimize interest costs.

Should I pay off debt or invest?

Pay off high-interest debt first (anything over 7-8% APR). Always take your employer 401(k) match before paying off debt - that's free money. For debt under 5% APR, investing often makes more sense. The guaranteed return from paying off debt needs to be weighed against potential investment returns.

How much extra should I pay toward debt?

Any amount helps. Even an extra $50/month can cut years off your payoff and save thousands in interest. Find extra money by cutting subscriptions, reducing dining out, or picking up a side gig. Try the calculator with different extra payment amounts to see the impact.

Can I pay off debt faster without earning more money?

Yes. Cut unnecessary expenses like unused subscriptions, excessive dining out, or premium streaming services. Sell items you don't use. Negotiate lower interest rates with creditors. Every dollar saved can go toward debt payoff.

Should I close credit cards after paying them off?

No. Closing credit cards hurts your credit score by reducing available credit and shortening your credit history. Keep cards open with a $0 balance. If you're tempted to use them, cut them up but don't close the accounts.