PAYING OFF DEBTS FASTER
- Jessica Schwartz
- Jul 8, 2014
- 2 min read
It took me quite a while to find a great loan debt calculator, but thanks to scouring Reddit's financial advice blogs I found one here:
This handy little calculator let's you see how long it will take to pay off your loans. You can add as many loans as you'd like, each with their different amount and interest rate. Once you've done that try fooling around with how much you have to pay or would like to pay per month. The website will pump out an easy to read graph that let's you know when you'll be paid off in full if you stick to the plan.
Note that there are two options to choose from to pay off your loan, the snowball method (paying extra money to the smallest loans first) and the avalanche method (paying extra money to the loan with the highest interest rate). The snowball method is noted to work better for morale, but the avalanche method will save you more in the long run, hence it's the option I chose.
Details: Here's my graph for example, using my goal of paying $600/month:
The different colors on the graphs represent my 4 different loans (although all government loans, each loan has a different interest rate). Underneath this graph on the website, it tells me exactly when each loan would be paid off. The big picture for me is that if I paid $600 a month, I would be debt free by May 2023. That's 9 years away and over $14,500 I'd pay in interest alone.
Now let's try that same thing, but I'll change the monthly payments to $700. This time it pumps out a new graph, and tells me that I'll be debt free by October 2021. That's 1 year and 7 months earlier, and over $2,900 saved in interest. See what a big difference it makes to pay $100 more a month?
This is a great tool to help you goal yourself for monthly payments.
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