How to Use Our Debt Payoff Calculator
In just three steps, you can build a personalized plan to eliminate your debt.
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List Your Debts: For each debt you have (credit card, auto loan, personal loan, etc.), click the “Add Debt” button and fill in the details: a name for the debt, the current balance, its APR, and the required minimum monthly payment.
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Set Your Extra Payment: In the “Extra Monthly Payment” box, enter the total additional amount you can put towards your debts each month, on top of all your minimum payments. This is your debt-fighting superpower—even $50 makes a huge difference.
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Choose Your Strategy: Select either the Debt Snowball or Debt Avalanche method from the dropdown menu. This will determine the order in which your extra payments are applied.
Understanding Your Results: Your Path to Zero
Your results will generate a full payment schedule showing you exactly where your money goes each month. More importantly, it will highlight your new Debt-Free Date and the Total Interest Saved compared to just paying the minimums. The key is understanding the two powerful strategies you can choose from.
There is no “wrong” choice. The best strategy is the one that you will follow consistently.
Frequently Asked Questions
What is the difference between this calculator and a formal Debt Management Plan (DMP)?
This calculator helps you create a DIY (do-it-yourself) payoff strategy using your existing budget. A Debt Management Plan (DMP) is a formal program offered by non-profit credit counseling agencies. In a DMP, you make one monthly payment to the agency, and they distribute it to your creditors. They can often negotiate lower interest rates, but there may be a monthly fee, and being in a DMP is noted on your credit report. This calculator is a great first step before considering a formal DMP.
Should I pause investing or saving for retirement while paying off debt?
This is a critical question that balances your present and future. Financial advisors often suggest this rule of thumb:
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401(k) Match: Always contribute enough to your company’s 401(k) to get the full employer match. This is a 100% return on your money that you should not pass up.
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High-Interest Debt: If you have debt with an APR over 8-10% (like most credit cards), it makes mathematical sense to pause other investing and aggressively pay down this debt. The guaranteed “return” you get from paying it off is higher than what you could reliably earn in the stock market.
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Low-Interest Debt: For low-interest debt (like a mortgage or some student loans below 5%), it often makes sense to continue investing while paying the minimums.
I can’t afford any extra payments right now. What should I do?
Feeling like you have no room in your budget is a common and stressful situation. Don’t lose hope.
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Track Your Spending: Use a budgeting tool to see exactly where your money is going. You might find small, recurring expenses you can cut.
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Call Your Creditors: You can call the number on your credit card statement and ask if you are eligible for a lower interest rate or a temporary hardship plan. A lower rate means more of your payment goes to the principal.
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Increase Your Income: Even a small side hustle, like delivering food, pet sitting, or selling items you no longer need, can generate an extra $50-$100 a month to start your debt snowball or avalanche.
What is the very first thing I should do after I become debt-free?
Celebrate your incredible achievement! Then, immediately shift your focus to building a safety net to ensure you never fall into debt again. Your top priority should be to create an emergency fund with 3 to 6 months’ worth of essential living expenses. This fund will cover unexpected events like a job loss or medical bill without forcing you to rely on credit cards.
Does this calculator work for my federal student loans?
While you can list student loans here, this calculator doesn’t account for the unique repayment options offered by federal student loans, such as Income-Driven Repayment (IDR) plans or Public Service Loan Forgiveness (PSLF). These plans have specific rules that may be more beneficial than an aggressive payoff strategy. It’s best to use a specialized student loan calculator for those debts.
My credit score is bad. Can I still use these strategies?
Absolutely. The Debt Snowball and Avalanche methods are behavioral strategies that work for anyone, regardless of their credit score. In fact, following this plan is one of the best ways to improve your credit score over time. As you pay down your balances, your credit utilization will decrease, and your history of on-time payments will grow—two of the biggest factors in your score.
Take the Next Steps on Your Financial Journey
Creating a debt payoff plan is a monumental step. Keep that positive momentum going.
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To find extra money for your debt payoff, a clear budget is essential. Use our 50/30/20 Budget Calculator to get organized.
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Paying down debt is a fantastic way to boost your credit score. Learn more with this Guide to Understanding and Improving Your Credit Score.
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Prepare for a debt-free future by planning your safety net. Our Emergency Fund Calculator shows you how to get there.
