Friday, February 11, 2011

Debt Payoff Calculator

I found this super handy Accelerated Debt Payoff Calculator last night, and I HIGHLY recommend that you check it out. It's very encouraging if you are trying to pay off debt quicker by adding more to your minimum monthly payment. If you plug in the principal balance, interest rate, and monthly payment amount into the calculator, it will show you how much longer you have until the debt is paid off and how much interest you will be paying over the life of the debt. Then at the bottom, you can plug in an amount that you would hypothetically add to your debt payoff plan - what you might choose to pay above what you have to pay. Hit calculate results, and it will show you how soon your debt would be paid off by paying that dollar amount more per month. It will also tell you how much interest you will save by paying off sooner, and how many months you have saved in paying on that loan.

I plugged in my undergrad student loans. Just the undergrad loans. I have grad school loans through a different loan provider, and the total amount is just depressing, folks. If I follow Dave Ramsey's debt snowball, then I want to start applying extra money to our smallest debt first. I guess I should consider it a blessing that as soon as I pay off the small balance on Luke's credit card by the end of this month, our next smallest debt is my undergrad student loans. Really, we don't have debt in a lot of different places. We have my undergrad student loans, the payment on the Mountaineer, my grad school student loans, and our mortgage. It's just a LOT of debt in those four payments.

So back to the calculator. I plugged in the information from my student loans, and found that if I keep paying at the rate I am now, it won't be paid off until 11 years and 7 months from now, and we'll pay $1855.11 in interest during the payoff. (Lucky me, I have a really low interest rate on this loan!) BUT, if we start paying an extra $100 a month on top of what we already pay, the loan will be paid off in 4 years and 6 months, and we will pay $702.71 in interest. For a savings of $1,152.39, along with 7 years and 1 month of being in debt to this loan.

Just seeing it all spelled out like that makes me feel like, "Yeah, I can manage to find an extra $100 a month to get that bad boy paid off THAT much sooner. That's huge. Like, Raegan would be in kindergarten instead of middle school when we got that loan paid off. Like, Zane would be in high school instead of getting ready to graduate from college. And if I could manage to scrounge up some extra money on some months, we could get it paid off all that much sooner.

So check out that calculator I linked to, plug in your numbers and see what you get. I hope it's encouraging for you like it was for me!

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