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Debt Payoff Calculator Example | How to Use the Debt Calculator

The debt payoff calculator tool is very useful in helping you become debt free. It can help you organize your debt and develop a plan to get it paid off. It seems nearly everyone is in debt these days yet there are very few people who actually know how debt works. We're a financially ignorant country who tends to spend more than we can afford! Of course, some debt is unavoidable, and if you want to go to college, you will have to go into debt (unless you're rich or smart enough to get a top scholarship - most of us do not fall into that category. Regardless of how much debt you are in or how you go into debt, the focus now should be paying it off.

For the most part, this tool is pretty self explanatory, but here are some helpful tips on how to use the debt payoff calculator.

1) Understanding APR - For more detailed information on APR and interest, see my post - Credit Card APR and Interest. APR stands for Annual Percentage Rate, which basically determines how much interest you will be paying. This can vary depending on the type of debt, anywhere from 5% up to 25% is normal. The easiest way to show how much APR effects how long it will take to pay off your debt is to use the tool to input 3 different credit cards, each with the same balance ($3,000) and monthly payment ($75), but with varying APRs (7.9%, 14.99%, 24.99%). See below for the results:

Debt Payoff Calculator free from givememyleg.com
Credit Card1

It will take you 3.92 Years to pay off your credit card debt of $3000 with an APR of 7.9% and monthly payment of $75.
You will have made 46.58 payments of $75 for a total of $3,493.25 or 116.44% more than your starting balance of $3,000.00.
You will have paid $493.25 in interest for an average of $0.35 per day, $2.42 per week, $10.49 per month, and $125.94 per year.

Credit Card2

It will take you 4.67 Years to pay off your credit card debt of $3000 with an APR of 14.99% and monthly payment of $75.
You will have made 55.78 payments of $75 for a total of $4,183.65 or 139.46% more than your starting balance of $3,000.00.
You will have paid $1,183.65 in interest for an average of $0.69 per day, $4.88 per week, $21.14 per month, and $253.64 per year.

Credit Card3

It will take you 7.25 Years to pay off your credit card debt of $3000 with an APR of 24.99% and monthly payment of $75.
You will have made 86.84 payments of $75 for a total of $6,512.71 or 217.09% more than your starting balance of $3,000.00.
You will have paid $3,512.71 in interest for an average of $1.33 per day, $9.32 per week, $40.38 per month, and $484.51 per year.
As you can see, your APR is very significant when it comes to paying off your debt. If you have a high amount of debt with a high APR rate, you should read my article on Developing a Plan to Pay off Debt to learn about balance transfers and other tips to get your APR lowered.

2) Fixed Monthly Payment - The amount you pay for much will tremendously effect how long it will take to pay off your debt and how much interest you will be charged.