1. What is the Debt Payoff Schedule?

The Debt Payoff Schedule calculates how long it will take to pay off a debt based on your monthly payment amount and interest rate. It shows the breakdown of each payment between principal and interest.

2. How Does the Calculator Work?

The calculator uses the debt payoff formula:

Where:

• \( Balance_t \) — Current balance (USD)
• \( Balance_{t-1} \) — Previous balance (USD)
• \( r \) — Monthly interest rate (decimal)
• \( PMT \) — Monthly payment (USD)

Explanation: Each month, interest is added to the balance, then your payment is subtracted. This continues until the balance reaches zero.

3. Importance of Debt Payoff Planning

Details: Understanding your payoff schedule helps you see the true cost of debt, plan your finances, and potentially save money by paying extra principal.

4. Using the Calculator

Tips: Enter your current debt balance, annual interest rate, and planned monthly payment. The calculator will show how long it will take to pay off and the total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What if I make extra payments?
A: Extra payments reduce principal faster, saving interest and shortening payoff time. Recalculate with higher payments to see the impact.

Q2: Why does most of my payment go to interest at first?
A: With amortized loans, early payments are mostly interest since the balance is highest at the beginning.

Q3: How can I pay off debt faster?
A: Increase monthly payments, make biweekly payments, or target highest-interest debts first (avalanche method).

Q4: What's the difference between minimum payment and payoff amount?
A: Minimum payments extend the loan term and cost more interest. Payoff amounts are calculated to clear the debt in a specific timeframe.

Q5: Should I pay off debt or invest?
A: Generally prioritize high-interest debt (>6-8%), but low-interest debt may be worth keeping while investing.