1. What is the Debt Payoff Formula?

This calculator uses Dave Ramsey's debt snowball method to estimate how quickly you can pay off credit card debt by making extra payments. The formula accounts for your principal balance, regular payment, extra payment, and interest rate.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( P \) — Principal balance ($)
• \( E \) — Extra payment amount ($)
• \( D \) — Monthly payment ($)
• \( R \) — Monthly interest rate (APR / 12)
• \( T \) — Time to payoff (months)

Explanation: The formula calculates how many months it will take to pay off debt when making extra payments, accounting for compound interest.

3. Importance of Extra Payments

Details: Making extra payments significantly reduces both the time to payoff and total interest paid. Even small additional amounts can have a dramatic impact on your debt-free date.

4. Using the Calculator

Tips: Enter your current credit card balance, your minimum monthly payment, any extra amount you can pay, and your APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use Dave Ramsey's method?
A: The debt snowball method provides psychological motivation by showing quick wins, helping maintain debt payoff momentum.

Q2: Should I pay smallest balance or highest interest first?
A: Mathematically, highest interest first saves more money, but Ramsey recommends smallest balance first for behavioral benefits.

Q3: How accurate is this calculator?
A: It provides a good estimate but actual payoff may vary slightly due to rounding, payment timing, or changing interest rates.

Q4: What if I can't make extra payments?
A: Focus on increasing income or reducing expenses to free up money for extra payments - even $20 extra makes a difference.

Q5: Should I stop retirement contributions to pay debt faster?
A: Dave Ramsey recommends pausing retirement contributions (except to get any employer match) while paying off debt.