Running the Numbers

I decided to use Money’s Debt Planner tool to see how long it would take to pay off two debts:

  • My car loan has a balance of $ 6250 and has an interest rate of 13.75%.
  • Medical bills that were supposed to be covered by insurance (long story) but now are $350 with a 20% interest rate.

I looked at all three of their options: pay by a certain date, pay a set amount per month, and pay the minimum balances.

How Quickly Can You Pay off Your Credit Card Debt?

Here are the results I got for paying it off in 2 years:

If you pay $309.40 a month, it will take you 2 years to pay off your credit cards.
Based on your current combined balance of $6,550.00, you will pay a total of $895.51 in interest.

Here are the results of the $350/month plan:

If you pay $350.00 a month, it will take you 1 year and 9 months to pay off your credit cards.
Based on your current combined balance of $6,550.00, you will pay a total of $771.88 in interest.

Finally, here are the results if I only pay the minimum balances:

By making minimum payments only, it will take you 10 years and 3 months to pay off your credit cards.
Based on your current combined balance of $6,550.00, you will pay a total of $2,504.66 in interest.

Just looking at that I realize that I have got to be more aggressive about paying these off as soon as possible. Try using that calculator and notice the huge difference between the payment plans for yourself.

Laura Martinez

Laura Martinez