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.