1. What is the Debt Paydown Calculator?

The Debt Paydown Calculator helps you determine your monthly payment when making extra payments toward debt. It calculates the minimum interest payment plus any additional amount you choose to pay.

2. How Does the Calculator Work?

The calculator uses the debt paydown formula:

Where:

• \( Balance \) — Current debt balance in dollars
• \( Rate \) — Annual interest rate (as percentage)
• \( Extra \) — Additional payment amount in dollars

Explanation: The formula calculates the monthly interest payment and adds any extra amount you specify to determine your total monthly payment.

3. Importance of Extra Payments

Details: Making extra payments reduces principal faster, decreases total interest paid, and shortens the loan term. Even small additional amounts can make a significant difference over time.

4. Using the Calculator

Tips: Enter your current debt balance, annual interest rate (as percentage), and the extra amount you plan to pay each month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my debt?
A: Extra payments reduce principal directly, which decreases future interest charges and helps pay off debt faster.

Q2: Should I pay extra toward principal or interest?
A: For most loans, specify that extra payments should be applied to principal to maximize their impact.

Q3: How much should I pay extra each month?
A: Even small amounts help. Consider starting with what you can afford and increasing over time.

Q4: Are there loans where extra payments don't help?
A: Some loans have prepayment penalties or front-loaded interest. Check your loan terms first.

Q5: How can I track my progress?
A: Use an amortization schedule to see how each extra payment affects your payoff timeline.