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Debt Payoff Calculator.

This calculator will provide you with the approximate amount of time it will take to pay off a particular debt. First enter your monthly payment, the percentage of interest you’re paying, and the remaining principal balance of your debt. Then click on the pull-down menu and indicate whether you’re making declining minimum or fixed payments.

Click on CALCULATE, and you’ll see your monthly interest charges, as well as the number of months and years it will take to clear this debt from your record. Hopefully, this will give you a clearer picture of your financial situation.

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A Helpful Guide to Getting Out of Debt

Drowning in Red Ink.

Many U.S. households find themselves buried in debt. According to CNN Money, the average indebted household in the United States owes more than $15,000 in credit card debt. The average mortgage debt stands at roughly $153,000, and the average student loan debt is more than $32,000.

What is the underlying cause of those eye-popping numbers? For many people, going into debt starts out innocently. They intend on borrowing only what they know they can repay, but as circumstances change and needs and wants arise, they fall back on borrowing. Soon, so much of their monthly income goes toward repaying debt that they may have to go into more debt just to make ends meet. It is an unforgiving cycle.

Are you struggling to cope with your monthly debt repayments, or do you just want to create room in your budget? In either case, you can use the following tips to help you cut bills and breathe a little easier when you look at the numbers in your bank account.

Know Your Debt

Do you really know how much you owe, or do you just wait until your monthly bills arrive and send some money where it's called for? Don't let your debt be the scary stranger on the other side of the room that you're afraid to look in the eye. In order to conquer your debt, you have to know it inside and out.

Start by adding up all your minimum monthly payments. That might feel like a punch in the gut, especially since the payments by themselves may not seem all that intimidating. Once you have a total in front of you, divide that number by your monthly income. The result is your debt ratio. Creditors usually do not give mortgage loans to people whose debt ratio is above 43 percent.

Another way you can calculate your debt ratio is on an annual basis, although you may want to leave your mortgage out if you use this method. Divide your yearly income by the total of all your debts. If you find that your debt ratio is more than 35 percent, it's a sign that you need to make some adjustments.

Prioritize Your Debt

Focus on paying off one debt at a time. At a glance, it might seem reasonable that you divide your extra income among your debts, but in the long run, you're likely to end up paying more overall if you do that. Pick one bill, and funnel all your extra income into that until it is paid off. In the meantime, make only minimum payments on your other debts.

There are different ways to decide which bill becomes your first victim. Picking the bill with the highest interest rate is wise, since lowering the principal on it will save you more money than if you chose a bill with a lower interest rate. You might also opt to pay off the smallest debt first; it will give you a sense of accomplishment, and you'll have one less monthly bill to worry about.

Evaluate Your Attitude

Asking an Optimist to Consider the Pessimistic Approach.

One website that gives financial advice to young professionals points out that, often, the first step in getting out of debt is making a firm commitment. The website says, "Everybody wants to be debt-free, but you don't actually do so until you do one thing: decide. Once you make the decision and commit, the resources show up in your life to help get you there. Decide. The choice is yours."

That may seem like psychobabble at a glance, but it's true: If you have only a vague notion that you want to get out of debt, you're less likely to follow through. On the other hand, if you make yourself a promise to reach your financial goals, your attitude will become the driving force that gets you to the finish line.

Think about the habits that led to your debt in the first place. Maybe some of your debt was necessary, but what about the rest of it? Is it because you couldn't wait to get that big-screen TV or because you took a vacation that was beyond your means?

If the prospect of working to get out of debt makes you cringe because you're afraid that you'll miss out on fun, brainstorm enjoyable things you can do that cost little to nothing. You might be surprised by how many cheap, fun things are open to you.

Evaluate Your Budget

After you promise yourself that you're going to get out of debt, it's time to take a long, hard look at your budget. Look for unnecessary monthly expenditures, and be honest with yourself about what "necessary" means. Eliminating things like magazine subscriptions and your weekly night out might be easy. However, what about things like cable and your gym membership? Maybe you can watch your favorite TV shows online, and maybe you can find a way to work out at home that is just as effective as what you do in a gym.

It is possible that you can even cut back on necessities. For example, you have to buy groceries, but how much you spend on groceries is up to you. If you are in the habit of always going to the same store and robotically picking up what you need, you're probably missing out on some good deals. Look at ads and coupons for all the groceries stores in your area, and don't be afraid to try different kinds of food. Who knows? Getting out of debt could improve your cooking skills.

Use the money that you save by cutting back to help you tackle your debt.

Test Your Budget

You've decided what you can do without, and you've penciled out a new budget, one that centers on vanquishing debt. That is great! Now it is time to put your new budget to the test. For a month, track every penny that you spend. When the month is over, compare the actual numbers with the budget you drafted.

Don't be discouraged if you see some sizable discrepancies. Even if you didn't stick to your new budget exactly, you probably did save some money, and now you have valuable information that can help you revise your budget into something that is more reasonable. Whatever changes you make, be sure that overall your budget maintains the right focus - that is, getting you out from under those pesky payments.

Can You Get Rid of Any Debt Right Away?

Visualize yourself without any debt. The reality is months - or perhaps years - in the future, but it is possible that you can lop off some of your debt immediately.

Maybe you love your car, and it is your faithful companion day after day as you brave rush hour traffic to get to the office. However, if you have to face heavy traffic, you probably live in a metropolitan area with a good public transportation system. Can you say goodbye to your wheels? If the amount you owe on your car is less than the car's value, it might be worth it. Plus, going without a vehicle saves you money on gas, insurance, parking, and maintenance costs.

Take a look at your recent purchases. Can you return any items that you bought on credit, like that adorable dress that you never got to wear?

Also, investigate student loan forgiveness. You may be able to lower significantly, or even eliminate, your monthly payments.

See if You Can Lower Your Interest Rates

A few of your credit cards probably have terrifyingly high interest rates, interest rates that could slow you down on your way to being debt-free. If you have enough available credit on a lower-interest account, consider transferring the balance from a higher-interest account into it.

There are other ways you can cut back on the amount of interest you pay. Perhaps you can get a consolidation loan. The thought of taking out another loan might make you shudder, but a consolidation loan will lump all or most of your monthly payments together. The result will be that you have to pay less interest, and you will have fewer bills cluttering your budget space.

Ask your creditors for lower interest rates. After a review of your account, they may say yes.

If you have a decent credit score, you may want to refinance some of your installment loans, like your mortgage or car loan.

Work Smarter and Harder

There is no question that getting out of debt takes some serious hard work, and that often includes hard work at your place of employment. Anything you can do to boost your income will help you get closer to your financial goals. Therefore, take advantage of opportunities to put in extra hours at work. You may even consider adding a part-time job.

Bear in mind, though, that balance is key. If you work too hard, you could burn yourself out. You will be mentally and physically exhausted, and that could lead to poor spending habits. For example, if you are always too tired to cook when you get home, you could end up buying your dinner every day. Know how much work you can handle, and stay within your limits.

Also, look into work-at-home options, whether it's through your current employer or you pick up another job. Working at home usually comes with a flexible schedule that you can mold around your other activities, and you'll save on transportation costs. Plus, if you can stand to work at home while the kids are around, you save on childcare expenses.

Find Other Ways to Increase Your Income

Sometimes, making extra money is fun. When was the last time you cleaned out your house? Dig out all the clutter and superfluous belongings, and sell them. Holding a garage sale or yard sale is a great way to make a little extra money, and you'll have a cleaner home. If you have rare items, like collectible coins or baseball cards, think about auctioning them off.

Use your hobbies and abilities to make money. Are you crafty? Think about starting a shop on Etsy, or ask local stores if they would be interested in selling your goods. Are you in good shape and enjoy working outdoors? Maybe you can earn a little extra by doing yard work for the neighbors.

Sometimes making extra cash is as simple as opening a new checking account; some banks give customers small cash back rewards for using their debit card.

These methods won't make you as rich as a king, but every dollar you bring in is another dollar that you can use as a weapon in your battle against debt.

Get the Whole Family Involved

Getting out of debt poses a special challenge for families with children. You want your children to be happy, and that weekly outing to the gourmet ice cream shop is a treasured family ritual. Your kids will balk when you cut that out and make other changes that move you toward a simpler lifestyle.

Explain the situation to them. If you think they will understand it, you can even show them the numbers. Then, enlist their help. Maybe you can even make a game out of saving money by rewarding points when your kids save electricity by turning off lights or when they help you find good deals in the grocery store.

Keep a Close Eye on Your Progress

Regularly crunch the numbers to see how your journey is progressing. Do you need to make adjustments, or are things moving along at a good pace? To keep yourself motivated, set small goals on your way to the ultimate goal - being debt free. When you reach a milestone, like lowering your debt ratio to a certain number or completely paying off a credit card, reward yourself with something small like a nice dinner out or a weekend away.

There is no doubt that getting out of debt is a tough battle, but the rewards are worth the effort. You'll experience a deep sense of satisfaction and greater financial freedom. Plus, you'll learn some valuable lessons along the way.



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