How Long Until You're Debt-Free? Run the Numbers
Knowing how long your debt will last — and how to shorten it — is the first step toward being debt-free. Here is how to calculate your payoff timeline and choose the best strategy.
The Payoff Formula
The number of months to pay off a loan is determined by the balance, interest rate, and monthly payment:
Months = -log(1 - (Balance x r) / Payment) / log(1 + r)
Where r = monthly interest rate (annual rate / 12)
Example: $15,000 at 8% with $400/month payment = 44 months (3 years 8 months)
The Scenario: Three Debts, $3,000 Extra/Month Available
| Debt | Balance | Rate | Min Payment |
|---|---|---|---|
| Credit Card | $5,000 | 22% | $150 |
| Car Loan | $12,000 | 6% | $350 |
| Student Loan | $25,000 | 5% | $300 |
Total minimum payments: $800/month. Total extra available: $300/month. Which debt gets the extra?
Strategy 1: Avalanche (Highest Rate First)
Put all extra $300 toward the credit card (22%) until it is gone, then roll to the next highest rate:
- Credit card paid off in 13 months (vs. 51 at minimum)
- Then attack car loan with $450/month — paid off in 18 more months
- Finally student loan at $750/month — paid off in 36 more months
- Total time: 67 months, $5,480 total interest
Strategy 2: Snowball (Smallest Balance First)
Put extra $300 toward the credit card (smallest balance) first — same start as avalanche in this case. But if the smallest balance was the student loan:
- The snowball gives you quick wins — psychological motivation
- Mathematically, the avalanche saves more on interest
- The difference between strategies: $200-$800 in interest over the full payoff
What Extra Payments Do to Your Timeline
Adding just $100/month extra to your highest-rate debt:
| Extra Payment | Time Saved | Interest Saved |
|---|---|---|
| $100/month | 8 months | $1,200 |
| $200/month | 15 months | $2,400 |
| $300/month | 21 months | $3,500 |
| $500/month | 30 months | $5,200 |
Key Takeaways
- The avalanche method (highest rate first) saves the most money
- The snowball method (smallest balance first) builds momentum
- Even $100 extra/month saves thousands in interest and months of payments
- Use our Loan Calculator to calculate your own payoff timeline