Debt Repayment Calculator
Find out how long it will take to pay off your debt with our easy-to-use Debt Calculator. Calculate your monthly payments, total interest, and more to manage your financial future with Canadian Debt Relief.
Debt Calculator: Plan Your Debt-Free Journey
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Calculator Disclaimer
The repayment amount shown using this calculator is an estimate, based on information you have provided. It is provided for illustrative purposes only and actual repayment amounts may vary. To find out actual repayment amounts, contact us.
Not sure about the numbers? Reach out to a debt relief specialist for free advice!
How To Use The Debt Calculator
- Enter the total debt amount.
- Provide the annual interest rate.
- Set your desired monthly payment or time to repay
What Is the Debt Snowball Method?
The debt snowball approach is a strategy for paying off debt by focusing on balances from smallest to largest, disregarding interest rates. Start by eliminating the smallest balance first, then apply that payment amount to the next debt on your list.
The name “snowball” reflects the way momentum builds over time, much like a snowball rolling down a hill. As you pay off each debt, the momentum grows, helping you accelerate through each balance.
How to Use the Debt Snowball Approach:
- List Debts from smallest to largest, ignoring interest rates.
- Pay Minimums on all debts except the smallest.
- Focus Extra Payments on the smallest debt until it’s cleared.
- Repeat until all debts are paid.
Once completed, you’re free from monthly payments, debt collectors, and seeing hard-earned money go toward past purchases.
This approach also helps build motivation. The quick victories encourage you to keep going, showing just how much faster debt can be eliminated compared to making only minimum payments.
Debt Snowball vs. Debt Avalanche
You may have heard of the debt avalanche method, which prioritizes high-interest debts first. While this can save on interest, it doesn’t build momentum in the same way. Focusing on behavior change is essential for success in paying off debt. The debt avalanche method may take longer to show progress, which can be demotivating. In contrast, the debt snowball gives you quick wins, helping you stay motivated as you knock out each balance.
Debt Terminology Made Simple
Understanding common debt terms can make repayment easier. Here’s a quick guide:
- Minimum Payment: The smallest amount required to keep your debt account in good standing each month. Falling short of this amount can lead to fees.
- Balance: The remaining amount you owe. For instance, if you borrowed $20,000 and have paid back $5,000, your balance is $15,000.
- Interest Rate: The percentage charged by lenders on top of the amount borrowed, representing the cost of the loan.
- Principal: The original amount you borrowed, not including interest. If you borrowed $20,000, this is your principal.
- Nonmortgage Debt: This includes all debts except your home mortgage, such as car loans or credit card balances.
- Debt-Free Date: The anticipated day when all consumer debt is repaid, allowing you to live free from the financial burden of past purchases.
By understanding these terms and the debt snowball method, you’ll be set to tackle your debts with confidence and build lasting momentum toward financial freedom.
