Debt Payoff Example
Pay $500/Month Toward Debt — Impact Examples
See how $500/month extra toward debt payoff changes timelines across different balances.
Scenario
$500/month payment toward debts of $5k, $10k, and $20k at 15% APR.
Inputs
Monthly Payment$500
APR15%
Results
$5,000 balance10 months / $334 interest
$10,000 balance24 months / $1,455 interest
$20,000 balance53 months / $6,390 interest
Explanation
$500/month is a meaningful payment. Even on $20k debt, it clears in under 5 years. The key insight: debt size, not rate, determines timeline most when the payment is fixed and substantial.
Key Takeaways
- Put every windfall (bonus, tax refund) to debt first.
- After debt is clear, redirect the $500 to savings/investing immediately.