Debt payoff calculator

Lenders look at your monthly debt payments divided by gross income. Above 36%, getting new credit becomes harder. Above 43%, mortgages become nearly impossible. High debt limits your options even if you're making payments on time.

Paying off and closing an account doesn't erase its history. The account shows as "paid in full" for 10 years. This is good for your record but doesn't immediately boost your score. In fact, closing old accounts can hurt your credit utilization ratio temporarily.

If you're struggling, call before you miss payments. Many creditors offer hardship programs: reduced rates, waived fees, or payment plans. Asking costs nothing. Once you're in collections, options shrink and credit damage is done.

In 1980, household debt was 50% of disposable income. Today it's over 100%. Credit cards, student loans, and auto loans have become normalized. What previous generations would have considered alarming debt levels are now average.

Avalanche (highest rate first) saves the most money mathematically. Snowball (smallest balance first) provides psychological wins that keep you motivated. If you're disciplined and motivated by math, use avalanche. If you need early wins to stay committed, use snowball. The best method is the one you'll actually follow.

Build a small emergency fund ($1,000-$2,000) first to avoid adding new debt when unexpected expenses hit. Then attack debt aggressively. Once debt is gone, build a full emergency fund (3-6 months expenses). Without some savings buffer, every emergency becomes more debt.

It depends. Consolidating multiple debts into one lower-rate loan simplifies payments and can save money. But if the consolidation extends your term significantly, you might pay more total interest. And if you run up new debt after consolidating, you're worse off. Consolidation is a tool, not a solution.

At minimum payments, decades. With aggressive payments, 1-3 years is common. A $10,000 balance at 20%: minimum payments take 37 years; $500/month takes 23 months. The timeline is almost entirely determined by how much extra you can pay above minimums.

Eventually, yes. Reducing credit utilization (the percentage of available credit you're using) typically improves scores within 1-2 billing cycles. Paying off accounts completely helps utilization but may initially dip your score if you close old accounts. Keep old accounts open with zero balances when possible.