How to Calculate Your Debt Repayment Timeline

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When it comes to debt, Americans certainly know how to rack it up — by the close of 2018, the total household consumer debt currently comes in at just above $13.5 trillion. That includes things like credit card debt ($5,700 average per household), student loan debt (an average of $32,731 per borrower) and other personal debt such as medical bills, mortgages and the like.

Those numbers are staggering, but even more concerning is how much that debt can cost consumers beyond the initial amount borrowed. If you take out debt and pay it off in a timely manner, that’s one thing — but if you carry that debt around for years, it can seriously drag you down financially.

Why should I set a timeline to pay off my debt?

As a rule, most debt comes with interest, and the longer you hold onto that debt, the more interest you will pay. That’s why when you take on debt, it’s vital that you have a timeline for paying it off as quickly as possible. As they say, time is money, and in this case, it’s your money flying out the interest window with every month that passes.

In some cases, choosing a shorter timeline upfront can pay off with a lower interest rate out of the gate, so it’s a double win. For example, the average auto loan in 2019 is 3.71% for a 36-month loan, while the average for a 60-month loan is 3.93%.

With open-ended debt, such as credit card debt, it’s up to you to create a payoff timeline. And, of course, in any case, you can always adjust the timeline to speed things up and save even more.

Creating a timeline to pay off your debt

Here’s what you need to do to draw up a timeline for your debt payoff.

Total up your debts

Make a list of all your non-mortgage debt (you can look at paying extra on your mortgage and refinancing options separately). Don’t forget things like student loans, credit cards, auto loans and medical bills, and be sure to note the minimum monthly payment for each. This will give you a good idea of just what you have to tackle.

Prepare timeline scenarios

Seeing how time affects your debt can be eye-opening. In most every case, the shorter the timeline (and thereby the bigger the payments), the less interest you will pay over the life of the loan.

First up, here’s what payments look like on a credit card balance of $10,000 with a 15% annual percentage rate (APR).

Credit card debt payoff calculations for $10,000 balance at 15% APR

Monthly paymentsMonths to pay offTotal paid

As you can see, you’ll pay $2,941 less in interest by tripling your monthly payments and paying off your balance in 15 months instead of 56.

Here’s another example, this time using a personal loan of $20,000 with an APR of 4.5%.

Personal loan payoff calculations for $20,000 balance at 4.5% APR

Monthly paymentsMonths to pay offTotal paid



Here you’ll pay $1,477 less by cutting your payoff timeline in half, from 72 months to 36. As you can see from these scenarios, we’re not talking small change. The higher your interest rate, the more you save by paying off the loan quicker.

Look at your interest rates

The interest rates on your debts may vary widely: debts like credit card balances often come with sky-high interest rates, while student loan debt typically comes with much lower interest rates. Make a list of the interest rates for each debt you owe and put them in descending order from the highest rate to the lowest rate.

Decide how you’ll prioritize your debt

In most cases, paying off debts with the highest interest rates first makes the most sense — this is called the debt avalanche method.

If, however, you have several small balances, just wiping them clean may be liberating and motivate you to keep paying off more — this is known as the debt snowball method. Also, some debt, such as student loan debt, earns you tax benefits, so you want to consider that as well as you decide where to focus your efforts.

Track your spending

Take a look at your budget. (You do have a budget, right? If not, create one ASAP.) See how much money you have left over after you pay your expenses each month. That's the amount of money you potentially can put toward your debt.

Examine your budget

If there’s not much left over to pay off debt, it’s time to take a closer look at your budget to see where you can shrink expenses or boost your income. Maybe that means cooking at home more often, cutting the cord on you cable subscription or finding another source of income. In most cases, there are areas that can be trimmed or cut, so more funds can be freed up to pay off debt.

Consider consolidation

One option to consider is consolidating debt with a personal loan. Debt consolidation loans allow you to pay off all your various debts in one fell swoop — in exchange, you’ll have just one large loan, which simplifies things.

By consolidating your debt, you also get some freedom to choose your repayment timeline. For example, you may opt for a shorter repayment term on your new loan in order to pay off your debt sooner and to save on interest.

Ideally, you’ll get a loan with a lower interest rate than your other debts. Doing so will save you money on interest over time. It could also lower your monthly payments.

Don’t neglect everything else for debt

While paying off debt quickly is a great mission, make sure you don’t get so laser focused on it that you neglect other important financial goals, such as retirement savings and an emergency savings fund. All of those contribute to your overall financial health, so sometimes your timeline simply can’t be as short as you would like it to be.

The bottom line

For most of us, debt is a necessary means to help us finance what we need and want in life. But as you can see, it can also quickly drag you down if you draw your payments out for too long.

Before taking on debt, make sure you have a plan to pay it off as quickly as possible. Speed things up even more when you can, so you can keep more of your hard-earned dollars.

Julie Ryan Evans is a seasoned writer and editor who has worked for top companies such as Microsoft, USA Today, and She has a master’s degree in nonfiction writing from The Johns Hopkins University and regularly covers topics including finance, real estate, health and pop culture. (Fun Fact: She once appeared on national television as an “expert” on The Real Housewives.) While she currently calls the Orlando area home, she has lived everywhere from Hawaii to Austin, Boston and beyond.

The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.