How to pay off $33.k in Credit Card Debt
Currently, I am developing and testing a new application designed to help people get out of debt. Below is a user case study showing the benefits of the app.
If you are interested, you can sign up for the beta test here: PlanningPl.us
Salty-Challenge-2143 posted on r/debtfree on Reddit on April 17, 2023 about the amount of debt he had and he was looking for advice. Here is a link to the post and you can see a screenshot of the post below.
Using the balancing information below as well as the APR and payment information, I was able to create a model of his current projected balances, payments, and amortization schedule ( amount that goes toward the interest and the amount that goes toward the principal).
Initial Projections
Based on our original projections, we calculated these metrics:
Payoff date: 4/17/2026
730 days to pay off.Minimum payment is $1,817
Daily interest: $24.61
Total interest cost is $10,161
Total balance: $33,461Total cost: $43,622
So, to put this in laypersons terms:
- For the users debt of $33.5k, they are going to pay an additional $10.1k in interest.
- Everyday, the debt is costing the user about $25. basically, everyday this debt is costing them about the same price as a half tank of gas.
Loan balance projection:
Based on the users payments, he is planning on paying all the loans off at once.
Payment projection:
Payments for all the credit cards will remain the same as long as the user is paying the balance.
Amortization schedule:
You can clearly see how more principal is paid off near the end of the credit card debt.
Comparisons:
All these debts are for credit card. Based on APR (left chart), you can clearly see that the Best Buy credit card should be paid off first followed by the Amazon credit card. The Chase card with the highest balance and the highest payment should be paid off third.
The application has a lot more comparison data for showing the breakdown of different types of loans. Since all of the users debt is credit card debt, I decided not to include the information here.
Above is an overview of all the loans in our application. The app is designed to track progress over time and offer additional advice but since we only have one balance metric, I am not including the graphs for tracking historical data.
Extra Payment Projections
Hypothetically, lets say the user really wanted to pay off their debts soon. How would the model change and how should their strategy change?
For this model, we will be looking at extra payments of $400 a month.
New payoff date: 11/23/2025 (originally 4/17/2026)
580 days to pay off instead of 730 days to pay off.New minimum payment is $2,167 (originally $1,817 plus $400)
Daily interest stays the same: $24.61
New total interest cost is $7,739.90 (originally $10,161)
Total balance stays the same: $33,461New total cost: $41,201 (originally $43,622)
So the overall impact:
- The user will save $2,421 compared to the original payment plan.
- All the credit cards will be paid off prior to 2026 (a year and seven months earlier than originally projected).
- If the debt costs them $25 a day, the savings will come from paying off their debt exactly 150 days sooner.
New Payment Projection:
Probably the most interesting aspect of the projection. By applying the extra $400 to the credit card with the highest APR, the most expensive credit cards are paid off sooner. Below is an image of the schedule. In the application, you can hover over the chart and see the schedule.
New Loan Balance Projection:
Since the credit card with the highest CPA is being paid off first, you can see the loan balances being affected in a nonlinear manner by the extra payments.
Compared to the original loan projection model, you can really see the difference in the repayment impact on each credit card.
Below is a video or the application in action. I start with the original credit card balance projections and then apply the extra payments.
PlanningPl.us Financial Planning Demo: Salty-Challenge-2143 — Watch Video
Let me know if you have any questions or suggestions.
Models are for entertainment purposes only. Some of the metrics have been rounded to the nearest dollar to make them more readable.
Additionally, if you are interested in signing up for the beta version of the application, follow the link to the signup form: PlanningPl.us
