Debt Payoff Plan

The debt

Lender

Date

Balance

Annual rate

INTEREST-ONLY PAYMENT

Your payment

MONTHS TO CLEAR

Years

Total interest

Early repayment charge?

Every debt you have — highest rate first

The arithmetic

Monthly rate

annual rate / 12 / 100

Interest-only payment

balance x monthly rate

Months

−log(1 − r·B/P) / log(1+r)

⚠ Below the interest-only figure

the balance NEVER falls

$5,000 at 18%

interest alone is $75/month

Paying exactly $75

you owe $5,000 forever

The relationship is

LOGARITHMIC — double the payment, more than halve the time

Paying off an 18% debt

= a guaranteed 18% return

⚠ Assumes

fixed rate, and NO new borrowing

Before committing to a plan

• Interest-only figure checked for EVERY debt
• Any payment at or below it fixed first — that debt is going nowhere
• Debts listed highest rate first
• Early repayment charges checked on fixed-term loans
• Card put away — the plan assumes no new borrowing
• Emergency fund considered before overpaying low-rate debt
• Total interest looked at once, as a single number
• Payment automated, so it does not depend on remembering

The interest-only figure is the one to check first

If your payment is below it, the balance grows forever and nothing else on this page applies. On $5,000 at 18% that threshold is $75 a month. Pay exactly that and you will still owe $5,000 in thirty years — which is what a minimum payment is engineered to sit just above.

The extra is worth more than it looks

Every dollar above the interest goes straight against principal, and that principal never accrues interest again for the whole remaining life of the loan. The relationship is logarithmic, so doubling a payment cuts the time by considerably more than half — and the saving is biggest early, when the balance is largest.