When you have significant debt, one of the hardest things to do is to attribute any extra income towards paying down those loans. Since you barely put a dent in the total amount you owe, it sometimes feels easier to forgo contributing all together. I always told myself, “But I could do so much with that $100 now and it really won’t make a difference in my outstanding debt anyway”. Now there are some times where that money may be better used elsewhere, but quite often it went to some impulse purchase instead that brought me no lasting joy.
Recently, I came across the Bankrate Calculator, which allowed me to calculate how my extra payments toward loans would impact my debt. By playing around with this calculator, I realized that by paying an extra $250 per month I would be able to cut my repayment time from seven to five years. That’s almost two years! There was even an amortization table to see how quickly the loans would be paid down with these extra funds.
Here is how it works. Head to the website and enter your loan information.
Then you can include any extra payments. These payments could be made monthly, annually, or by a one-time payment. From there you can select the “Show/Recalculate Amortization Table”. The calculator will automatically update your amortization table as well as your payoff date.
When I added an extra payment of $250 per month, my payoff date changed from August 24, 2024 to September 24, 2022. That is almost two years earlier! By seeing that these additional payments made a real dent in my overall loan term as well as my interest, I now feel a lot better about making extra monthly payments.
The other great thing about this calculator is that it isn’t really limited to student loans. You can use them for any fixed interest rate debt to help calculate an expedited payment schedule.