If you only pay the minimums
The "do nothing different" baseline. What the credit-card statement is hoping you'll pick.
— months to debt-free
Total interest paid
—
Total paid
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Years
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Paying Off Debt
You've got an extra $500/month. Pay down debt faster, or invest it? It depends on the APR. This page does the actual math: how long until you're debt-free, how much interest you'd save, and what you'd have if you invested instead. The right answer follows.
With $500/mo extra toward debt
All of the optional money goes to accelerating debt.
— months to debt-free
Total interest paid
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Interest saved vs minimums
—
Time saved
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Alternative: invest the $500/mo instead
Minimums on the debt, the extra goes into an index fund. Same amount of money, different destination.
— at the original payoff date
Total contributed
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Interest still paid on debt
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Net wealth at payoff
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Side-by-side: which is bigger?
Compare your net financial position at the same point in time. Accelerated debt payoff leaves more cash freed up later; investing leaves more cash invested earlier.
Accelerated payoff: net wealth
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Cash freed at month —, then invested at the return rate until the alternative's horizon.
Invest the difference: net wealth
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Investment value minus remaining debt at the baseline payoff month.
The plan, at a glance
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What's next?
The rule that actually matters
If your APR > expected investment return, pay down the debt. A credit card at 22% is a guaranteed 22% return on the dollars you put against it. No index fund matches that risk-free.
For lower-rate debt (student loans at 5%, a mortgage at 6.5%), the math gets closer. Add the psychology — sleeping better with less debt — and many people still come out ahead paying it down, even when the spreadsheet says otherwise.
What this plan doesn't model
- Tax on investment gains — a 7% return in a Roth IRA stays at 7%; in a taxable brokerage it drops to ~5.5% after long-term capital gains tax.
- Mortgage interest deduction — if you itemize, your effective mortgage rate is lower than the headline APR.
- Employer 401(k) match — getting the full match always beats paying down debt. That's an immediate 100% return.
- Emergency fund — keep 3–6 months of expenses liquid before either of these moves. Accelerated debt payoff can leave you needing a new credit card if anything breaks.
- Multiple debts — this page treats your debt as one aggregate at a single APR. For multiple debts, use the snowball/avalanche calculator linked above.