Calculating how long it’ll take you to pay off a loan
The calculator below calculates the number of months it takes to pay off a loan debt (for example, a credit card balance); it is based on equation (3.14) in The Calculus of Happiness. The result depends on the loan amount, current monthly payment, and the interest rate on the loan (expressed as a decimal). Input those values into the green cells to see how long it would take to pay off the loan.
In Section 3.2.3 of The Calculus of Happiness I use the formula the calculator below is based on (equation (3.14) in teh book) to illustrate how increasing the monthly payment even by as little as $5 can save you months of payments (and all the interest associated with them). Specifically, I calculate that paying $5 more than the $20 minimum monthly payment due for a $1,000 credit card debt at a 12% annual interest rate reduces the payoff time by 18.4 months!
This calculator assumes that the monthly payments and interest rate are fixed for the life of the loan.