Interest & Fees - trust the darned tools!
So my spouse and I are paying off 3 credit cards - a big reason why we're YNABers now.
Two cards have the same interest rate and the third has a higher rate. We're deploying the "avalanche" method and it comes as a surprise to me that when I run a payoff calculator adding the current interest amount to the minimum payment card-by-card vs paying each card at their minimum and paying the sum-of-the-interest-of-all-cards against the highest interest card the payoff date doesn't change - the % applied to the principal sure changes but it does really seem to be 6 of 1, 1/2 dozen of another situation.
The key point is we need to focus on paying the statement minimum, the interest charges, and a big dose of extra money to get clear of the dreaded credit card debt.
This is what I get for griping about the interest charges being a separate line in the Budget that sits there glaring at me for not funding it. 🤷♂️
Yes, it's primarily throwing money at debt that moves the payoff date.
The point of funding the Interest category is so the Payoff Goal gives sensible answers. Additionally, ANYTHING budgeted toward the Payment category is progress. Thirdly, zero overspending is a good habit to develop.
A real debt payoff calculator will be more accurate, but it's estimate will only be slightly earlier.
Thirdly, zero overspending is a good habit to develop.
Oh I feel like that was firstly for us. YNAB for the flipping win on helping me mechanically see how to do it. It highlights that our /income/ is not the problem, it was our frivolous spending.