Before you rush off to the stock markets,
make sure that you are investing some of your money into your
own debts. For instance, if you have credit cards with Annual
Percentage Rate (APRs) of 21%, you can earn a 21% return on
your investment if you make more monthly payments towards
that 21% APR credit card, rather than investing in the stock
market. Furthermore, any money you save on NOT having to pay
the 21% APR is tax-free. Thus, use this Debt Investment Calculator
to find out your earnings had you increased your monthly payments
on any of your debts (preferably credit cards with the highest
Enter the current monthly payments you make towards your
debt. Then, add the additional monthly payment you could squeeze
out in order to pay off your debt faster. Then, click on "Compute"
and you will see the Return on Investment (ROI) on your debt.
Todd Comments on March 27th, 2007
I owe $5000 in student loan debt, so I entered
in the appropriate values. The results I get are:
If you add $50 to your monthly
payment, you will pay off this debt in 38 payments instead
of 60, and you will save $352 in interest charges. This savings
translates into a guaranteed, tax-free, average annual return
of 5%. And that's not even considering the emotional returns
you'll get when you pay off this debt 22-months (1 years,
10 months) ahead of schedule!