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Tradeoff Between Debt Reduction and Building Wealth Calculator

Should you pay off loans first and then invest in stocks? Or should you invest at an early age to gain the benefits of compounding over many years? Use the Tradeoff Between Debt Reduction and Building Wealth Calculator to analyze different debt reduction and investing mixes.

Form Input

On the calculator form, enter only numbers (with or without decimal points).

Do not enter currency symbols like dollar signs, commas or percent signs.


Tradeoff Calculator
Annual Amount Available for Debt Payment and Investing:
$
Minimum Required Annual Debt Payment:
$
Initial Debt Balance:
$
Annual Investment Rate of Return:
      %
Number of Years:
  
Final Debt Balance
  
Final Investment Value
  
Final Net Worth
  
   


The amount available for recurring annual investment is Annual Amount Available for Debt Payment and Investing minus Minimum Required Annual Debt Payment.

The Final Net Worth is Final Investment Value minus Final Debt Balance at the end of a selected number of years. The net worth does not include any accrued value of items being paid off. For example, equity of real estate is not included. Also, the calculator does not include tax implications of paying off a debt early.

If the total debt is paid before the number of years, the amount available for investment does not change.

All computations are for annual values.


Analyze Different Debt Payments

The next table displays the net worth for five annual debt payments. The increment of each payment is determined by dividing the difference of the Annual Amount Available for Debt Payment and Investing and Minimum Required Annual Debt Payment by five.

The first annual debt payment in the table is the Minimum Required Annual Debt Payment plus the increment.

Net Worth
Annual Debt Payment
Net Worth



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