Quote:
Originally posted by Averett
Hey NoSoup, are there any simple formulas out there that I can use to calculate my debt? Basically I want to know how long it will take to pay off my credit card debt using the current balance, set amount of minimum payments and the APR. There are plenty of websites out there that have calculators, but I haven't found one that shows the actual formula.
I'm frustrated.
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<- not NoSoup!
Edit: My conclusions about how to do this are in the post starting with "
how is it useful" below. Feel free to skip to that post, the rest are less important, and might confuse you. =)
But, after playing around with a bunch of math, and finally google, I found something.
The morgage formula![1]
P = (r*D*(1+r)^m) / ((1+r)^m-1)
P is "payment per period"
r is "interest rate per period"
m is "number of payments"
D is "starting debt"
there is no difference between morgages and other debt really, so this should work.
(a^b is a to the power b. Ie, 2^3 is 2 * 2 * 2, or 2 cubed).
NoSoup, that look rightish? I tried to solve the continuous case using ODE's, but my calculus is very rusty: kept on getting junk.
Footnotes:
[1]: Link is to a PDF, you'll need acrobat reader to look at it. It's just a cheat sheet for some undergrad actuary course I'm guessing.