Calculation Methodology & Formulas

1. Debt Payoff Amortization Logic

For each month m, monthly periodic interest is calculated on the current outstanding balance B using the stated APR:

The monthly budget is the sum of entered minimum payments plus the extra monthly amount. Minimums are paid first; any remaining budget, including minimums freed as debts are paid off, goes to the next debt in the chosen order:

• Debt Snowball Strategy: Active debts are ordered by lowest remaining balance. Extra funds are directed to the smallest balance until paid off, then rolled into the next smallest.
• Debt Avalanche Strategy: Active debts are ordered by highest APR. Extra funds are directed to the highest interest account first, maximizing interest savings.

2. Savings Goal Formulas

Savings growth assumes deposits are made at the end of each month and interest compounds monthly. The annual rate is divided by 12:

Where T = Target Amount, S₀ = Current Savings, r = Monthly Interest Rate (Annual Rate / 12 / 100), n = Months.

3. Retirement Scenario Engine

Retirement balance projections compound a monthly rate for each month. Contributions increase at the end of each year when an annual escalation is entered. Three scenarios are generated:

• Base Scenario: User-selected annual growth rate.
• Conservative Scenario: Base rate minus 2% (clamped at 0%).
• Optimistic Scenario: Base rate plus 2%.

4. Precision & Limitations

Debt payoff interest and payments are rounded to the nearest cent or penny each month. Savings and retirement projections use floating-point values internally and round displayed schedule values to two decimal places. Results are estimates, not lender statements.