You will be able to set a fixed monthly debt repayment amount and see how it changes your payoff date.
Get out your latest statement for every debt you have, cards and loans, and write down the minimum payment on each. Add them up. That total is where you start turning debt repayment into a fixed amount you pay on payday, instead of whatever is left at the end of the month.
Many people with credit card debt pay whatever is left each month, and in most months that ends up being the minimum on the statement. Paying from what is left puts the debt last, behind every other spending choice you make that month. In a good month there may be money spare. In an ordinary month there is none, and the payment shrinks to the minimum.
The minimum payment is designed to keep your account in good standing. It is not designed to clear the debt. On many cards it is a small percentage of the balance with a floor. As the balance falls, the minimum falls too, so the debt shrinks more and more slowly. Paying only the minimum keeps a balance alive for years. You'll find the terms for your own card on your statement and in the card's terms and conditions.
Wei Ling, the course's example person, owes S$3,000 on her credit card, mostly from last year's trip and February's Lunar New Year. She also has a personal loan with S$5,400 left to repay at S$300 a month. Until now, her card got whatever was left at the end of the month. All figures in this course are made up for teaching, and her card terms are example terms only: 26% interest a year, with a minimum payment of 3% of the balance or S$50, whichever is higher. A simple month-by-month calculation shows that paying only the minimum on S$3,000 would take her over ten years and cost about S$4,500 in interest, which is more than the original balance.
The fix is a fixed repayment line, which is a debt payment you decide once, at the start of the month, and pay on payday like rent. The money leaves your account before you have a chance to spend it.
Start with the minimums. They belong in the needs bucket of your budget, because missing them brings fees and a mark on your credit record. Wei Ling's card minimum this month is about S$90, which is 3% of S$3,000. Her loan instalment is S$300. Together that is about S$390, and both already sit in her needs bucket.
Next, work out what your budget can actually support for debt. For Wei Ling, the sinking funds from module 3 and the audit in lesson 4.5 have freed up S$480 a month of future you money. If all of it goes to debt, her repayment line becomes S$870: S$300 for the loan and S$570 for the card. That is S$480 a month more than her minimums of S$390.
Higher payments clear a debt sooner. Because the balance falls faster, there is less balance for interest to be charged on. Using the same example terms, and working each case out month by month, Wei Ling's S$3,000 card balance would clear like this:
minimums only: over ten years, about S$4,500 in interest a fixed S$300 a month: 12 months, about S$420 in interest a fixed S$570 a month: 6 months, about S$220 in interest
You can run the same comparison for your own debts with a loan calculator. Most banks and many comparison sites offer one. Enter the balance, the interest rate and the payment, then try two or three payment amounts and note how long each takes and how much interest it costs. Lesson 5.4 shows how to do the same thing with a few rows in a spreadsheet.
Personal instalment loans work differently from cards. The instalment is fixed for the term, and paying extra early may cut the interest by less than you expect. It may also come with an early repayment fee. Before you pay extra on an instalment loan, ask the lender for the settlement figure and check for any fee. Lesson 3.1 of the course "Credit and debt: scores, cards, loans and BNPL", called "Personal instalment loans: fixed payments on a flat rate", explains how these loans are priced.
Keep a starter buffer, a small cash reserve, while you repay. If every spare dollar goes to debt and your bank balance is near zero, the next surprise bill, such as a dentist visit or a broken phone, goes straight back on the card. The debt you just paid down grows again, and it feels as if the plan has failed.
Wei Ling's buffer target is S$1,000. She will put most of the first two months of her S$480 into the buffer before the card gets the extra. The 6-month figure in the comparison assumes the extra goes to the card from the first month, so with the buffer built first, her card will take longer than that to clear. Lesson 6.1, "A starter buffer comes before extra debt payments", explains how to size your own buffer.
Now take your latest statements, add up the minimum payment on each of your debts, and compare that total with what your budget can carry.
Write down your total minimum payments, then the repayment amount your budget can support, and the difference between them.
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