So I'm doing a little financial planning, and I'm looking into the worthwhile-ness of paying off my student loans as quickly as possible. Being that I have multiple student loans, I combined them all together in a weighted average, putting me at around $30,000 with a 4.5% annual interest rate, which I believe compounds daily. (numbers rounded for simplicity)
I can very easily figure out if I pay PMT amount per month, how long it will take me to pay off given no interest:
CV / PMT = M
Where CV is Current Value, PMT is payment per month, and M is months spent paying off. But this is not very useful to me.
I can also sort of figure out if interest is simple, and doesn't compound:
Daily Interest = CV*R/365 Corrected Daily Interest = (Daily Interest/2)
CV / PMT-(CDI*30) = M
Corrected Daily Interest means that, assuming a linear decline in current value, the accrued interest at a daily rate will be on average, the Initial Balance divided by two. It makes sense to me and I think it checks out, but I could be horribly wrong.
Given this, I can also solve for total accrued interest over the payoff time.
M*30*CDI = TI
Where TI = Total Interest.
But this isn't accurate enough, because I know how brutal compound interest can be, which is what is the case here. I'd like to include that in my calculations, but most formulas I seem to find only solve for Months to Pay Off, or Future Value, but I'm trying to figure out both, and do it in a way I can put it into an excel formula. Any guidance would be great!
I've been trying to use this site for help.