So, you've got a credit card debt of $2,550, right? That card has an annual interest rate of 21.9%. Your goal is to pay off this debt in three years (which is 36 months), and you ain't gonna buy anything else on that card. We're gonna use a cool financial formula called "amortization" to figure this out. Amortization is just a bougie word that means paying off debt with regular payments over time.
Here's the formula:
P = [r*PV] / [1 - (1 + r)^-n]
Where:
- P is your monthly payment
- r is your monthly interest rate (which is your annual rate divided by 12)
- PV is your present value (that's the amount you owe right now)
- n is the number of payments you're gonna make
First step, we gotta convert your annual interest rate to a monthly rate. You do this by dividing 21.9% by 12.
So, r = 21.9% / 12 = 0.01825 (which is 1.825% in decimal form)
Next, you just plug in all your values into the formula:
P = [0.01825*$2,550] / [1 - (1 + 0.01825)^-36]
Now, time to crunch those numbers:
P = $46.46 / [1 - 0.3927]
This simplifies to:
P = $46.46 / 0.6073
Doing the math on that gives:
P = $76.49
So, your monthly payment to totally clear that $2,550 debt in three years at 21.9% interest would be about $76.49.
Got it? This stuff's super important 'cause credit can be a game changer if you handle it right. Always remember to stay woke with your money moves. Best of luck!