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Student handout

Compare two debt payoff plans

Use a fixed debt simulation to separate the effect of payment size from the effect of payoff order.

Class period, optional

Class date

Use only the fictional scenario

Do not enter or write personal income, debts, account balances, policy details, names, or identifying information. This activity does not need a name or FinanceLearn account.

Scenario

The simulator supplies three fictional debts: a store card, a credit card, and a car loan. Students compare the same debts first at $500 per month and then at $900 per month.

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Tasks and response space

  1. 1. At $500 per month, record the payoff months, total interest, and first-debt month for both orders.

  2. 2. Repeat at $900 per month. Keep the debts and rates unchanged.

  3. 3. Separate the effect of raising the payment from the effect of changing the order.

  4. 4. Choose one order for the fictional borrower and defend it with one cost measure and one behavior measure.

  5. 5. Write a three-checkpoint plan with a start date, a monthly payment, and a review date.

Extension

Find the lowest displayed payment where the two orders finish in the same month and explain why interest can still differ.

All six activities: classroom lessons.

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.