1. Identify the total minimum payment and additional payment amounts: $307.25 and $300.00 respectively.
2. Calculate the total monthly payment: $307.25 + $300.00 = $607.25.
3. Determine the total pay-off months for each method: 120 for Minimum Payment, 52 for Lowest Balance, and 46 for Highest Interest.
4. Calculate the total interest paid for each method: $14,119.00 for Minimum Payment, $6,971.75 for Lowest Balance, and $5,832.25 for Highest Interest.
5. Compare the total interest paid across methods: Lowest Balance method results in the least interest paid ($6,971.75), followed by Highest Interest method ($5,832.25), and Minimum Payment method ($14,119.00).
6. The Highest Interest method is the most cost-effective in terms of total interest paid, despite having a shorter pay-off period.
7. The Lowest Balance method is the second most cost-effective.
8. The Minimum Payment method is the least cost-effective, resulting in the highest total interest paid.
Parent Tip: Review the logic above to help your child master the concept of debt worksheet excel.
