How we calculate everything.

Monthly principal-and-interest is computed with the standard amortizing-loan formula:

M = P · [ r(1 + r)^n ] / [ (1 + r)^n − 1 ]

P = loan principal
r = annual interest rate ÷ 12 (monthly rate)
n = loan term in years × 12 (number of payments)

The amortization schedule then walks month by month: each payment's interest portion is the outstanding balance × the monthly rate, and the remainder reduces principal. Extra payments are applied directly to principal and capped at the remaining balance so the final payment never goes negative. Property tax, home insurance, PMI, and HOA dues are added on top to produce the full PITI figure.

Both methods make every debt's minimum payment, then direct all extra money toward one target debt. The difference is which debt is targeted:

• Avalanche targets the highest interest rate first — mathematically the lowest total interest.
• Snowball targets the smallest balance first — fastest first win, best for momentum.

The simulation runs month by month. Interest accrues on each balance at its monthly rate (APR ÷ 12), minimums are applied, and any leftover budget plus the rolled-up payments from already-cleared debts hit the current target. The snowball re-sorts remaining debts by balance each month so the target is always correct as balances change. We assume no new charges are added during payoff.

Compound growth with regular contributions uses the future-value formula:

FV = PV·(1 + r)^n + PMT · [ ((1 + r)^n − 1) / r ]

PV  = starting balance
PMT = periodic contribution
r   = periodic return rate
n   = number of periods

We compound monthly to match how most people contribute. When the return rate is zero, the formula collapses to simple addition of contributions (avoiding a divide-by-zero). Goal mode inverts this to solve for the contribution needed to hit a target by a given date.

The accumulation phase compounds your balance and contributions to your retirement date. The withdrawal phase then draws your desired income (less Social Security and other income), growing that gap with inflation each year while the remaining portfolio continues to earn returns.

The headline "safe withdrawal" benchmark uses the widely-cited 4% rule (Bengen, 1994; the Trinity Study) — implying a target nest egg of roughly 25× your first-year withdrawal gap. We also run a year-by-year depletion model so you can see the age your portfolio would actually last to under your specific return and inflation assumptions, which is often more realistic than a single static rate.

We compare your current loan's remaining cost against the new loan, including closing costs. The break-even point is:

Break-even (months) = Closing costs ÷ Monthly payment savings

Lowering your payment isn't automatically a win: resetting a 30-year clock can increase lifetime interest even at a lower rate. We surface the true lifetime cost difference alongside the monthly savings and break-even month, and factor the opportunity cost of the closing costs so the recommendation reflects total dollars, not just the payment.

We model both paths over your time horizon. Buying accrues the down payment, closing costs, mortgage payments, property tax, insurance, maintenance, and appreciation/equity. Renting accrues rent (grown by your assumed rent inflation) plus the investment return on the money not tied up in a down payment.

Critically, the renter's investment account is debited or credited each month by the actual cash-flow difference between the two paths — so when buying is cheaper in a given month, the renter invests less (or draws down), and vice versa. Both sides compound monthly. The result is an apples-to-apples net-worth comparison rather than a simple monthly-payment comparison.

Self-employed contributions combine two parts: the employee elective deferral (up to the annual IRS limit) and the employer profit-sharing contribution (a percentage of net self-employment income), subject to the combined annual cap and catch-up contributions for those 50+.

Net self-employment income is reduced by the deductible portion of self-employment tax first. We apply Social Security tax up to that year's wage base and Medicare tax on all SE income, then compute the maximum employer contribution on the resulting base. Roth versus traditional treatment changes the tax-savings estimate but not the contribution limit.

The portfolio model compounds each property's value by your appreciation assumption, pays down loans on schedule, and accumulates net rental cash flow. When accumulated equity and cash flow are sufficient, the model simulates acquiring additional properties (a cash-out-refinance-style reinvestment), which is how a portfolio can scale faster than a single property.

Acquisitions begin after year zero and can occur multiple times per year when funds allow. Final net worth reflects total equity across all properties plus retained cash flow, net of outstanding loan balances.