Calculate your Cumulative Rate of Accelerated Debt Erosion (CRADE).
Your CRADE Metrics
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Understanding the CRADE Calculator
The Cumulative Rate of Accelerated Debt Erosion (CRADE) calculator is a financial tool designed to help individuals understand how effectively their investments are growing while simultaneously being used to pay down debt. It calculates the time it takes to reach a specific financial target, considering not just investment growth but also the impact of dedicated debt repayment applied directly to the investment principal.
This metric is particularly useful for individuals who are aggressively paying down debt but also want to leverage any extra funds to accelerate their long-term investment growth. It helps visualize the synergy between debt reduction and wealth accumulation.
How it Works: The Math Behind CRADE
The CRADE calculator models a scenario where:
An Initial Investment is made.
Regular Monthly Contributions are added.
The investment grows at a specified Annual Growth Rate.
A portion of funds (Monthly Debt Repayment Applied to Investment) is added to the investment principal, simulating that extra debt payments are being directed towards bolstering investment. This accelerates the growth of the investment.
The goal is to determine the time required to reach a Target Amount.
Formula Components:
The core of the calculation involves a month-by-month simulation. For each month, the following steps are performed:
Calculate Monthly Growth: The current investment balance is multiplied by the monthly growth rate (Annual Growth Rate / 12).
Add Contributions and Debt Repayment: The monthly contributions and the specified monthly debt repayment amount are added to the balance.
Update Balance: The new balance becomes the starting point for the next month.
This process repeats until the investment balance reaches or exceeds the target amount. The total number of months is then converted into years and months.
CRADE Value: The primary output is the time (in years and months) required to reach the target. A lower CRADE value indicates faster achievement of the financial goal, signifying effective use of funds for both debt erosion and investment acceleration.
Use Cases:
Aggressive Debt Paydown Strategies: Individuals paying off mortgages, student loans, or credit card debt who want to see how applying extra payments impacts their overall wealth-building timeline.
Financial Goal Planning: Estimating how long it will take to save for a down payment on a house, retirement, or other major financial goals when debt is also a significant factor.
Budgeting and Financial Management: Helping to allocate extra funds more effectively between debt reduction and investment.
Understanding Financial Synergies: Visualizing the compounding effect when debt repayment is strategically merged with investment growth.
Disclaimer: This calculator provides an estimate based on the inputs provided. It does not account for taxes, fees, inflation, or variations in market performance. Consult with a qualified financial advisor for personalized advice.