How We Calculate

This page is the foundation of the whole site. If a guide on Dollar Doctrine shows you a number, that number was either calculated with one of the formulas published below, or taken from a named public source and labeled with an “as of” date. There is no third category.

1. Our rule

This rule sounds simple, and holding to it takes discipline. It means we never copy a statistic from another website's summary of a statistic. It means an example never quietly changes its assumptions halfway through to make the result look better. And it means that when a comparison on this site favors one payoff method, one loan term, or one payment strategy over another, both sides were run through the same formulas under the same declared conditions, so the difference you see comes from the math and not from the presentation.

2. The formulas we use

Loan payment (amortization)

For a fixed-rate loan paid in equal monthly installments — the structure behind the auto loan and mortgage examples on this site — the monthly payment is:

From that payment, the total cost of the loan follows directly: Total interest = M × n − P. In other words, multiply the monthly payment by the number of payments to get everything you will hand over, then subtract the amount you actually borrowed. What remains is what borrowing cost you. Many of our guides exist simply to make this one subtraction visible, because a monthly payment on its own hides it completely.

Credit card interest (average daily balance)

Credit cards do not charge interest the way loans do. For the card examples on this site, interest for a billing cycle is calculated from the average daily balance:

The average daily balance is exactly what its name says: the balance recorded on each day of the cycle, added together and divided by the number of days. The APR is converted to a daily rate by dividing by 365, and that daily rate is applied across the days in the cycle. This is why the timing of payments and purchases inside a cycle changes the interest charged, even when the starting and ending balances look similar — a point our credit card guides return to often.

Minimum-payment simulations

When a guide shows how long a card balance lasts if only the minimum is paid, the simulation needs a minimum-payment rule, so we declare one openly:

This is a common issuer formula, but it is not the only one, and we say so wherever the simulation appears: every issuer's minimum-payment formula can differ. Your card's actual minimum may be calculated differently, which means your actual payoff timeline will differ from our example too. Our minimum-payment examples run on the declared assumption above, stated in the open, so you can see exactly what the simulation does and does not claim.

Payoff-method simulations (avalanche and snowball)

Comparisons between the debt avalanche and the debt snowball only mean anything if both methods get the same money and the same rules. Our simulations hold them to this structure:

• The total monthly budget stays fixed for the whole simulation. Neither method gets a dollar more than the other.
• Every debt receives its minimum payment each month, so no balance is ever ignored.
• Whatever budget remains after all minimums goes to the single target debt — under the avalanche, the debt with the highest APR first; under the snowball, the debt with the smallest balance first.
• When a debt is paid off, the money that was going to it rolls onto the next target debt, so the attack payment grows as debts disappear.

Because the budget, the debts, and the interest formulas are identical on both sides, any difference in total interest or finish date between the two methods is a real difference in how the methods behave — not an artifact of how we set the example up. You can see this applied in our debt payoff guides.

3. Rounding

All calculations are carried out at full precision from start to finish — we never round a value in the middle of a calculation and then keep calculating from the rounded version. Only the finished results are rounded for display, with amounts shown to the nearest cent or, where a guide is working at a larger scale, the nearest dollar. One honest consequence follows: if you take the rounded numbers printed on a page and redo the arithmetic by hand, your result can differ from ours by a few cents. That small gap is a rounding artifact, not a different method, and the full-precision figure is always the one our conclusions rest on.

4. Sources we rely on

When a figure on this site comes from outside our own calculations, it comes from a short list of primary public sources:

• The Federal Reserve — the G.19 consumer credit release, which is where the average credit card APR figures we cite are published, and FOMC statements, which record the Federal Reserve's rate decisions in its own words.
• Freddie Mac — the Primary Mortgage Market Survey, the weekly mortgage rate survey behind the mortgage rate figures we cite.
• The IRS — federal tax brackets, the standard deduction, and FICA rates, taken from the agency that administers them.
• The CFPB — the Consumer Financial Protection Bureau, for the rules that govern credit cards and consumer credit.

Beyond these, no marketing blog is a source for this site. If a number cannot be traced back to our formulas or to a named source like the ones above, it does not get published as a fact here.

5. Market figures and “as of” dates

Interest rates and averages move. A card APR average, a mortgage rate, or a tax figure describes the moment it was measured, not the world forever. That is why market figures on Dollar Doctrine always carry an “as of” date, and why they should be read the right way: a figure with an older date is a snapshot of that date, not a claim about today. We review figures and update them as newer releases appear, and when a change is large enough that it alters what a page says, we note the change on the page rather than silently swapping the number. If you are about to act on a figure, check its date first — and for a decision that matters, confirm the current figure at the source itself.

6. What our examples are not

Worked examples are teaching tools, and it is worth being precise about their limits. Our examples are not predictions: running a formula on declared assumptions shows what follows from those assumptions, not what will happen in your life. They are not guarantees: no result in a guide promises that the same result will occur for any other person, balance, or lender. And they are not a calculation of your personal situation: your issuer's formula, your lender's terms, your employer's payroll setup, and your own spending will all differ from the clean example on the page. Treat every worked example as a clear window into how the math behaves — then apply that understanding, with your real numbers, to your real decision.

7. Corrections

A methodology page is only worth having if errors get fixed in the open. When a mistake is found in a calculation or a figure on this site — by us, or by a reader — the page itself is corrected. Readers can flag a suspected error in the comments on the Dollar Doctrine YouTube channel, where the team reads and responds. If you think a number here is wrong, show us your working, the way we show you ours. That exchange is not an embarrassment to this site; it is exactly how the site is supposed to work.

Methodology supports education, not advice. Read our disclaimer for what the content on this site is — and is not.