What does income coverage mean?
Income coverage happens when projected annual dividend income is at least equal to twelve months of your current debt payment.
Debt-free in22.0 yrs
Interest cost$171,759
Prospyr calculator
Debt Freedom Engine
Compare debt-first, invest-first, and hybrid strategies to see when dividend income can cover your debt payment before the debt is fully paid off.
Inputs
Outputs update as you type. Switching modes keeps your numbers intact.
Modeled leading path
Invest-first
This strategy reaches income coverage in 13.2 yrs and debt freedom in 22.0 yrs.
Debt payment target
$19,200/yr
Adjusted yield
5.0%
Debt Drag ScoreCompares debt payment pressure against projected dividend income.
0.07x
DRIP AdvantageEstimated monthly income benefit from reinvesting dividends.
$19,085/mo
Result explainer
What the modeled path means
What this means
Invest-first is the modeled leading path under these assumptions. It reaches income coverage in 13.2 yrs and debt freedom in 22.0 yrs.
Why this result happened
- $400/mo of extra cash is split by the modeled strategy between debt payoff and investing.
- The debt side uses a 5.3% interest rate and a $1,600/mo payment target.
- The income side uses an adjusted yield of 5.0% and reinvests dividends inside the portfolio.
What could change this
- A rate increase, payment change, or lower monthly surplus can move the leading path.
- Dividend cuts, lower yields, taxes, and account treatment can delay income coverage.
- Debt terms, prepayment rules, and lender fees can change the real payoff timeline.
Next number to check
Open DRIP Engine SimulatorCheck whether the dividend reinvestment assumption has enough coverage and buffer to hold up.
This ranks modeled scenarios only. It is not a recommendation to prioritize debt, investing, or a hybrid path.
Projected portfolio value includes a 2.0% annual portfolio growth assumption. Dividend income is modeled separately from that portfolio value projection.
Debt-first
Income coverageWhen projected dividend income can cover the monthly debt payment.16.6 yrs
Debt free15.2 yrs
Projected portfolio value$2,017,002
Monthly income$20,399
Extra cash split: $400/mo to debt and $0/mo to investing.
Invest-first
Leads modelIncome coverageWhen projected dividend income can cover the monthly debt payment.13.2 yrs
Debt free22.0 yrs
Projected portfolio value$2,340,453
Monthly income$23,670
Extra cash split: $0/mo to debt and $400/mo to investing.
Hybrid
Income coverageWhen projected dividend income can cover the monthly debt payment.15.1 yrs
Debt free17.9 yrs
Projected portfolio value$2,150,997
Monthly income$21,754
Extra cash split: $200/mo to debt and $200/mo to investing.
30-year strategy table
Year-by-year checkpoints for debt balance, portfolio value, income, and coverage.
| Year | Strategy | Debt | Portfolio | Annual Income | Coverage |
|---|---|---|---|---|---|
| Now | Invest-first | $250,000 | $50,000 | $2,500 | 0x |
| Year 5 | Invest-first | $215,351 | $101,274 | $5,870 | 0x |
| Year 10 | Invest-first | $170,328 | $182,435 | $12,259 | 1x |
| Year 14 | Invest-first | $124,781 | $285,684 | $21,606 | 1x |
| Year 15 | Invest-first | $111,823 | $319,618 | $24,898 | 1x |
| Year 16 | Invest-first | $98,168 | $357,799 | $28,708 | 1x |
| Year 17 | Invest-first | $83,779 | $400,879 | $33,130 | 2x |
| Year 18 | Invest-first | $68,616 | $449,625 | $38,273 | 2x |
| Year 19 | Invest-first | $52,638 | $504,941 | $44,271 | 2x |
| Year 20 | Invest-first | $35,800 | $567,896 | $51,284 | 3x |
| Year 21 | Invest-first | $18,056 | $639,759 | $59,507 | 3x |
| Year 22 | Invest-first | $0 | $722,037 | $69,175 | 4x |
This is informational only, not licensed financial advice. Always verify debt terms and pricing data with your lender before making financial decisions.
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Why compare three strategies?
Debt-first reduces interest drag fastest. Invest-first builds income fastest. Hybrid tries to balance both pressures in one plan.
How should I use this?
Treat the result as a planning lens. Small changes in rates, payment terms, dividend cuts, or tax treatment can change the best path.
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Freshness and methodology
Last reviewed
April 2026 with 2026 CRA planning inputs.
Methodology
Debt payoff projections use standard amortization, monthly extra-cash allocation, DRIP-style reinvestment assumptions, account-type yield adjustments, and a 30-year income coverage milestone window.
Updated for 2026 CRA limits · Last verified April 2026
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