Debt Payoff Calculator
Compare avalanche and snowball strategies to find the fastest, cheapest way to pay off multiple debts.
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—Formula
- Avalanche
- Mathematically optimal — minimizes total interest paid.
- Snowball
- Psychologically motivating — kills small debts fast for quick wins.
- Freed payment
- When a debt is paid off, its minimum "rolls down" to the next priority debt.
- Extra
- Your additional monthly amount, applied to the priority debt on top of minimums.
Model compounds interest monthly. Real-world accrual varies by lender (daily for most credit cards), but month-end compounding is the standard for payoff projections and accurate to within a few dollars over typical horizons.
Examples
How It Works
The Avalanche method targets the debt with the highest interest rate first. This is mathematically optimal — it minimizes total interest paid. Once the highest-rate debt is paid off, its minimum payment plus the extra amount rolls to the next highest-rate debt.
The Snowball method targets the debt with the smallest balance first. While it costs slightly more in total interest, it creates quick wins by eliminating individual debts faster. This psychological momentum helps many people stay motivated.
Both methods use the same total monthly payment — the difference is only in which debt gets the extra money. The "snowball" of freed-up minimum payments grows as each debt is eliminated, accelerating payoff of remaining debts regardless of which strategy you choose.
Tips & Best Practices
Frequently Asked Questions
Which is better: avalanche or snowball?
Avalanche saves more money in total interest (it's mathematically optimal). Snowball provides quicker psychological wins by eliminating small debts first. The best method is whichever one you'll actually stick with. If you're disciplined, use avalanche. If you need motivation from quick wins, use snowball.
How much extra should I pay?
Any amount helps. Even $100/month extra can save thousands in interest and years of payments. Look at your budget for areas to cut temporarily — streaming services, dining out, subscriptions — and redirect that money to debt payoff.
What is the debt snowball effect?
As you pay off each debt, its minimum payment becomes available to add to your payment on the next debt. This creates a growing 'snowball' of money. If you're paying $100 minimum on debt A, once it's paid off, you add that $100 to your payment on debt B.
Should I stop contributing to savings while paying off debt?
Keep a small emergency fund ($1,000–$2,000) to avoid new debt from unexpected expenses. Beyond that, focus extra money on high-interest debt — especially anything above 7–8% interest, since the guaranteed 'return' from debt payoff exceeds typical investment returns.