Snowball Method
Smallest Balance First
Avalanche Method
Highest Interest First
Payoff Timeline Comparison
Amortization Schedule (Avalanche)
| Date | Total Payment | Interest | Principal | Remaining |
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Debt Payoff Strategy Comparator
Understanding Debt Payoff Strategies
Managing multiple debts can be overwhelming. When you have extra money in your budget to put towards debt, knowing where to allocate those funds is crucial for efficiency. Two of the most popular and effective strategies for eliminating debt are the Debt Snowball and the Debt Avalanche methods. Both methods require you to pay the minimum monthly payment on every single debt to avoid penalties, but they differ significantly in how they utilize any surplus cash.
The Debt Snowball Method
The Debt Snowball method prioritizes psychological wins. With this strategy, you list all your debts from the smallest balance to the largest balance, regardless of the interest rate. You pay the minimums on everything, but throw every extra dollar at the smallest debt. Once that small debt is paid off, the money you were paying on it (minimum + extra) rolls over into the next smallest debt, creating a "snowball" effect.
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Pros: Quick wins boost motivation and help you stick to the plan.
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Cons: You may end up paying more in interest over time compared to the Avalanche method.
The Debt Avalanche Method
The Debt Avalanche method prioritizes mathematical efficiency. Here, you list your debts from the highest interest rate to the lowest interest rate. You pay minimums on everything and put all extra funds toward the debt with the highest interest rate. Once the highest-interest debt is gone, you move the payments to the next highest rate.
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Pros: Mathematically the fastest way to get out of debt and saves the most money on interest.
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Cons: It can take longer to see the first debt completely disappear, which requires more discipline.
How to Use This Calculator
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Enter Your Budget: Input the total amount you can afford to pay toward debt each month. This must cover at least the minimum payments for all your debts combined.
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List Your Debts: For each loan or credit card, enter the name, current balance, interest rate (APR), and the required minimum monthly payment.
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Compare Results: Click "Calculate Strategies" to see a side-by-side comparison. The tool will show you the debt-free date and total interest paid for both strategies, along with a visual chart and a detailed amortization schedule for the Avalanche method.
By understanding the trade-offs between motivation and interest savings, you can choose the path that best aligns with your financial personality and goals.