Debt Payoff Calculator
Compare debt snowball and avalanche methods to find the fastest and most cost-effective way to become debt-free. Create your personalized debt elimination plan today.
Strategy Comparison
Compare snowball vs avalanche methods side-by-side
Interest Savings
See exactly how much interest you'll save
Debt-Free Date
Calculate your exact debt-free timeline
Debt Snowball Method
The debt snowball method focuses on paying off your smallest debts first, regardless of interest rate. This creates psychological wins and momentum to keep you motivated throughout your debt elimination journey.
How It Works
- List all debts from smallest to largest balance
- Make minimum payments on all debts
- Put all extra money toward the smallest debt
- Once smallest debt is paid off, move to the next smallest
- Repeat until all debts are eliminated
Best For:
- People who need quick wins to stay motivated
- Those with multiple small debts
- People who struggled with debt payoff before
- When psychological factors outweigh math
Real Example: Sarah's Success
Sarah had $28,000 in debt across 5 accounts. Using the snowball method, she paid off her first debt in 3 months, which gave her the motivation to tackle the rest. She became debt-free in 2.5 years, even though avalanche would have saved her $1,200 in interest.
Debt Avalanche Method
The debt avalanche method focuses on paying off debts with the highest interest rates first. This mathematically optimal approach minimizes the total interest you'll pay over time.
How It Works
- List all debts from highest to lowest interest rate
- Make minimum payments on all debts
- Put all extra money toward the highest-rate debt
- Once highest-rate debt is paid off, move to the next highest
- Repeat until all debts are eliminated
Best For:
- People motivated by saving money
- Those with high-interest credit card debt
- Disciplined individuals who don't need quick wins
- When mathematical optimization is preferred
Real Example: Mike's Savings
Mike had $45,000 in debt with rates from 6% to 24%. Using the avalanche method, he saved $8,400 in interest compared to the snowball method. He stayed motivated by tracking his interest savings month by month.
Snowball vs Avalanche: Which Method Wins?
Debt Snowball Wins When:
- ✓You need motivation and quick wins
- ✓You have many small debts
- ✓Interest rates are similar across debts
- ✓You've failed at debt payoff before
- ✓Behavioral psychology trumps math for you
Best for: People who need emotional momentum to succeed
Debt Avalanche Wins When:
- ✓You have high-interest credit card debt
- ✓Interest rates vary significantly
- ✓You're motivated by saving money
- ✓You're disciplined and patient
- ✓Mathematical optimization appeals to you
Best for: People who want to minimize total interest paid
Remember: The best debt payoff method is the one you'll actually stick with until you're debt-free!
Debt Payoff Calculator FAQ
Should I pay off debt or invest?
Generally, pay off high-interest debt (credit cards, personal loans >8%) before investing. For lower-interest debt (mortgages, student loans <6%), you might benefit more from investing while making minimum payments.
Rule of thumb: If your debt interest rate exceeds expected investment returns, pay off debt first.
How much extra should I pay toward debt?
Pay as much extra as you can while maintaining:
- A small emergency fund ($1,000 minimum)
- Employer 401(k) match contributions
- Basic living expenses
- Some money for unexpected costs
Should I consolidate my debt first?
Debt consolidation can be helpful if you qualify for a lower interest rate, but it doesn't address the root spending behaviors. Consider consolidation if:
- You can get a significantly lower interest rate
- It simplifies your payments
- You won't accumulate new debt on the cleared cards
What if I can't afford minimum payments?
If you're struggling with minimum payments:
- Contact creditors to discuss payment plans
- Consider credit counseling services
- Look into debt management plans
- Increase income through side work
- Cut expenses to the bare minimum
Your 7-Step Debt Elimination Action Plan
List All Your Debts
Include balance, minimum payment, and interest rate for each
Choose Your Strategy
Use our calculator to compare snowball vs avalanche
Find Extra Money
Cut expenses, increase income, or use windfalls
Automate Payments
Set up automatic payments to stay on track
Track Your Progress
Monitor balances monthly and celebrate milestones
Avoid New Debt
Change spending habits and use cash/debit only
Build Emergency Fund
Once debt-free, redirect payments to savings
Related Financial Calculators
Ready to Break Free from Debt?
Your debt-free journey starts with a single step. Calculate your payoff plan and take control today.