💰 Financial
Debt Payoff Calculator
Compare different debt payoff strategies, such as the Snowball method and the Avalanche method, to see which gets you debt-free the fastest.
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Formula
Snowball: Order debts from smallest balance to largest.
Avalanche: Order debts from highest interest rate to lowest.Snowball Method- Builds momentum with quick wins
Avalanche Method- Saves the most money on interest
Example
Snowball vs Avalanche
You have a $1,000 medical bill (0%), a $2,500 credit card (24%), and a $6,000 car loan (5%).
- Avalanche Method: Pay extra on the 24% credit card first. This minimizes total interest paid across all debts.
- Snowball Method: Pay extra on the $1,000 medical bill first. Getting rid of an entire account quickly provides a psychological boost, even though it costs slightly more in total interest.
Frequently Asked Questions
Mathematically, Avalanche is always better because it reduces total interest. Psychologically, Snowball is highly effective because eliminating smaller debts quickly keeps you motivated.
Continue making the minimum payments on all your debts. Take every extra dollar you have and put it toward your "target" debt (chosen by Snowball or Avalanche).