Debt Payoff Calculator
Compare Snowball vs. Avalanche strategies
Add a Debt
Your Debts
What is the Debt Snowball Calculator?
The Debt Snowball Calculator is a strategic financial tool designed to help you determine the fastest and most efficient way to eliminate multiple sources of debt.
Whether you have credit card balances, student loans, or medical bills, this calculator compares two powerful payoff methods: the Debt Snowball and the Debt Avalanche.
Think of your debt like a cluttered garage. You can either start by clearing out the smallest boxes first to create space quickly (Snowball), or you can tackle the heaviest, most difficult item first because it’s costing you the most energy to move (Avalanche).
This calculator simulates your financial future month-by-month, showing you exactly when you will be debt-free based on your chosen strategy and budget.
The Math Behind the Method
At its core, debt payoff is a battle between Principal (what you owe) and Interest (the cost of borrowing).
The calculation relies on the standard amortization concept, but with a twist: Rollover Payments.
When one debt is paid off, the money you were paying toward it—plus its minimum payment—rolls over into the payment for the next debt on your list. This creates a compounding effect, accelerating your payoff speed over time.
The Strategies
- Debt Snowball (Behavioral Approach): Debts are sorted by Balance (Low to High). You ignore interest rates and focus entirely on eliminating the smallest debt first. The “quick wins” provide psychological momentum, which behavioral economists argue helps people stick to the plan longer.
- Debt Avalanche (Mathematical Approach): Debts are sorted by Interest Rate (High to Low). You focus your extra money on the debt that is charging you the most interest. This is mathematically superior because it minimizes the total amount of interest paid over the life of the loans.
The Core Formula
While the simulation is complex, the monthly interest for any single debt is calculated using the simple interest formula:
Monthly Interest = Current Balance × (Annual Interest Rate ÷ 12)
If your minimum payment doesn’t exceed this number, your debt will grow instead of shrink (known as negative amortization). This calculator automatically checks for this risk.
How to Use This Calculator
Follow these steps to generate your personalized payoff plan:
- Select Your Strategy: * Choose Snowball if you need motivation and quick wins.
- Choose Avalanche if you want to save the maximum amount of money on interest.
- Set Your Extra Monthly Budget: Enter the amount of extra cash you can dedicate to debt payoff every month. This is money on top of your required minimum payments. Even an extra $50 can shave months off your timeline.
- Add Your Debts:For each credit card or loan, enter the:
- Name: (e.g., “Visa” or “Student Loan”)
- Balance: The total amount you currently owe.
- Min Payment: The lowest amount the bank requires you to pay.
- Interest Rate (%): The APR found on your monthly statement.
- Review the Plan:Click “Add Debt” for each item. The calculator updates in real-time. Toggle between Snowball and Avalanche to see how the “Debt Free Date” and “Total Interest” numbers change.
Interpreting Your Results
Once your debts are entered, the calculator provides three key metrics. Here is how to read them:
- Debt Free Date: This is the finish line. It assumes you never miss a payment and never add new charges to your cards.
- Benchmark: If this date is more than 5 years away, consider increasing your monthly budget or seeking credit counseling.
- Total Interest: This is the “cost” of your debt. It is money paid to the bank that purchased nothing for you.
- Insight: Compare the Total Interest between Snowball and Avalanche. The difference represents the “cost” of choosing psychology over math. Often, the difference is smaller than people expect, making the Snowball method a valid choice for many.
- Total Duration: The precise time in years and months until you owe $0.
Limitations
While this calculator provides a powerful forecast, keep these real-world constraints in mind:
- Variable Interest Rates: The calculator assumes your interest rates (APR) remain fixed forever. In reality, credit card rates are often variable and fluctuate with the federal prime rate.
- Minimum Payment Fluctuations: Most credit card minimum payments decrease as your balance decreases (usually calculated as 1-3% of the balance). This calculator assumes you continue paying the fixed minimum amount you entered until the debt is gone, which is the faster way to pay off debt.
- Human Behavior: The model assumes perfect discipline—no new spending on the cards and no missed payments. It cannot account for emergencies that might cause you to pause your payoff plan.
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