Debt Payoff Calculator

What this calculator tells you

When you owe money on several debts, you need a plan for the extra cash that goes beyond the minimum payments. This calculator compares two well-known methods for up to three debts, the snowball and the avalanche, and shows how long each takes to clear all the debts and how much interest each one costs.

Both methods pay the minimum on every debt each month and direct the rest of your total budget at one debt at a time. When a debt is cleared, its minimum payment is added to the budget for the next debt, so the amount you pay each month stays the same until everything is repaid.

The two methods

The snowball method pays off the debt with the smallest balance first. Clearing a small debt quickly gives a sense of progress, and the freed payment then rolls onto the next smallest balance. The avalanche method pays off the debt with the highest interest rate first. Because the most expensive borrowing is cleared earliest, it usually produces the lowest total interest. The two methods can produce different orders of payment, and the calculator shows the result of each.

A worked example

Suppose you have a card balance of 500 at 6% and a second card of 2,000 at 24%. The snowball method targets the 500 balance first because it is smaller, even though it has the lower rate. The avalanche method targets the 2,000 balance first because its rate is higher. In this case the avalanche saves more interest, but the snowball clears a debt sooner, which some people find easier to stay with.

Choosing between them

The avalanche method usually costs less in interest, which matters most when the rates differ widely. The snowball method can be easier to keep to when motivation is hard to sustain, since each cleared account is a visible milestone. If the rates and balances are close, the difference in total cost is small, and the simpler method may be the better choice.

Assumptions and limits

The calculator uses a fixed total monthly budget and a fixed rate on each debt, and assumes no new borrowing. Minimum payments on real accounts are often a percentage of the balance, which falls over time, so the real schedule may differ. Fees, penalty rates and any change in rates are not included.

Debts with different terms or features, such as a loan with a fixed repayment date, may not fit the model neatly. Check each debt's terms before you rely on the result.

Keeping the plan on track

Debt plans fail most often when a shock, such as a car repair, forces new borrowing. Holding a small cash cushion while paying down debt reduces this risk. If a payment is missed, restart the calculation with the new balances rather than abandoning the plan.

Using the result

Use the calculator to choose a method and a total monthly amount that clears your debts by a date you can meet. If the budget is not enough to clear the debts in a reasonable time, look for ways to increase it or to lower the rates, such as a lower-rate consolidation loan, and compare each change with the totals shown.

Choosing a total budget you can keep

The total monthly budget is the most important input. A plan that uses an amount you cannot sustain will stall after a few months, and the freed-up payments will be needed elsewhere. Choose a figure that is firm but realistic, and add a small buffer for irregular costs. If you raise the budget later, rerun the calculation so the schedule reflects the new total.