Debt Payoff Calculator
Strategy Comparison
Avalanche
Pay highest interest rate first. Saves the most money.
Snowball
Pay smallest balance first. Builds momentum with quick wins.
Related Calculators
Debt Payoff Strategies
The Debt Avalanche Method
The avalanche method prioritizes debts by interest rate, paying off the highest rate first while making minimum payments on others. This approach minimizes total interest paid and is mathematically optimal.
Avalanche Steps
- List all debts by interest rate (highest to lowest)
- Make minimum payments on all debts
- Put all extra money toward the highest-rate debt
- When paid off, roll that payment to the next highest rate
- Repeat until debt-free
The Debt Snowball Method
The snowball method prioritizes debts by balance, paying off the smallest balance first. While it may cost more in interest, the quick wins provide psychological motivation that helps many people stick with their payoff plan.
Snowball Steps
- List all debts by balance (smallest to largest)
- Make minimum payments on all debts
- Put all extra money toward the smallest balance
- When paid off, roll that payment to the next smallest
- Repeat until debt-free (momentum builds like a snowball)
Which Method Is Better?
| Factor | Avalanche | Snowball |
|---|---|---|
| Total interest paid | Lower ✓ | Higher |
| Time to first win | Longer | Faster ✓ |
| Psychological boost | Moderate | High ✓ |
| Best for | Disciplined savers | Those needing motivation |
Finding Extra Money to Pay Down Debt
Cut Expenses
- Cancel unused subscriptions
- Reduce dining out
- Lower utility bills
- Shop with a list
Increase Income
- Sell unused items
- Start a side gig
- Ask for a raise
- Take on overtime
Common Debt Types & Rates
| Debt Type | Typical APR | Priority |
|---|---|---|
| Payday loans | 300-500% | Highest priority |
| Credit cards | 15-25% | High priority |
| Personal loans | 6-15% | Medium priority |
| Auto loans | 4-10% | Medium priority |
| Student loans | 3-7% | Lower priority |
| Mortgages | 3-7% | Lowest priority |
Important Tips
- Build a small emergency fund ($1,000) before aggressively paying debt
- Don't close credit cards after paying them off (affects credit score)
- Consider balance transfer cards for high-rate debt (0% intro APR)
- Automate payments to never miss a due date
- The best method is the one you'll stick with
Frequently Asked Questions
What is the difference between the debt avalanche and snowball methods?
The debt avalanche method pays off debts from highest to lowest interest rate, saving the most money on interest. The debt snowball method pays off debts from smallest to largest balance, providing quick wins and psychological motivation. Mathematically, avalanche saves more money, but studies show snowball's quick wins help many people stay committed and actually finish paying off their debt.
How much extra should I pay toward debt each month?
Pay as much as you can comfortably afford after covering essential expenses. Even an extra $50-100/month makes a significant difference. Calculate your discretionary spending and redirect what you can. Many people find $200-500/month extra is achievable by cutting subscriptions, dining out less, or taking on side income.
Should I save or pay off debt first?
Build a small emergency fund first ($1,000-2,000) to avoid going deeper into debt for unexpected expenses. Then focus aggressively on high-interest debt like credit cards. Once high-interest debt is paid, balance saving and paying off lower-rate debt like mortgages and student loans based on interest rates and your risk tolerance.
How long will it take to pay off my debt?
It depends on your total debt, interest rates, and monthly payment amount. Use our calculator to see your specific timeline. As a rough guide, paying $500/month toward $10,000 in credit card debt at 18% APR takes about 24 months. Doubling your payment can often cut payoff time by more than half due to reduced interest accumulation.