Debt Payoff Planner
Enter up to 5 debts and find out which payoff strategy — the debt snowball or the debt avalanche — gets you debt-free fastest and saves the most interest. Add an extra monthly payment to turbocharge either strategy.
This calculator provides estimates for general informational purposes only and does not constitute financial advice. Consult a qualified financial professional before making any financial decisions.
How It Works
Both strategies require you to make minimum payments on all debts, then apply any extra payment to one target debt at a time.
Debt Snowball (popularized by Dave Ramsey):
- Order debts from smallest balance to largest
- Extra payment goes to the smallest balance
- When it is paid off, its minimum + the extra rolls to the next smallest
- Psychological win: early payoffs provide motivation
Debt Avalanche (mathematically optimal):
- Order debts from highest interest rate to lowest
- Extra payment goes to the highest-rate debt
- When it is paid off, its minimum + the extra rolls to the next highest rate
- Financial win: minimizes total interest paid
The algorithm runs month by month:
1. Accrue interest on all balances (balance × monthly rate)
2. Apply each debt's minimum payment
3. Apply extra payment to the target debt (snowball: lowest balance; avalanche: highest rate)
4. When a debt reaches $0, reallocate its minimum to the next target
5. Repeat until all balances are $0
The avalanche always pays equal or less total interest than the snowball. The difference is often hundreds to thousands of dollars on typical debt loads. However, if the snowball provides the motivation to stay on track, it can be the better behavioral choice.
Frequently Asked Questions
Which is better: snowball or avalanche?
Mathematically, the avalanche saves the most money because you eliminate high-interest debt first. The snowball may be better behaviorally — early wins keep you motivated. If discipline is not an issue, use the avalanche. If you need motivation milestones, use the snowball.
How much difference does the extra monthly payment make?
Dramatically. Even an extra $50–$100/month can cut months or years off your payoff timeline and save thousands in interest. The larger the extra payment, the more dramatic the effect. Any amount consistently applied accelerates debt freedom.
Should I include my mortgage in this planner?
Generally, focus the debt payoff planner on high-interest consumer debt (credit cards, personal loans, auto loans). Mortgages typically have much lower rates and tax advantages. Pay high-interest debt first, then consider extra mortgage payments.
What if two debts have the same balance (snowball) or rate (avalanche)?
When debts tie, target the one with the higher interest rate (for snowball ties) or the lower balance (for avalanche ties) to break the tie. Our calculator handles ties automatically.
What happens when a debt is paid off?
When a debt reaches zero, its former minimum payment is added to the extra payment pool and redirected to the next target debt. This accelerating rollover is what gives the "snowball" its name — it grows bigger as each debt is eliminated.