Debt Payoff Calculator

How to Use This Debt Payoff Calculator

1. Enter each of your debts with their name, current balance, interest rate (APR), and minimum monthly payment.

2. Click "Add Another Debt" to include additional debts like credit cards, car loans, student loans, or personal loans.

3. Enter your extra monthly payment amount - this is money beyond the minimum payments you can dedicate to accelerating debt payoff.

4. Select your preferred method or choose "Compare Both" to see side-by-side results.

5. Click "Calculate Payoff Plan" to see your timeline, total interest paid, and recommended payoff order.

What is the Debt Snowball Method?

The debt snowball method, popularized by financial expert Dave Ramsey, focuses on paying off your smallest balance first regardless of interest rate. You make minimum payments on all debts except the smallest, which receives all your extra money until it is eliminated. Once the smallest debt is paid off, you roll that entire payment amount into the next smallest debt.

The primary advantage of the snowball method is psychological momentum. Eliminating debts quickly provides a sense of accomplishment and motivation to continue. Research shows that people who use the snowball method are more likely to successfully pay off all their debt because the quick wins keep them engaged in the process.

What is the Debt Avalanche Method?

The debt avalanche method prioritizes debts with the highest interest rates first, regardless of balance size. You make minimum payments on all debts while directing extra payments to the highest-interest debt. Once that is paid off, you attack the next highest-interest debt.

Mathematically, the avalanche method saves the most money on interest and often results in a faster total payoff time. However, if your highest-interest debt also has a large balance, it may take months or years before you eliminate your first debt, which can be discouraging for some people.

Snowball vs Avalanche: Which Method is Better?

The best method depends on your personality and financial situation:

• Choose Snowball if: You need motivation and quick wins, have debts of similar interest rates, or have struggled with debt payoff before
• Choose Avalanche if: You are disciplined and math-driven, have high-interest debt significantly above others, or want to minimize total interest paid
• The difference: Avalanche typically saves 5-15% more on interest, but snowball has higher success rates for completion

The most important factor is choosing a method you will stick with. A "suboptimal" strategy you follow is better than a "perfect" strategy you abandon.

How Debt Payoff Strategies Work

• Make minimum payments: Always pay at least the minimum on all debts to avoid late fees and credit damage
• Target one debt: Direct all extra payment toward your target debt (smallest or highest-rate)
• Roll payments forward: When a debt is eliminated, add its payment to the next target debt
• Accelerating effect: Your payment power grows as each debt is eliminated, creating a "snowball" effect
• Stay consistent: Maintain your total payment amount even as debts are paid off

Tips for Successful Debt Payoff

• Build a small emergency fund first: $1,000 prevents new debt from unexpected expenses
• Stop adding new debt: Cut up cards or freeze them while paying off existing balances
• Find extra money: Side gigs, selling items, or reducing expenses can accelerate payoff
• Track your progress: Celebrate milestones to maintain motivation
• Consider consolidation: If you qualify for a lower-rate personal loan, consolidation can simplify payments and reduce interest