Debt Payoff Planner

How the Debt Payoff Planner Works

This planner simulates two popular debt payoff strategies: the avalanche method and the snowball method. Both methods have you make minimum payments on all debts while directing any extra money to one priority debt. The difference is how they choose the priority.

The avalanche method targets the debt with the highest interest rate first, which minimizes total interest paid. The snowball method targets the smallest balance first, giving you quick wins that build momentum. Both work; the avalanche method saves more money, while the snowball method is often easier to stick with psychologically.

Frequently Asked Questions

How much faster will extra payments pay off my debt?

The impact depends on your balances and interest rates. As a general example, adding $200/month in extra payments to $20,000 of debt at an average of 15% interest can cut your payoff time from over 10 years to under 4 years and save you over $10,000 in interest. Even $50/month extra makes a meaningful difference on high-rate debts like credit cards.

Which is better: avalanche or snowball?

The avalanche method is mathematically optimal because it minimizes interest charges. However, studies (including one published in the Harvard Business Review) found that people are more likely to succeed with the snowball method because paying off small debts quickly provides motivational wins. If you are disciplined and motivated by numbers, choose avalanche. If you need quick wins to stay on track, choose snowball.

Should I consolidate my debts instead?

Debt consolidation can help if you qualify for a lower interest rate than your current weighted average. A balance transfer card with a 0% introductory rate or a personal loan at a lower rate can save money and simplify payments. However, consolidation only works if you stop accumulating new debt. Avoid consolidation if the new loan has high fees or if a longer term means you pay more interest overall.