Debt payoff calculator

How a debt payoff calculator works

A debt payoff calculator takes a list of your debts (balances, interest rates, minimum payments) plus an extra amount you can put toward debt each month, and projects exactly when you'll be debt-free under different strategies.

Both major strategies — avalanche and snowball — make minimum payments on every debt while putting all extra money toward one target debt. The difference is which debt you target first.

Avalanche vs snowball: side by side

• Avalanche method: attack the highest interest rate first, then move to the next highest. Mathematically optimal — saves the most money on interest.
• Snowball method: attack the smallest balance first, regardless of rate, then move to the next smallest. Psychologically optimal — you eliminate debts faster, which builds momentum.

A worked example

In this example the gap is small because the credit card is both the highest-rate AND smallest-balance debt — both methods target it first. The avalanche advantage grows when those don't align (e.g., a large high-rate debt alongside several small low-rate ones).

When to use which method

• Use avalanche if: you're disciplined and motivated by numbers. The interest savings can be significant when there's a big gap between your highest and lowest rates.
• Use snowball if: motivation is your biggest obstacle. Research from Harvard Business School found that people who eliminate small debts first are more likely to finish their payoff plan. The behavioural win can be worth more than the mathematical loss.
• Use a hybrid: wipe out any tiny debts under $500–1,000 first for the quick win, then switch to avalanche for the rest. Captures the best of both.

The "debt or invest" decision

While paying off debt aggressively, you may wonder if you should be investing instead. The simple rule:

• Always capture any employer match in retirement accounts first — that's a 50–100% return you can't get elsewhere.
• Pay off any debt above 7–8% APR before investing additional money. The guaranteed return from killing a 22% credit card beats any expected investment return.
• Debt below 5% APR (most mortgages, some student loans) can coexist with investing — long-term market returns typically exceed those rates.
• Always maintain at least a $1,000–2,000 starter emergency fund alongside any debt payoff plan, or one unexpected expense puts you back on the credit card.

Tactics that accelerate payoff

• Automate minimums + the snowball/avalanche extra. Set up auto-pay for the minimum on every debt plus the extra amount on your target. Removes monthly decisions.
• Apply windfalls. Tax refunds, bonuses, gift money — pour 100% of unexpected income into the target debt. A single $2,000 refund can shave 2–3 months off the timeline.
• Negotiate rates. Call your credit card company and ask for a lower APR. They say yes more often than you'd think — especially if you've been a customer for years and are current on payments.
• Consider consolidation carefully. A personal loan at 10% replacing a 22% credit card saves real money — but only if you don't accumulate new card debt afterwards.
• Cut up the cards. Or freeze them in a block of ice. Whatever it takes. New debt cancels out progress.