Debt Payoff Calculator: Snowball vs Avalanche

Two Strategies to Freedom

Mathematically, they are different. Psychologically, they are miles apart.

1. The Debt Snowball (Psychology)

* Method: List debts smallest to largest. Pay minimums on all, and throw *everything* at the smallest one. * Pros:Quick wins! Knocking out a $500 debt in month 1 feels amazing and builds momentum. * Cons: You pay slightly more interest over time.

2. The Debt Avalanche (Math)

* Method: List debts by Interest Rate (Highest to Lowest). Attack the one with the highest rate (e.g., 24% Credit Card). * Pros: Mathematically optimal. You save the most money and get out of debt fastest. * Cons: It might take 18 months to kill the first big high-interest debt, requiring discipline.

🚀 The Power of "Extra"

Adding just $50 or $100 extra per month can shave *years* off your payoff date. Use the calculator to see the dramatic difference.

Frequently Asked Questions

Q: Why does the bank minimum payment keep me in debt? A: Minimum payments are designed to cover mostly interest and a tiny sliver of principal (often 1% of balance). This keeps you profitable for the bank for decades.

Q: Should I save or pay off debt? A: If your debt interest is > 7% (Credit Cards, Personal Loans), pay it off *before* investing. The guaranteed 20% return of paying off a card beats the stock market.