Debt Avalanche Calculator: Maximize Savings
This Debt Avalanche Calculator provides a strategic plan to pay off your debts faster and save money on interest. The Avalanche method prioritizes debts by Annual Interest Rate (APR), ensuring your extra payments always target the most expensive debt first. Use the comparison mode to see exactly how much time and interest you save versus the Minimum Payment or Snowball (Smallest Balance First) methods.
Debt List Input
Your Debt Avalanche Results
Interest Saved (Avalanche vs. Comparison)
Time Saved (Avalanche vs. Comparison)
Total Avalanche Interest Paid
Avalanche Payoff Date
Visual Comparison (Avalanche vs. Comparison Method)
Monthly Payment Breakdown (Avalanche)
How the Debt Avalanche Calculator Works
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Understanding the Debt Avalanche Formula
The core of the Avalanche method is prioritizing debts by APR. The monthly interest is calculated using the formula $I = P \cdot r \cdot t$ (or a monthly compounding version for accuracy), where $I$ is interest, $P$ is the principal, $r$ is the monthly interest rate ($\text{APR}/1200$), and $t$ is the time period (1 month). The extra payment is always allocated to the debt with the highest APR after all minimum payments are made.
Why Prioritizing Interest Rate Saves You Money
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Comparison: Avalanche vs. Snowball vs. Minimum Payments
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Frequently Asked Questions (FAQ)
The Debt Avalanche method is a debt repayment strategy where you pay the minimum payment on all debts, and direct any extra monthly payment towards the debt with the highest annual interest rate (APR). Once that debt is paid off, the freed-up minimum payment is added to the extra payment and rolled over to the next highest-APR debt.
The calculator simulates your monthly payments based on your total monthly budget. In each month, it calculates the interest accrued on every debt, applies the minimum payments, and then uses the remaining 'extra' budget to aggressively pay down the highest-interest debt until all balances reach zero. The total number of months is then converted to a specific payoff date.
The **Avalanche** method prioritizes debts by interest rate (APR), saving you the most money in interest. The **Snowball** method prioritizes debts by balance size (smallest first), providing psychological wins and motivation but typically resulting in more interest paid overall.
Yes, the calculator uses standard monthly compounding interest formulas suitable for most consumer debts like credit cards, personal loans, and student loans. However, mortgage or auto loan calculations may slightly differ due to specific amortization schedules.
If your monthly budget only covers the sum of all minimum payments, the calculator will still function. The Avalanche method will effectively turn into a standard minimum payment schedule, but the breakdown will still illustrate the total time and interest required to pay off the debts using no extra funds.
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