1. What is the Debt Avalanche Method?

The Debt Avalanche method is a debt repayment strategy where you pay off debts in order of highest interest rate first while making minimum payments on all others. This method minimizes the total interest paid over time.

2. How Does the Calculator Work?

The calculator uses the avalanche formula:

Where:

• \( \text{Debt}_i \) — Individual debt balance
• \( \text{Extra} \) — Additional monthly payment
• \( \text{Freed} \) — Minimum payments from paid-off debts

Explanation: The calculator creates an amortization schedule for each debt, applying all extra payments to the highest interest debt first until it's paid off, then moving to the next highest.

3. Importance of Debt Payoff Strategy

Details: Choosing the right payoff strategy can save thousands in interest and shorten your debt-free timeline. The avalanche method is mathematically optimal for interest savings.

4. Using the Calculator

Tips: Enter each debt as "Balance,InterestRate,MinimumPayment" separated by commas. Multiple debts should be on separate lines. Include any extra monthly payment you can make.

5. Frequently Asked Questions (FAQ)

Q1: Why choose avalanche over snowball method?
A: Avalanche saves more on interest, while snowball (paying smallest debts first) provides psychological wins sooner.

Q2: How accurate are these calculations?
A: The calculations assume fixed interest rates and consistent payments. Actual results may vary if rates change.

Q3: Should I include my mortgage?
A: Typically only include high-interest debt (credit cards, personal loans). Low-rate mortgages may be better kept.

Q4: What if I can't make extra payments?
A: The calculator still works with $0 extra, showing minimum payment timeline.

Q5: How often should I recalculate?
A: Recalculate whenever your financial situation changes (new debt, increased income, etc.).