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Debt Avalanche Method:
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The Debt Avalanche method is a debt repayment strategy where you pay minimums on all debts, then apply any extra payment to the debt with the highest interest rate first. This method mathematically minimizes the total interest paid over time.
The calculator uses the Debt Avalanche formula:
Where:
Explanation: The calculator simulates monthly payments, applying minimums to all debts and extra payments to the highest interest debt until all debts are paid off.
Details: Choosing the right payoff strategy can save thousands in interest and help you become debt-free faster. The avalanche method is mathematically optimal for interest savings.
Tips: Enter each debt as "Balance,InterestRate,MinimumPayment" separated by semicolons. For example: "5000,18.9,100; 10000,5.5,200". Enter your total extra monthly payment you can make beyond minimums.
Q1: Why choose avalanche over snowball method?
A: Avalanche saves more money in interest long-term, while snowball (paying smallest debts first) provides psychological wins but costs more in interest.
Q2: What if I can't pay extra each month?
A: The calculator still works with $0 extra, showing how long it will take paying just minimums (often decades for credit card debt).
Q3: Should I include mortgage/auto loans?
A: Typically focus on high-interest debt first (credit cards > personal loans > auto > mortgage), but you can include all debts for a complete picture.
Q4: How accurate is the calculator?
A: It provides a good estimate but actual payoff may vary slightly due to changing interest rates, payment timing, or additional charges.
Q5: Can I see month-by-month progress?
A: This calculator shows total time and interest. For detailed amortization, consider a spreadsheet or more advanced tools.