1. What is the Debt Snowball Method?

The debt snowball method is a debt reduction strategy where you pay off debts from smallest to largest, gaining momentum as each balance is paid off. As you eliminate each debt, you roll its minimum payment into the next debt's payment.

2. How Does the Calculator Work?

The calculator uses the snowball payoff formula:

Where:

• \( \text{Debt}_i \) — Individual debts ordered from smallest to largest
• \( \text{Extra} \) — Additional monthly payment you can make
• \( \text{Freed Minimums} \) — Cumulative minimum payments from paid-off debts

Explanation: The calculator sorts your debts from smallest to largest, then calculates how long each will take to pay off as you apply freed-up minimum payments to the next debt.

3. Importance of Debt Payoff Strategy

Details: The snowball method provides psychological wins by eliminating smaller debts first, which can help maintain motivation throughout the payoff process.

4. Using the Calculator

Tips: Enter all debts and their corresponding minimum payments as comma-separated lists. Include any extra monthly payment you can consistently apply to your smallest debt.

5. Frequently Asked Questions (FAQ)

Q1: Why pay smallest debts first instead of highest interest?
A: While mathematically not optimal, the psychological boost from quick wins helps many people stay motivated to become debt-free.

Q2: How accurate is this calculator?
A: It provides an estimate assuming fixed payments and no additional debt. Actual payoff may vary with interest and spending changes.

Q3: Should I include my mortgage?
A: Typically no - focus on consumer debts first (credit cards, personal loans, car payments).

Q4: What if I can't make the extra payment?
A: Even without extra payments, the snowball method still works by rolling freed minimums into remaining debts.

Q5: How does this compare to the avalanche method?
A: Avalanche (paying highest interest first) saves more on interest but may take longer to see progress.