Debt Payoff Planner
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
Debt free in
2 yr 10 mo
Paying the highest rate first
- Total interest$2,685.40
- Total paid$20,585.40
Avalanche (highest rate first)
Snowball (smallest balance first)
Both strategies cost about the same here, so pick whichever you will actually stick to.
Assumes fixed rates, no new borrowing, and that every minimum is paid on time. Rolling each cleared debt’s payment into the next is what makes either strategy work.
Choosing an order to pay debts in
With one debt there is nothing to decide. With four, the order you attack them in changes both the date you are free and the total you pay. The two established methods disagree: avalanche targets the highest interest rate first, snowball targets the smallest balance first. This planner runs both against your actual figures and reports what each one costs.
The mechanism underneath either method is the same and is the part that does the work: pay every minimum, throw everything spare at one target debt, and when that debt clears, roll its payment into the next one. The total going out never falls, so each cleared debt accelerates the one behind it.
A worked example where the two disagree
Take a $8,000 card at 21.99% with a $200 minimum and a $1,200 store card at 6.99% with a $40 minimum, plus $200 a month spare. Avalanche attacks the big expensive card and finishes in 26 months with $2,172.12 of interest. Snowball clears the small cheap card first — gone in month 6 — but finishes in 27 months with $2,435.75 of interest.
So avalanche wins by $263.63 and one month, and snowball buys a debt gone in six months instead of twenty-six. That is the trade, stated in the only terms that matter: a specific amount of money against a specific amount of momentum.
The two often coincide. With the planner’s default set — a $5,000 card at 19.99%, a $12,000 car loan at 7.5% and a $900 store card at 24.99% — both methods finish in 34 months with $2,685.40 of interest, because the smallest balance happens to carry the highest rate. When that is true, there is no decision to make.
How the plan is simulated
Each month the planner charges every outstanding debt interest of balance × (annual rate ÷ 12), pays each minimum in strategy order, then applies whatever is left of the budget to the first unpaid debt in that order. The budget is the sum of all minimums plus the extra you set, and it stays constant for the whole run.
Because the simulation is month by month rather than a formula, the rolled-over payments are handled exactly: the month a debt clears, its minimum is freed and immediately available to the next target. That roll-over is worth more than the choice of strategy in most real cases.
What the plan assumes
Fixed rates, fixed minimums, no new borrowing, and every payment made on time. Real minimums usually fall as the balance falls, which slows a plan that assumes they stay put; treat the projected date as a best case unless you commit to holding the payment steady. Promotional rates that expire, late fees, over-limit fees and annual fees are not modelled.
Neither is anything outside the arithmetic — and that is often the deciding factor. Avalanche is mathematically optimal by definition; it is worth less than snowball if you abandon it in month nine. Pick the plan you will still be running next year.
Debt strategy questions
How much does choosing wrong actually cost?
Usually less than people fear. On the example here, snowball costs $263.63 more than avalanche across 27 months — roughly $10 a month for the satisfaction of clearing a debt in month six. The gap widens when a large balance carries a much higher rate than everything else.
Should I clear debt before building an emergency fund?
A common compromise is a small buffer first — enough to absorb a car repair — then attack the debt, because an unexpected bill with no buffer goes straight back onto the card and undoes months of progress. Beyond that buffer, high-rate debt beats low-yield savings on the arithmetic.
What if the plan says the debts never clear?
That means the total budget does not cover the interest being charged across all the debts. It is a signal to look at the rates themselves — a balance transfer, a consolidation loan, or a hardship arrangement with the lender — rather than to keep paying into a balance that is growing.