Free Financial Compass

Choosing Your Debt Payoff Strategy

Tackling debt can feel overwhelming, but a clear strategy can make all the difference. The two most popular and effective methods are the Debt Snowball and the Debt Avalanche. This tool analyzes your specific debts to show you exactly how each method would work for you, helping you choose the path that best fits your personality and financial goals.

The Debt Snowball vs. The Debt Avalanche

• The Debt Snowball (Focus on Motivation): With this method, you pay off your debts from the smallest balance to the largest, regardless of the interest rate. You make minimum payments on all debts, but throw any extra money at the smallest one. Once it's paid off, you "snowball" that payment (and the extra money) onto the next smallest debt. The quick wins from clearing your first few debts can be a powerful motivator to keep you going.
• The Debt Avalanche (Focus on Savings): This method is mathematically optimal. You pay off your debts from the highest interest rate to the lowest. You make minimum payments on everything, but focus all extra cash on the debt with the highest APR. This approach saves you the most money in interest over time, but it may take longer to pay off your first debt, requiring more discipline.

Debt Payoff Calculator

Compare the Snowball and Avalanche methods to find your best strategy. Enter your debts and any extra monthly payment to see your payoff plan.

Interpreting Your Results

The results from this calculator are designed to give you a complete picture to make the best choice:

• Method Comparison Table: This gives you a head-to-head comparison of the two strategies. You can immediately see the difference in total interest paid and how long it will take to become debt-free with each method.
• Recommendation: Based on the numbers, we provide a recommendation. Typically, if the interest savings are significant, the Avalanche method is suggested. If the savings are minimal, the motivational benefits of the Snowball method might be a better choice.
• Payoff Schedule: The detailed table shows you a month-by-month breakdown of how your balances will decrease over time based on the method you select. This provides a clear roadmap for your journey out of debt.