Debt payoff calculator: snowball versus avalanche.

Two ways to clear several debts

Both methods start the same way: pay the minimum on every debt, then put every spare unit of money toward one debt. The difference is which one you pick.

Snowball attacks the smallest balance first. You clear it quickly, free up its minimum payment, and roll that into the next smallest. The wins come early, which many people find motivating.

Avalanche attacks the highest interest rate first. It usually costs less, because you stop the most expensive debt growing sooner.

What the calculator does

It runs a month by month simulation. Each month interest is added to every balance, minimum payments are made, and everything left over goes to the target debt. When a debt is cleared, its minimum payment joins the pool. The totals stay the same, so the only thing that changes is the order. The result shows how many months each method takes and how much interest you pay in total.

A worked example

Example only. Two debts: a card of 1,000 at 8% with a minimum of 30, and a loan of 5,000 at 24% with a minimum of 100. You have 200 extra a month. Snowball clears the card first and takes 23 months, paying about 1,477 in interest. Avalanche goes to the 24% loan first and takes 22 months, paying about 1,251. That is roughly 226 less. The saving depends on how far apart the rates are. When the smallest balance also has the highest rate, the two methods give the same answer.

Which should you choose

If the interest gap is large, avalanche saves real money. If you tend to lose motivation, snowball's early wins might help you finish, and a plan you finish is worth more than a cheaper plan you abandon. Run both here and look at the difference. If it is small, pick the one that feels better. The Journal has a longer comparison in debt snowball vs avalanche.

Things the calculator does not model

It assumes fixed interest rates, no new borrowing, no fees and payments made at the end of each month. Real cards compound daily or monthly, change rates and have minimums that shrink as the balance falls. Treat the output as a clear estimate. If a minimum payment is lower than the monthly interest, a debt will never clear on that payment alone, and the calculator will say so when extra payments are not enough.

Before you start

Gather the true balance and APR from each statement. Include everything you actually pay interest on. If you are struggling to meet minimums, speak to your lender or a qualified debt adviser. This page is general information, not advice.

Next steps

Work out how much extra you can find using the 50/30/20 calculator and the Journal guide to living paycheck to paycheck. In Vaulta, you can set a debt payment as a goal with a date and keep an eye on your totals in net worth tracking.

Making the plan work in real life

Automate the minimum payments so none are ever missed, then make the extra payment on the day you are paid, not at the end of the month. Stop adding new balance to the cards you are clearing, or the simulation stops describing your situation. If a lender offers a lower rate or a longer term, run the calculator again with the new figures. A lower rate nearly always beats any choice of method.