Debt Snowball Calculator

What this calculator does

This calculator simulates a debt-payoff plan month by month using either the snowball method (smallest balance first) or the avalanche method (highest APR first). Enter each of your debts — balance, minimum payment, APR — and an extra monthly payment you can commit. The tool returns the time to debt-free, total interest paid, total paid, and the order in which each debt gets retired. It also runs the alternative method side-by-side so you can compare.

All math is an iterative JavaScript simulation running locally on your device.

Snowball vs avalanche — the two strategies

Both methods cover all minimum payments every month, then apply the extra payment to a single “priority” debt. The difference is which debt gets that priority:

• Snowball: the debt with the smallest current balance gets the extra payment. When that debt is paid off, its minimum payment rolls into the pool and the next-smallest debt becomes the priority. Popularised by Dave Ramsey. The argument: paying off small debts quickly produces psychological wins that keep you motivated.

• Avalanche: the debt with the highest APR gets the extra payment. Mathematically optimal — minimizes total interest paid over the whole payoff period. The argument: discipline yourself to follow the math; the savings are real.

The dollar gap between the two depends on your specific debt mix. If all your debts have similar APRs, snowball and avalanche produce nearly identical results. If you have one high-APR card buried under bigger low-APR debts, avalanche can save thousands.

Worked example

Three debts:

With an extra $200/month:

• Snowball: pay off Card A first (it has the smallest balance), even though Card B has a slightly lower APR. Then Card B, then the personal loan.
• Avalanche: pay off Card A first (it also has the highest APR — in this example both methods happen to agree on the first debt). Then Card B (the higher APR of the remaining two), then the personal loan.

In this specific portfolio, the two methods are close in total cost because the highest-APR debt also happens to be the smallest. In portfolios where a large debt has the highest APR, avalanche can save meaningfully more.

Why the simulation needs to iterate month by month

The standard amortization formula (used for mortgages and single loans) doesn’t work cleanly for multi-debt payoff because:

1. Interest accrues each month on the current balance after payments, not on the original balance.
2. The “priority” debt changes as debts are paid off — snowball/ avalanche reorder when a debt hits zero.
3. Slack from minimum payments (when a debt is below its minimum’s full payment) rolls into the pool.
4. The extra payment amount may not be a fixed dollar value if you also choose to roll freed-up minimums into the extra pool.

The simulation captures these dynamics by stepping forward one month at a time, updating balances and re-sorting priorities. This is the same approach used by spreadsheet templates (which have a row per month and hundreds of rows for long payoffs).

Sequencing rules — pay yourself, then debt

Standard financial-planning sequence for someone with debt:

1. Employer 401(k) match (free money, takes precedence over almost anything — typically 3-5% of salary).
2. Small starter emergency fund (~$1,000) to cover routine emergencies without resorting to new debt.
3. Aggressive debt payoff — snowball or avalanche, whichever you’ll stick with.
4. Full emergency fund (3-6 months of essential expenses) once high-APR debt is cleared.
5. Investing — IRA, brokerage, increased 401(k) — once debt is cleared and emergency fund is full.

A common deviation: people start step 5 before clearing step 3. Mathematically this is often a mistake. Paying off a 20% APR credit card is equivalent to a guaranteed 20% return, which beats any realistic investment return.

The exception: if you have a low-APR mortgage and high-yield savings account paying decent returns, prepaying the mortgage may not beat keeping the cash invested. The break-even APR is roughly today’s risk-free yield plus a margin. As of 2024-25, that means consumer-debt APRs above ~6% are typically worth paying off before investing extra; APRs below that, the answer is more nuanced.

Privacy

The simulation runs as an iterative JavaScript loop on your device. Debt balances, minimums, APRs, extra payment — every value stays in your browser tab. No fetch calls, no analytics on your financial data, no server logging.