Debt Payoff Calculator

How to use the debt payoff calculator

Add a row for each debt with its balance, its APR and its minimum payment, then set one extra amount that sits on top of all the minimums. The tool adds the minimums and the extra into a single monthly total and runs that same total twice, once in each payoff order.

In both runs every debt receives its minimum every month. Whatever is left over is thrown at one target debt, and when a debt clears its minimum is not released back into the budget: it rolls onto the next target. That rolling is why the last debt disappears so much faster than the first.

The two orders differ in one decision only. Avalanche sends the surplus to the highest APR first, so the most expensive balance shrinks fastest. Snowball sends it to the smallest balance first, so the shortest job finishes first. Everything else about the two runs is identical.

On these particular debts both orders finish in the same month, 33, and the whole difference lands in the interest column. That is common when one large low rate balance sets the end date: whichever order you run, the car loan is the last thing standing and it clears at the same time.

Change the extra amount and the picture moves. At $100.00 a month the interest gap widens to $227.24, and at $400.00 it narrows to $93.67 while avalanche also finishes a month sooner. The reference table below runs five extra amounts so the pattern is visible rather than asserted.

Why avalanche never costs more in interest

This part is arithmetic rather than opinion. Both orders pay the same minimums and spend the same monthly total, so the only variable is which balance the surplus lands on. A dollar removed from a 24% balance stops 24 cents a year of interest; the same dollar on a 7% balance stops seven.

Because that holds for every dollar and every month, no ordering can beat sending the surplus to the highest rate first. Avalanche is therefore the cheapest of all the orders you could run, and snowball can only match it or cost more. On the defaults it costs $159.07 more.

What the two orders look like month by month

The interest column is not the only output. The month each debt disappears differs sharply between the orders, and the tool reports it because it is the thing snowball is built around. On the defaults, snowball retires the $1,200.00 store card in month 6 while avalanche is still 18 months from clearing anything.

So the two outputs point in different directions on these numbers: one order costs $159.07 less, the other empties a statement 18 months sooner. Which of those matters more is not a question a calculator can answer, and this page does not try to. It reports both figures and leaves the choice where it belongs.

The formula, worked line by line

There is no closed form here, because the answer depends on the order in which balances disappear. The engine simulates instead: it accrues a month of interest on every live debt, pays every minimum, throws the remainder at one target, and repeats until nothing is owed. Then it does the whole thing again in the other order.

The monthly total is fixed at the sum of the minimums plus the extra, and it stays fixed for as long as anything is owed. When a debt clears, its minimum does not leave the budget: it joins the surplus. That is the rolling snowball, and both orders use it.

pool = sum of all minimums + extra          (constant while anything is owed)
i[k] = APR[k] ÷ 12 ÷ 100
each month, for every live debt k:
  balance[k] = balance[k] × (1 + i[k])
  pay min(minimum[k], balance[k])
then send the remainder of the pool to the target debt
avalanche target = highest APR still owing
snowball  target = smallest balance still owing

When the pool cannot cover the interest

If the minimums and the extra together come to less than the interest the debts accrue in a month, nothing ever clears and the total climbs. The engine detects that after one month, when the total owed has not fallen, and reports it plainly instead of returning an enormous number of months.

One structural assumption is worth naming: minimums are held constant through the run. Real card minimums usually shrink as the balance does, which would slow the low priority debts slightly in both orders. Enter a minimum near what you actually expect to pay, and the comparison between the two orders stays sound.

Questions people ask