Debt Payoff Calculator Formula & How It Works
Avalanche: Pay minimums on all debts; extra payment → highest-rate debt first
- Avalanche: minimises total interest (mathematically optimal)
- Snowball: pays smallest balance first (psychological wins)
- Both strategies are identical if balances and rates are equal
- Extra payment = Total budget − all minimums
The debt avalanche saves the most money by targeting the highest-interest debt first. The debt snowball provides motivational wins by clearing small balances first. Studies show snowball users are more likely to stick with the plan. Choose based on whether you're motivated more by math or motivation.