Debt Payoff Planner

Which debt to kill first

If you have more than one debt — a credit card, a car loan, a student loan — the order in which you pay them off matters. With a fixed monthly budget, you can save thousands in interest and shave years off your timeline just by directing the "extra" beyond minimums at the right debt first. This tool runs the math for both popular strategies side-by-side so you can pick the one that fits your psychology and your wallet.

Snowball vs avalanche — psychology meets math

Avalanche targets the highest-APR debt first. It is mathematically optimal: it minimises total interest paid and minimises total months to debt-free. Use it if you find motivation in saving the most money.

Snowball targets the smallest balance first. It clears individual debts faster (giving you quick wins), then rolls those payments onto the next-smallest. It costs slightly more in interest, but research (notably Kellogg School / Harvard Business School studies) suggests people stick with snowball plans more often — and a plan you actually follow beats a perfect plan you abandon.

Difference between the two is usually small (a few percent of total interest) when APRs are within a few points of each other, but can be substantial if you have one very-high-interest debt.

Minimums first, then pour the surplus

Each month: balance grows by balance × APR ÷ 12, then each minimum is paid (capped at balance), then leftover budget is poured into the priority debt. When a debt hits zero, its minimum redirects to the next priority. The "interest saved vs minimums" stat compares your chosen plan to the scenario where you pay only the minimum on each debt forever.

Promo rates, moving minimums, and emergency buffers

• Don't add new debt. Putting groceries on a credit card while paying it down resets the snowball. Cut up the card or lock it digitally first.
• Minimum payment is a moving target. Credit card minimums recalculate each month (usually a % of balance, often 2–3%). The tool uses your input as a fixed minimum — fine for planning, but real minimums will decline as balances do.
• 0% promotional APR is a trap if you can't clear it. When the promo period ends, interest often back-dates. Set the APR you'll actually pay if your plan slips past the deadline.
• Tax-deductible debt is different. US mortgage interest (if you itemize) and US student loan interest (up to a cap) are deductible; aggressive payoff might cost you a deduction. Avalanche may still win, but the comparison is closer.
• Build a 1-month emergency cushion first. A single car repair on a credit card will undo months of avalanche progress. Most planners suggest $1k–1mo expenses set aside before aggressive payoff.
• Consolidation isn't always cheaper. A balance-transfer card with a 3% fee that lasts 18 months is great if you finish in 18 months. Personal loans replace revolving debt with fixed payments — useful for discipline, but watch the new rate.
• 50-year cap warning. If the warning fires, your budget can't cover even the interest accrual on your highest-rate debt. You need more income, lower rates (consolidation), or settlement.

Pairs with

• loan-calculator — month-by-month amortization for a single debt.
• mortgage-refi-comparison — when mortgage is the largest debt.
• compound-interest-calculator — for the "invest vs pay down" decision after high-rate debt is gone.

Three debts, $900/month — where does the surplus go?

Say you have three debts and a $900/month budget: a $6,000 card at 22% (min $120), a $9,000 car loan at 7% (min $200), and a $4,000 student loan at 5% (min $80). Minimums total $400, leaving $500 to attack one debt. Avalanche throws that $500 at the 22% card first — mathematically the cheapest path, saving the most interest. Snowball throws it at the $4,000 student loan first — the fastest first win, then rolls its $80 onto the next. Both clear the slate in roughly the same window here; avalanche saves a few hundred more, snowball delivers a cleared debt sooner.

Picking a strategy, scaling the budget, and the invest-vs-payoff crossover

Which strategy should I actually pick? Avalanche if saving money motivates you; snowball if visible progress keeps you going. The best plan is the one you'll finish — a slightly costlier plan you stick to beats an optimal one you abandon.

Does a bigger monthly budget help much? Disproportionately, yes. Every extra dollar goes straight at the priority balance after minimums, so raising the budget shortens the timeline faster than it looks — test a couple of figures and watch the interest-saved stat move.

Should I invest instead of overpaying debt? Compare rates. Guaranteed "return" from clearing a 22% card beats almost any investment. Low-rate debt (a 3% loan) is more defensible to carry while investing — the crossover is roughly your expected after-tax return.

What counts as the minimum payment? The smallest amount the lender requires that month. The tool pays every minimum first, then pours the leftover into your chosen priority debt.

The rollover effect — why concentration beats spreading thin

Both strategies pay every minimum first, then pour whatever is left in the budget onto exactly one target debt. Avalanche targets the highest interest rate — mathematically the cheapest path, because it kills the most expensive interest first. Snowball targets the smallest balance — the fastest first clearance, which then frees that debt's minimum to roll onto the next. The compounding trick is the rollover: when a debt is cleared, its old minimum is added to the attack budget for the next one, so each payoff accelerates the one after it. That is why concentrating the extra payment beats spreading it thin.

Splitting payments evenly defeats the purpose

Splitting the extra payment evenly across every debt. It feels fair, but it defeats the rollover and leaves every balance lingering, accruing interest for longer. Pick one target — highest rate or smallest balance — and send the entire surplus there until it is gone. The best plan is the one you will actually finish: a slightly costlier snowball you stick to beats an optimal avalanche you abandon.

Related

Model any single debt's schedule with the loan calculator, and once the debts are cleared, redirect that freed-up budget into the compound interest calculator to see it work for you instead. Our guide compares the two approaches head to head: avalanche vs snowball.

Avalanche vs snowball, side by side

Build your own payoff

1. List every debt with its balance, minimum payment and interest rate.
2. Pay every minimum in full — non-negotiable, or you take late-fee and credit-score damage.
3. Pick one target: highest rate (avalanche) or smallest balance (snowball).
4. Throw the entire leftover budget at that one debt until it is gone.
5. When it clears, roll its old minimum into the next target — that rollover is what accelerates the whole plan.