How to Calculate Debt Payoff
What is Debt Payoff?
A debt payoff calculator shows how to eliminate multiple debts using the avalanche (highest interest first) or snowball (lowest balance first) method, with total interest and payoff date.
Formula
Snowball: smallest balance first. Avalanche: highest rate first. Time = principal / (monthly_payment − interest_per_month)
- P
- Principal balance (currency)
- r
- Interest rate (%)
- PMT
- Monthly payment (currency)
Step-by-Step Guide
- 1Avalanche: pay minimums on all; throw extra money at highest APR debt first — minimises total interest
- 2Snowball: pay minimums on all; attack smallest balance first — fastest early wins, more motivating
- 3After one debt paid off: redirect its payment to the next target
- 4Total interest saved vs minimum payments can be thousands
Worked Examples
Input
$10k at 20%, $5k at 15%, $2k at 10% — $300 extra/month, avalanche
Result
Attack $10k debt first; saves most interest overall
Frequently Asked Questions
What's the debt snowball method?
Pay minimums on all debts, attack smallest balance first. Psychological wins motivate continued payoff.
Is avalanche method better?
Mathematically, yes—saves more interest. Snowball is better behaviorally for some people (quick wins).
How much extra should I pay?
Any extra goes to principal. 10-20% above minimum accelerates payoff significantly and saves interest.