Debt Payoff Calculator
Estimate time to pay off multiple debts using debt avalanche method
The calculator below estimates the amount of time required to pay back one or more debts. Additionally, it gives users the most cost-efficient payoff sequence, with the option of adding extra payments. This calculator utilizes the debt avalanche method, considered the most cost-efficient payoff strategy from a financial perspective.
Debt Payoff Calculator
| Debt name | Remaining balance | Monthly or min. payment | Interest rate | Actions |
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If 'Yes' is chosen, after a debt has been paid off, the money that was being paid to that specific debt will be distributed towards paying off remaining debts; the total amount initially allotted to monthly payments will be fixed until all debts are paid off.
If 'No' is chosen, after a debt is paid off, the monthly payment for that particular debt will not be distributed towards paying off the remaining debts. In this case, the total amount allotted to monthly payments decreases as debts are paid off.
Understanding the Debt Avalanche Method
The debt avalanche method is a debt payoff strategy that prioritizes paying off debts with the highest interest rates first. This approach minimizes the total interest paid over time, making it the most cost-effective debt payoff strategy.
How it works: You continue making minimum payments on all debts while applying any extra money toward the debt with the highest interest rate. Once that debt is paid off, you move the extra payment to the next highest interest rate debt, creating a "snowball" effect.
Benefits: This method saves you the most money on interest charges and helps you become debt-free faster than other payoff strategies.