Debt Payoff Calculator Tutorial

1. Understanding the Strategies

Debt Snowball Method

• Pay off smallest balances first
• Maintain minimum payments on all debts
• Roll payments to next smallest debt
• Best for motivation and quick wins

Debt Avalanche Method

• Pay off highest interest rates first
• Maintain minimum payments on all debts
• Roll payments to next highest rate
• Best for saving money on interest

2. Inputting Your Debts

1

Debt Information

For each debt, you'll need:

Debt Name: Identify the debt (e.g., "Credit Card", "Car Loan")
Balance: Current amount owed
Interest Rate: Annual percentage rate (APR)
Minimum Payment: Required monthly payment

2

Total Monthly Payment

Enter the total amount you can afford to pay toward all debts combined each month. This should be more than the sum of your minimum payments to make progress.

3. Interpreting Results

Recommended Strategy

The calculator will recommend either Avalanche or Snowball based on which saves you more money or gets you debt-free faster.

Time and Cost Analysis

Compare the total time to become debt-free and the total interest paid under each method. Consider both the financial and psychological factors when choosing your approach.

4. Tips for Success

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Be accurate with interest rates

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Update balances regularly

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Consider windfalls (tax returns, bonuses)

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Stick to your chosen method

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Celebrate small victories

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Re-calculate when circumstances change

Example Scenario

Consider someone with three debts:

• Credit Card: $5,000 at 18.9% ($100 min payment)
• Personal Loan: $8,000 at 11.5% ($200 min payment)
• Car Loan: $12,000 at 6.5% ($250 min payment)

With $800 monthly payment, the calculator would show that Avalanche saves about $1,200 in interest compared to Snowball, but Snowball provides earlier psychological wins by eliminating the credit card debt faster.