Tackle your debt efficiently using the popular Debt Snowball strategy. This calculator helps you determine how long it takes to become debt-free or solves for the monthly payment needed to meet your goals.
Debt Snowball Calculator Excel
Debt Snowball Calculator Excel Formula
The time to payoff a debt ($n$) is calculated using the following logarithmic formula based on the annuity equation:
Formula Source: Investopedia – Debt Snowball Method
Variables:
- B (Balance): The total outstanding principal of the debt.
- P (Payment): The total amount paid every month toward the debt.
- i (Interest Rate): The monthly interest rate (Annual Rate / 12).
- n (Months): The number of months required to reduce the balance to zero.
What is a Debt Snowball Calculator Excel?
A Debt Snowball calculator is a financial tool designed to model the “Snowball Method” of debt repayment. Unlike the Avalanche method (which targets high interest rates), the Snowball method prioritizes paying off the smallest balances first to build psychological momentum.
Using an Excel-based logic or this web module, users can simulate how “rolling over” payments from one debt to the next accelerates the payoff process, often shaving years off their financial obligations.
How to Calculate Debt Snowball (Example):
- List all debts from smallest to largest balance.
- Identify your “Monthly Extra” payment amount.
- Pay the minimum on all debts except the smallest.
- Direct all extra funds to the smallest debt until paid.
- Move the entire payment from the paid debt to the next smallest one.
Related Calculators:
- 🔗 Debt Avalanche Strategy Tool
- 🔗 Credit Card Minimum Payment Calculator
- 🔗 Personal Loan Amortization Excel
- 🔗 Interest Savings Calculator
Frequently Asked Questions (FAQ):
Is the Debt Snowball better than the Avalanche? It depends on your personality. Snowball is better for motivation, while Avalanche saves more money on interest.
Should I include my mortgage in the snowball? Most experts suggest focusing on consumer debt (credit cards, cars, student loans) before tackling the mortgage.
Does this calculator account for compounding? Yes, the formula uses monthly compounding interest as per standard banking practices.
Can I use this for credit cards? Yes, simply input your current balance and the interest rate shown on your statement.