Struggling to decide how to tackle your debt? Use our Avalanche vs Snowball Calculator to compare the two most popular debt repayment strategies. Find out whether focusing on high interest rates (Avalanche) or small balances (Snowball) will save you more money and time.
Avalanche vs Snowball Calculator
Debt #1
Debt #2
Comparison Summary
Avalanche vs Snowball Calculator Formula
Total Interest ($I$) per month is calculated as:
$I_m = B \times \frac{r}{12}$
Where:
- $B$ = Current Balance
- $r$ = Annual Interest Rate (decimal)
Avalanche Method: Sort debts by Interest Rate ($r$) descending.
Snowball Method: Sort debts by Balance ($B$) ascending.
Variables Explained
- Balance: The total amount of money you currently owe on a specific debt.
- Interest Rate: The annual percentage rate (APR) charged by the lender.
- Minimum Monthly Payment: The smallest amount you must pay each month to remain in good standing.
- Extra Monthly Payment: The additional cash you can allocate to your debt repayment beyond the minimums.
What is the Avalanche vs Snowball Calculator?
The debt avalanche and debt snowball are two popular strategies for paying off multiple loans or credit card balances. While both require you to pay the minimum on all debts, they differ in how they prioritize extra payments.
The Debt Avalanche focuses on mathematical efficiency by targeting the debt with the highest interest rate first, minimizing total interest paid. The Debt Snowball focuses on behavioral psychology by paying off the smallest balance first, providing quick “wins” to keep you motivated.
How to Calculate Avalanche vs Snowball (Example)
- List all your debts with their balances and interest rates.
- Identify your total monthly budget for debt repayment.
- For Avalanche: Direct all extra funds to the debt with the highest APR.
- For Snowball: Direct all extra funds to the debt with the lowest balance.
- Once a debt is paid off, “roll” its payment amount into the next target debt.
Frequently Asked Questions (FAQ)
Which method is mathematically better?
The Debt Avalanche is always mathematically superior because it reduces the total amount of interest accrued over time.
Why would anyone choose the Snowball method?
The Snowball method is effective for those who need psychological motivation. Seeing a debt disappear quickly can encourage you to stick to the plan.
Can I combine both methods?
Yes, many people use a “hybrid” approach, paying off a very small balance first for motivation, then switching to high-interest debts.
Does this work for mortgages?
Yes, but since mortgages usually have lower rates and higher balances, they are often the last debts addressed in these strategies.