Debt Payoff Calculator

The formula

The first line is what makes the comparison fair: both strategies spend exactly the same amount every month. Only the destination differs.

Worked example

Three debts — $800 at 5%, $6,000 at 24%, $9,000 at 11% — with $200 a month on top of the minimums.

• avalanche: 34 months, $3,368.22 of interest, first debt gone in month 22
• snowball: 34 months, $3,614.39 of interest, first debt gone in month 4
• the snowball costs $246.17 more — 1.3% of everything paid
• and it finishes in the same month: no delay at all

So the real trade is this: $246.17 to turn a 22-month wait for your first cleared debt into a 4-month one, finishing on the same date either way. Nobody can tell you whether that is worth it. Everybody should be able to tell you what it costs.

What the research actually found

The snowball is usually defended with the word “motivation” and nothing else. But the question has been studied on real data and published. Gal and McShane, in the Journal of Marketing Research in 2012, examined the records of a debt settlement firm’s customers and reported that

closing debt accounts is predictive of debt elimination regardless of the dollar balance of the closed accounts, whereas the dollar balance of closed accounts is not predictive of debt elimination when controlling for the fraction of accounts closed.

Read it slowly, because it is more specific than the usual advice. What predicted getting out of debt was how many accounts had been closed — not how much money those accounts held. Closing a small cheap debt counted as much as closing a large expensive one. That is the empirical case for attacking the smallest balance first, and it is why this page reports the number of open accounts as a result in its own right rather than only the balance.

What it does not establish: that you personally will do better with one method. It is an association measured across a population of people already in debt settlement, and the authors put it carefully — completing discrete subtasks might motivate consumers to persist. We report the finding and the price, and leave the choice where it belongs.

Where this goes wrong

Questions

Which is better, the debt avalanche or the debt snowball?

The avalanche always pays less interest — that is arithmetic, not opinion. The question is how much less, and on the example above it is $246.17, or 1.3% of everything paid, with both methods finishing in the very same month. In exchange, the snowball clears your first debt 18 months sooner. Enter your own debts above: the gap is what should decide, and it varies enormously.

Is there any evidence the snowball works?

Yes, and it is rarely cited. Gal and McShane, in the Journal of Marketing Research (2012), studied customers of a debt settlement firm and found that closing debt accounts is predictive of debt elimination regardless of the dollar balance of the closed accounts, whereas the dollar balance of closed accounts is not predictive of debt elimination when controlling for the fraction of accounts closed. In other words, what predicted getting out of debt was how many accounts someone had closed, not how much money those accounts represented. That is an argument for the snowball, and it is an empirical one rather than a motivational slogan.

Does the snowball always take longer?

No — and the example above is a case in point: both methods finish in the same month, 34. Ordering changes where the interest lands more often than it changes the finish line, because the budget is the same either way. It is worth checking rather than assuming.

What is the freed-up payment, and why does it matter so much?

When a debt is cleared, its minimum payment does not disappear — it rolls into the money attacking the next debt, which is why payoff accelerates as you go. That rolling is what the word snowball describes, and it happens under both methods. Keeping that freed payment in the plan rather than letting it drift back into spending is worth more than the choice of method on most sets of debts.

Should the calculator not just tell me which to pick?

It cannot, honestly. The cheaper method is only cheaper if you finish, and no calculator knows whether you will. What it can do is price the difference exactly, so the decision is made against a number instead of a personality quiz. Where the gap is small, that fact is the most useful thing on the page.

Are minimum payments assumed to stay the same?

Yes — each debt keeps the minimum you enter for as long as it is open. Real card minimums fall as the balance does, which drags repayment out; that behaviour is modelled in detail on our credit card page, where a single debt is the subject. Here the point of comparison is the ordering, so holding minimums flat keeps both strategies on identical footing.

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