Debt Avalanche Method Calculator
Model the avalanche method for your debts. See how paying off the highest interest rates first minimizes total interest paid and saves you the most money.
Loan Details
Accelerated Savings
Redirecting your saved monthly payments ($0/mo) for the 0 years you saved at a 7% annual return accumulates this wealth.
Minimize Interest Charges with the Avalanche Method
Our Debt Avalanche Calculator is built to simulate the avalanche payoff strategy, widely considered the mathematically optimal way to eliminate debt. By targeting your highest interest rate debt first while maintaining minimum payments on all other accounts, you minimize the total interest paid and accelerate your debt-free date.
How the Debt Avalanche Strategy Works
The avalanche method focuses on mathematical optimization. You list your debts in order of interest rate:
- Maintain minimum payments on all debts except the one with the highest interest rate.
- Throw all extra money (from savings, side hustles, etc.) at the highest interest rate debt until it is gone.
- Take the entire payment from the paid-off highest interest debt and add it to the next highest interest rate debt.
This minimizes the amount of compounding interest charged. For consumer guidelines on credit and debt relief options, check the Consumer Financial Protection Bureau (CFPB) website.
Worked Numerical Example
Consider a debt of $18,000 at a 15.0% interest rate over a 5-year term, with an extra payment of $250/month:
- Outstanding Balance: $18,000
- Interest Rate: 15.0% (APR)
- Term: 5 Years (60 Months)
- Standard Monthly Payment: $428.22
- Extra Monthly Payment: $250.00
| Payoff Option | Monthly payment | Total Interest Paid | Total Cost of Debt | Payoff Timeline |
|---|---|---|---|---|
| Standard Schedule | $428.22 | $7,693.44 | $25,693.44 | 5.0 Years |
| Accelerated Prepayment | $678.22 | $4,120.12 | $22,120.12 | 2.7 Years |
| Total Savings | +$250.00 / month | $3,573.32 Saved | $3,573.32 Saved | 2.3 Years Saved |
When to Use This vs. Our Other Calculators
To select the most appropriate calculator for your planning:
- Use the Debt Snowball Calculator if you want to prioritize small balances for quick motivation.
- Use the Debt Payoff Calculator to model general combined debt schedules.
- Use the Credit Card Payoff Calculator if you have revolving credit card balances.