The Ultimate Guide to Paying Off Debt: Avalanche vs. Snowball vs. Custom

Managing multiple debts can feel overwhelming, but with a clear strategy, you can take control of your finances. This calculator empowers you by modeling the most effective payoff plans, showing you the path to becoming debt-free.

Debt Avalanche: The Financially Optimal Method

The Debt Avalanche method involves making minimum payments on all your debts, then putting any extra money toward the debt with the highest Annual Percentage Rate (APR). Once that debt is gone, you "avalanche" its payment onto the next-highest-APR debt.

• Best For: People who are motivated by saving the most money possible and want to get out of debt at the fastest mathematical speed.
• Why it Works: By eliminating high-interest debt first, you prevent that debt from accumulating more interest over time, reducing your total cost.

Debt Snowball: The Psychologically Powerful Method

The Debt Snowball method involves making minimum payments on all debts, then putting extra money toward the debt with the lowest balance. Once that's paid off, you "snowball" that payment onto the next-smallest debt.

• Best For: People who need early, frequent wins to stay motivated. Paying off a small debt completely can provide a powerful psychological boost to keep going.
• Why it Works: It builds momentum. The feeling of progress can be more valuable than pure optimization for those who struggle with staying on track.

Custom Strategy: Your Plan, Your Priority

Sometimes, your personal situation dictates a different priority. You might want to pay off a high-stress personal loan from family first, or eliminate a specific debt before a major life event. The "Custom Order" strategy gives you full control. Simply drag and drop the debt cards in the order you wish to prioritize them for extra payments.

The Bottom Line

There is no single "best" plan for everyone. Use the comparison table in the results to see the real-world difference in time and money between the Avalanche and Snowball methods. The best strategy is always the one you can stick with consistently until you are finally debt-free.