What is the Debt Avalanche?

The debt avalanche payoff method is a popular way to pay down debt. The idea is that you pay off the debts with the highest interest rates first; regardless of the balance. Like the other rollover debt payoff methods, you pay the minimum amount due on all of the other accounts and apply any extra money towards the first debt in line. Once that account is paid off, you apply the money you used on the original debt towards the next one and so on.

Is the Debt Avalanche the Best Method?

The advantage that the avalanche payoff method has over the methods is that it is mathematically the most effective way to pay down debt. Due to compounding interest, high interest debts can really make it difficult to pay them down. Attacking the accounts with the ighest interest will save you the most amount of money in the long run.

Drawbacks to the Debt Avalanche

One of the main problems with debt stacking is that it can take a long time to payoff your first debt; which can lead to the loss of motivation. Each individual's debt situation is different and there is no perfect solution that works for everybody. You can choose other debt payoff methods on the calculator. Try them out to see which plan works best for you.

How to Use This Calculator

This calculator was designed to be easy to use so you only need a few pieces of information to get started. The first thing you'll want to fill in is the monthly budget amount. The budget amount refers to the total amount you can afford to pay towards debt each month. It's important to note that this amount includes the minimum payment amounts. For example, let's say you have two credit cards: one has a minimum payment of $200 and the other has a paymet of $300. In addition to those two payments, you can afford to pay an extra $400 each month towards debt. In this case, your total debt payoff budget is $900.

For each debt you have, enter the current balance, minimum payment and interest rate. Click the Add Row button to add a new line for each additional debt. When you are all done, click the Go button to see your plan. You will be able to see your debt free date and how much interest you will be saving if you stick to the plan. You will be given the option to create a free account and the information you entered will be automatically imported.

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# Account Name Current Balance Minimum Payment Interest Rate
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