Debt Payoff/Snowball Calculator
Create a plan to pay off multiple debts using the debt snowball method.
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Build Momentum with the Debt Snowball Method
Our Debt Snowball Calculator creates a strategic payoff plan by focusing on your smallest debts first, providing the psychological wins needed to stay motivated on your debt-free journey.
What is the Debt Snowball Method?
The debt snowball method is a popular debt-reduction strategy that prioritizes paying off debts from the smallest balance to the largest, regardless of the interest rate. The "snowball" effect occurs as you pay off each small debt and roll the payment you were making into the next-largest debt. This creates a larger and larger payment that accelerates your progress and provides powerful psychological momentum.
How It Works: Creating the Snowball
The calculator implements the debt snowball strategy step-by-step:
- List and Order Debts: Enter all your debts, and the calculator will automatically order them from the smallest balance to the largest.
- Apply Minimum Payments: The calculator assumes you make minimum payments on all debts.
- Add Extra Payments: Any extra amount you specify in your budget is applied entirely to the smallest debt.
- Roll Over Payments: Once the smallest debt is paid off, its payment amount is "rolled over" and added to the payment of the next-smallest debt, creating the snowball.
Interpreting Your Payoff Plan
The most important results are your **Debt-Free Date** and the **Total Interest Paid**. The payoff schedule provides a clear month-by-month roadmap, showing you which debt to focus on and when each will be eliminated. This provides clarity and motivation to stick with your plan.
Debt Snowball vs. Debt Avalanche
The main alternative to the debt snowball is the **debt avalanche** method, where you pay off debts with the highest interest rate first. While the debt avalanche will always save you more money in interest, many people find the debt snowball easier to stick with because the quick wins of paying off smaller debts provide powerful psychological reinforcement. The best method is the one you will actually follow.
Frequently Asked Questions
What is the debt snowball method?
The debt snowball method is a debt-reduction strategy where you pay off your debts in order from the smallest balance to the largest, regardless of interest rates. After the smallest debt is paid off, you roll the payment you were making on it into the payment for the next-smallest debt.
Is debt snowball or avalanche better?
Mathematically, the debt avalanche method (paying highest interest rate first) will save you more money on interest. However, the debt snowball method is often more psychologically effective because the quick wins from paying off small debts can provide motivation to stay on track.
How do you start a debt snowball?
To start a debt snowball, list all your debts from smallest balance to largest. Make minimum payments on all debts except the smallest one. Put every extra dollar you have towards the smallest debt until it's paid off. Then, move to the next-smallest debt.
Tips for Success
- Find Extra Money: Use a budget calculator to identify areas where you can cut spending to create a larger "snowball" payment.
- Celebrate the Wins: When you pay off a debt, celebrate that milestone to keep your motivation high!
- Stop Accumulating New Debt: The snowball method only works if you stop adding to your debt balances.
- Use Windfalls: Apply any extra money from tax refunds, bonuses, or gifts directly to your smallest debt to accelerate your progress.
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