Debt Avalanche Calculator
Plan your debt repayment using the Debt Avalanche method by prioritizing high-interest debts to minimize total interest paid and become debt-free faster.
Introduction
Welcome to the Debt Avalanche Calculator! This tool helps you create a repayment plan for multiple debts using the Debt Avalanche method. By focusing on the debt with the highest interest rate first while making minimum payments on others, you minimize the total interest paid over time, saving money in the long run.
How to Use
- Select the currency for your calculation (e.g., USD, INR, EUR).
- Enter details for each debt, including name, balance, annual interest rate, and minimum monthly payment.
- Click "Add Another Debt" to include more debts if needed.
- Specify an extra monthly payment amount to apply to the highest interest debt for faster repayment.
- Click "Calculate Avalanche" to see your repayment plan based on the Debt Avalanche method.
- Review the summary, notes, and chart in the result section for insights on your debt repayment timeline.
- Click "Copy Results" to copy the summary, "Reset" to clear the form, or "Save Entries" to store calculations locally.
Understanding Debt Avalanche
The Debt Avalanche method focuses on paying off the debt with the highest interest rate first while making minimum payments on others. Key points include:
- Debts are sorted by interest rate, highest to lowest, to minimize total interest paid.
- Extra payments are applied to the highest interest debt until it's paid off, then rolled over to the next highest.
- Interest is calculated monthly for each debt based on its remaining balance.
- This method prioritizes financial efficiency by reducing the overall cost of debt.
Calculations assume fixed interest rates and consistent payments unless specified otherwise.
FAQs
What if I can pay more than the extra amount some months?
This calculator assumes a fixed extra payment. For variable payments, recalculate with updated amounts to see the impact on your timeline.
Does this account for changing interest rates?
No, interest rates are assumed to be fixed. If rates change, update the values and recalculate.
How does this differ from the Debt Snowball method?
Debt Avalanche focuses on highest interest rates to minimize total interest paid, while Debt Snowball targets smallest balances for quick psychological wins.
Does the currency selection affect the calculation?
No, the currency selection is for display purposes only. The calculation remains the same regardless of the currency chosen.
About This Calculator
Built by xAI, this Debt Avalanche Calculator provides a simple way to plan debt repayment for educational purposes. For detailed financial planning, consult a financial advisor.