Debt Payoff Strategy Comparator
Should you prioritize your smallest debt (Snowball for motivation) or your highest interest rate (Avalanche for maximum savings)? Enter your debts below to see the exact time and money difference between the two most popular payoff strategies.
Debt List
| Debt Name | Current Balance (Rs) | Interest Rate (%) | Min. Monthly Payment (Rs) | Action |
|---|
Debt Avalanche Method (Lowest Interest)
Debt Snowball Method (Quick Wins)
Understanding the Payoff Strategies
When tackling multiple debts, the order in which you apply extra funds is crucial. The best strategy depends on your personality and financial goals:
1. Debt Avalanche (Math-First)
- **Goal:** To save the maximum amount of interest.
- **Method:** All extra payments are directed to the debt with the **Highest Interest Rate**, regardless of the balance size. Once that is paid off, the money rolls to the next highest interest rate.
- **Pro:** Always saves the most money and clears the debt fastest *mathematically*.
- **Con:** May take a long time to pay off the first debt if it has a large balance, which can be demotivating.
2. Debt Snowball (Motivation-First)
- **Goal:** To build momentum and motivation through quick wins.
- **Method:** All extra payments are directed to the debt with the **Smallest Balance**, regardless of the interest rate. Once it is paid off, the entire payment (the old minimum + the extra payment) rolls to the next smallest debt.
- **Pro:** You get to scratch off debts quickly, which builds psychological momentum and makes it easier to stick with the plan.
- **Con:** You will pay more in total interest than with the Avalanche method.
The Power of "Rolling" Payments
Both methods rely on the same principle: when a debt is paid off, you take the minimum payment you were making on that debt and add it to the extra payment you are directing to the next debt in line. This creates the "snowball" or "avalanche" effect, dramatically reducing your total payoff time.
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