Money, Explained From the Inside

Tools / Borrow / Chapter 14 · Making Debt Decisions

Debt payoff planner

Add up to four debts and a monthly amount you can put toward them. Compare the main strategies on time and total interest.

1 · The idea

Two orderings

Always pay every minimum, then send every spare pound, dollar or dirham to one debt. Avalanche picks the highest rate, which always minimises interest. Snowball picks the smallest balance, which clears accounts sooner and helps some people stay motivated.

The formula

Avalanche: highest rate first · Snowball: smallest balance first

Budget
total you can pay per month across all debts
Minimums
the smallest payment each lender requires

2 · A worked example

With a card (24%), a car loan (7%) and a store card (29%) and $700.00 a month: avalanche clears everything in 1 yr 10 mo for $1,422 interest; minimums alone take 6 yr 10 mo and cost $5,566.

3 · Now use your own numbers

Change anything. The result updates instantly.

If below the sum of minimums, minimums are used.

Debt 1: Card
Debt 2: Car loan
Debt 3: Store card
Debt 4: Other
Avalanche: debt-free in
1 yr 10 mo$1,422 interest
Interest saved vs minimums
$4,144
Payoff order (avalanche)
Debt 3 → Debt 1 → Debt 2
05k10k15k20k01234567
Years on the horizontal axis.
  • Avalanche
  • Snowball
  • Minimums only
StrategyTime to clearTotal interest
Avalanche (highest rate first)1 yr 10 mo$1,422
Snowball (smallest balance first)1 yr 10 mo$1,422
Minimums only6 yr 10 mo$5,566

What this means

The avalanche always costs the least interest. The snowball sometimes costs a little more but delivers the first “paid off” sooner. The best plan is the one you will actually follow.

Notice the gap to “minimums only”: it is mostly the effect of paying a fixed total each month, not of the ordering.

Illustrative, not personal advice. Inspired by Chapter 14 · Making Debt Decisions of Money, Explained From the Inside. Your figures stay in this browser. Real products add terms, taxes and conditions that this simple model leaves out.

4 · Take care

What this tool can’t see

  • Check for early-repayment charges before sending extra money to a loan.
  • Interest on some debts (e.g. student loans, 0% offers) has special terms; treat those with care.

5 · Go further

Where this fits

See it in a life:

DavidIncome without wealth

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