What this tool does
Simulate paying up to three debts with one monthly budget using either highest-interest-first or smallest-balance-first priority.
How to use it
- Enter each balance, APR and minimum payment.
- Set a monthly budget that covers the sum of all minimums.
- Choose avalanche for highest APR or snowball for smallest balance, then compare payoff order, months and total interest.
Formula and method
Each month interest is added at APR ÷ 12. Minimums are paid first, then all remaining budget goes to the priority debt. When one balance reaches zero, its freed payment rolls to the next debt until all are paid.
Worked example
For debts of 1,000 at 8% and 5,000 at 22%, minimums 50 and 150, and a 400 budget, both examples finish in 18 months. Avalanche pays high APR first with about 924.73 interest; snowball pays the small debt first with about 1,041.48.
Common uses
- Comparing avalanche and snowball trade-offs
- Checking whether a budget covers minimums
- Estimating a payoff order and timeline
Limitations
The simulation assumes fixed APRs, no new charges, regular monthly timing and the entered minimums. It excludes fees, promotional changes, daily interest, late payments, negotiated settlements and lender-specific allocation rules.
FAQ
Which strategy costs less?
Highest-interest-first usually reduces interest under equal assumptions, while smallest-balance-first may provide earlier account closures and motivation.
Why must the budget cover minimums?
Missing required minimums can cause fees or delinquency, and the model cannot produce a valid plan when scheduled payments exceed the budget.