The Debt Avalanche method is a powerful strategy for paying off multiple debts, designed to save you the most money on interest and reduce your overall repayment time. Unlike the Debt Snowball method, which focuses on psychological wins by paying off smallest balances first, the Avalanche method prioritizes financial efficiency.
How the Debt Avalanche Works
The core principle of the Debt Avalanche is simple: you list all your debts and arrange them by interest rate, from highest to lowest. You continue to make minimum payments on all your debts, but any extra money you have available each month is directed towards the debt with the highest interest rate. Once that debt is completely paid off, you take the money you were paying on that debt (its minimum payment plus any extra payment you were applying) and add it to the minimum payment of the next debt on your list (the one with the next highest interest rate). This "snowballs" your payments, but in a financially optimized way, tackling the most expensive debts first.
Why Choose the Debt Avalanche?
Maximum Interest Savings: By targeting high-interest debts first, you reduce the total amount of interest you pay over the life of your debts. This is the most mathematically efficient way to get out of debt.
Faster Debt Freedom: Saving on interest often translates to paying off your debts in a shorter amount of time compared to just making minimum payments or using other methods.
Financial Discipline: It requires a disciplined approach, but the financial rewards are significant.
Using the Debt Avalanche Calculator
Our Debt Avalanche Calculator helps you visualize the impact of this strategy. Input your current debt balances, their respective interest rates, and minimum monthly payments. Then, specify any additional amount you can commit to paying each month. The calculator will compare your current repayment scenario (making only minimum payments) with the Debt Avalanche strategy, showing you how much interest you can save and how much faster you can become debt-free.
Even a small additional payment can make a significant difference when applied strategically with the Debt Avalanche method. Start inputting your debts below to see your potential savings!
Debt Avalanche Calculator
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function calculateAvalanche() {
var debts = [];
var debtNames = ["Debt 1", "Debt 2", "Debt 3", "Debt 4", "Debt 5"];
for (var i = 1; i 0;
var hasInterestRate = !isNaN(interestRate) && interestRate >= 0;
var hasMinPayment = !isNaN(minPayment) && minPayment > 0;
if (hasBalance && hasInterestRate && hasMinPayment) {
debts.push({
name: debtNames[i – 1],
originalBalance: balance,
balance: balance,
interestRate: interestRate,
minPayment: minPayment,
monthlyInterestFactor: (interestRate / 100) / 12
});
} else if (balanceInput !== "" || interestRateInput !== "" || minPaymentInput !== "") {
// If any part of a debt is entered, but not all valid parts, show an error.
document.getElementById('result').innerHTML = 'Please ensure all fields (Balance, Interest Rate, Minimum Payment) are valid positive numbers for each debt you enter. Debt ' + i + ' has incomplete or invalid data.';
return;
}
}
if (debts.length === 0) {
document.getElementById('result').innerHTML = 'Please enter at least one valid debt to calculate.';
return;
}
var extraPayment = parseFloat(document.getElementById('extraPayment').value);
if (isNaN(extraPayment) || extraPayment < 0) {
extraPayment = 0;
}
// — Standard Repayment Calculation (Minimum Payments Only) —
var standardDebts = JSON.parse(JSON.stringify(debts)); // Deep copy
var totalInterestPaidStandard = 0;
var monthsStandard = 0;
var maxMonthsStandard = 1200; // Cap at 100 years to prevent infinite loops
while (monthsStandard < maxMonthsStandard) {
monthsStandard++;
var allDebtsPaidStandardThisMonth = true;
var monthlyPaymentsMadeStandard = 0;
for (var j = 0; j 0) {
allDebtsPaidStandardThisMonth = false;
var monthlyInterest = debt.balance * debt.monthlyInterestFactor;
totalInterestPaidStandard += monthlyInterest;
debt.balance += monthlyInterest; // Add interest first
var paymentAmount = Math.min(debt.balance, debt.minPayment);
debt.balance -= paymentAmount;
monthlyPaymentsMadeStandard += paymentAmount;
if (debt.balance = maxMonthsStandard) {
document.getElementById('result').innerHTML = 'Standard repayment calculation could not complete within ' + (maxMonthsStandard / 12) + ' years. Minimum payments might not be covering interest for some debts.';
return;
}
// — Avalanche Repayment Calculation —
var avalancheDebts = JSON.parse(JSON.stringify(debts)); // Deep copy
var totalInterestPaidAvalanche = 0;
var monthsAvalanche = 0;
var maxMonthsAvalanche = 1200; // Cap at 100 years
var freedUpMinPaymentsFromPreviousMonths = 0; // This accumulates from debts paid off in prior months
while (monthsAvalanche < maxMonthsAvalanche) {
monthsAvalanche++;
var allDebtsPaidAvalancheThisMonth = true;
var currentMonthPaymentsMadeAvalanche = 0;
var minPaymentsFreedUpThisMonth = 0; // Min payments from debts paid off *this* month
// 1. Calculate interest and apply minimum payments for all active debts
for (var k = 0; k 0) {
allDebtsPaidAvalancheThisMonth = false;
var monthlyInterest = debt.balance * debt.monthlyInterestFactor;
totalInterestPaidAvalanche += monthlyInterest;
debt.balance += monthlyInterest; // Add interest
var paymentAmount = Math.min(debt.balance, debt.minPayment);
debt.balance -= paymentAmount;
currentMonthPaymentsMadeAvalanche += paymentAmount;
if (debt.balance 0; });
activeDebts.sort(function(a, b) {
return b.interestRate – a.interestRate;
});
for (var l = 0; l 0) {
var paymentToDebt = Math.min(debt.balance, availableForExtraApplication);
debt.balance -= paymentToDebt;
availableForExtraApplication -= paymentToDebt;
currentMonthPaymentsMadeAvalanche += paymentToDebt;
if (debt.balance = maxMonthsAvalanche) {
document.getElementById('result').innerHTML = 'Avalanche repayment calculation could not complete within ' + (maxMonthsAvalanche / 12) + ' years. Payments might not be covering interest for some debts.';
return;
}
var interestSaved = totalInterestPaidStandard – totalInterestPaidAvalanche;
var timeSavedMonths = monthsStandard – monthsAvalanche;
var timeSavedYears = Math.floor(timeSavedMonths / 12);
var remainingMonths = timeSavedMonths % 12;
var resultHTML = '