The Avalanche Debt Method is a powerful strategy for paying off multiple debts. It prioritizes debts with the highest annual interest rates first, regardless of their balance. By focusing extra payments on the most expensive debts, you minimize the total interest paid over time and accelerate your overall debt freedom.
How the Avalanche Method Works:
List All Debts: Gather information for each debt: outstanding balance, annual interest rate, and minimum monthly payment.
Sort by Interest Rate: Arrange your debts from the highest annual interest rate to the lowest.
Pay Minimums: Make the minimum required payment on all debts except the one with the highest interest rate.
Attack the Top Debt: Direct any extra money you have towards the debt with the highest interest rate. This is where the "avalanche" effect begins.
Snowball the Payments: Once the highest-interest debt is paid off, take the money you were paying on that debt (its minimum payment + any extra payment you were applying) and add it to the minimum payment of the *next* highest-interest debt. Continue this process until all debts are paid off.
This calculator helps you visualize this strategy, estimate your payoff time, and see how much interest you can save.
Enter Your Debt Information:
This is the additional amount you can afford to pay towards your debts each month.
Why Choose the Avalanche Method?
The primary advantage of the avalanche method is that it saves you the most money on interest. By tackling the highest-interest debts first, you reduce the overall cost of borrowing. This method is mathematically superior to the snowball method (which prioritizes smallest balances) for minimizing total interest paid and often results in a faster overall payoff time, especially if you have debts with significantly different interest rates.
Tips for Success:
Commit to the Extra Payment: Consistency is key. Even a small extra payment can make a big difference over time.
Avoid New Debt: While paying off existing debts, try to avoid taking on new ones.
Automate Payments: Set up automatic payments for minimums and your extra payment to ensure you stay on track.
Celebrate Milestones: Acknowledge your progress as each debt is paid off to stay motivated.
Re-evaluate Regularly: Your financial situation can change. Revisit your debt plan periodically and adjust as needed.
var debtCounter = 3; // Start after initial 3 debts
function addDebtRow() {
debtCounter++;
var debtInputsDiv = document.getElementById('debtInputs');
var newRow = document.createElement('div');
newRow.className = 'debt-row';
newRow.style.cssText = "margin-bottom: 10px; padding: 10px; border: 1px solid #eee; border-radius: 5px; background-color: #f9f9f9;";
newRow.innerHTML = `
`;
debtInputsDiv.appendChild(newRow);
}
function removeDebtRow(buttonElement) {
var rowToRemove = buttonElement.parentNode;
rowToRemove.parentNode.removeChild(rowToRemove);
}
function calculateAvalanche() {
var debts = [];
var debtRows = document.querySelectorAll('.debt-row');
debtRows.forEach(function(row) {
var name = row.querySelector('.debt-name').value;
var balance = parseFloat(row.querySelector('.debt-balance').value);
var rate = parseFloat(row.querySelector('.debt-rate').value);
var minPayment = parseFloat(row.querySelector('.debt-min-payment').value);
if (isNaN(balance) || isNaN(rate) || isNaN(minPayment) || balance < 0 || rate < 0 || minPayment 0) { // Only add debts with outstanding balance
debts.push({
name: name || "Unnamed Debt",
balance: balance,
rate: rate, // Annual percentage
minPayment: minPayment,
originalMinPayment: minPayment // Store original for snowball effect
});
}
});
if (debts.length === 0) {
document.getElementById('result').innerHTML = "Please enter valid debt information with outstanding balances to calculate.";
return;
}
var extraPayment = parseFloat(document.getElementById('extraPayment').value);
if (isNaN(extraPayment) || extraPayment < 0) {
extraPayment = 0; // Default to 0 if invalid or negative
}
// Sort debts by interest rate (descending)
debts.sort(function(a, b) {
return b.rate – a.rate;
});
var totalInterestPaid = 0;
var totalMonths = 0;
var currentExtraPaymentPool = extraPayment; // This pool grows as debts are paid off
var resultsHtml = "
Avalanche Debt Repayment Plan:
";
resultsHtml += "
";
resultsHtml += "
";
resultsHtml += "
Debt Name
";
resultsHtml += "
Original Balance ($)
";
resultsHtml += "
Annual Rate (%)
";
resultsHtml += "
Min. Payment ($)
";
resultsHtml += "
Estimated Payoff Time
";
resultsHtml += "
Interest Paid ($)
";
resultsHtml += "
";
for (var i = 0; i 0 && paymentToApply <= (currentBalance * monthlyRate)) {
resultsHtml += "
";
resultsHtml += "
" + debt.name + "
";
resultsHtml += "
$" + debt.balance.toFixed(2) + "
";
resultsHtml += "
" + debt.rate.toFixed(2) + "%
";
resultsHtml += "
$" + debt.minPayment.toFixed(2) + "
";
resultsHtml += "
Payment too low to pay off debt. Debt will grow.
";
resultsHtml += "
";
// This debt won't be paid off, so it doesn't contribute to the snowball.
// We still need to account for its minimum payment in the total monthly outflow.
// For simplicity in total payoff time, we'll treat it as never paid off.
// The total interest paid will be an estimate if it's never paid off.
totalMonths = Infinity; // Indicate that not all debts will be paid off
totalInterestPaid = Infinity; // Indicate that interest will be infinite
continue; // Move to the next debt, but this one is problematic
}
// Iterative calculation for payoff
var tempBalance = currentBalance;
while (tempBalance > 0 && debtMonths = maxMonths && tempBalance > 0) { // If capped and still balance
payoffTimeStr = " > 100 years (Payment insufficient)";
} else {
var years = Math.floor(debtMonths / 12);
var months = debtMonths % 12;
payoffTimeStr = (years > 0 ? years + " years " : "") + (months > 0 ? months + " months" : "");
if (payoffTimeStr === "") payoffTimeStr = "Paid off immediately"; // For very small balances
}
resultsHtml += "
";
resultsHtml += "
" + debt.name + "
";
resultsHtml += "
$" + debt.balance.toFixed(2) + "
";
resultsHtml += "
" + debt.rate.toFixed(2) + "%
";
resultsHtml += "
$" + debt.minPayment.toFixed(2) + "
";
resultsHtml += "
" + payoffTimeStr + "
";
resultsHtml += "
$" + debtInterestPaid.toFixed(2) + "
";
resultsHtml += "
";
// If the debt was actually paid off (not just capped)
if (debtMonths < maxMonths) {
currentExtraPaymentPool += debt.originalMinPayment; // Add its minimum payment to the pool for the next debt
}
}
resultsHtml += "
";
resultsHtml += "
Summary:
";
if (totalMonths === Infinity) {
resultsHtml += "Total Estimated Payoff Time: Some debts cannot be paid off with the current payments.";
resultsHtml += "Total Estimated Interest Paid: Infinite (debts will continue to grow).";
} else {
resultsHtml += "Total Estimated Payoff Time: " + Math.floor(totalMonths / 12) + " years and " + (totalMonths % 12) + " months";
resultsHtml += "Total Estimated Interest Paid: $" + totalInterestPaid.toFixed(2) + "";
}
document.getElementById('result').innerHTML = resultsHtml;
}