Debt Payoff Calculator

Create a strategic plan to eliminate debt faster and save thousands in interest using proven financial strategies.

Strategic Debt Elimination Guide

Step 1: Complete Debt Inventory

Gather All Debt Information: Credit cards, personal loans, student loans, car loans, and any money owed to family/friends.

For Each Debt Record: Current balance, minimum payment, interest rate (APR), and payment due date.

Don't Include: Mortgage (unless you want to pay it off early) or business debt (separate strategy needed).

Reality Check: This step often reveals people owe 20-30% more than they thought. Don't let this discourage you—knowledge is power.

Step 2: Choose Your Strategy

Debt Snowball Method (Recommended for Beginners)

Pay minimums on all debts, put extra money toward the smallest balance first.

Best for: People who need motivation and quick wins

Debt Avalanche Method (Mathematically Optimal)

Pay minimums on all debts, put extra money toward the highest interest rate first.

Best for: People motivated by saving money on interest

Financial Advisor Insight: Snowball has an 80% success rate vs. 60% for avalanche. Motivation matters more than math for most people.

Step 3: Find Extra Money for Debt Payments

Quick Wins (This Month):

Cancel unused subscriptions ($50-200/month)
Reduce dining out by 50% ($100-300/month)
Sell items you don't need ($200-1,000 one-time)

Medium-Term Strategies (Next 3 Months):

Take on freelance work or side gig
Use tax refund or bonuses entirely for debt
Negotiate lower rates on insurance/phone/internet

Pro Strategy: Even an extra $100/month can cut years off your debt payoff and save thousands in interest.

Step 4: Prevent New Debt

Emergency Buffer: Build a $1,000 mini emergency fund first, then focus on debt.

Remove Temptation: Take credit cards out of your wallet, delete stored payment info from shopping sites.

Use Cash/Debit Only: For variable expenses like groceries and entertainment.

Critical Truth: Adding new debt while paying off old debt is like trying to fill a bucket with holes in it.

Advanced Strategies for Faster Payoff

Balance Transfer: Move high-interest debt to 0% APR card (if you qualify and won't add new debt)

Debt Consolidation Loan: Combine multiple debts into one lower-rate payment

Call and Negotiate: Ask creditors for lower rates - success rate is about 30%

Bi-weekly Payments: Split monthly payment in half, pay every 2 weeks (26 payments vs 24)

Avoid These Debt Payoff Mistakes

• Paying only minimums forever (a $5,000 credit card at 18% APR takes 47 years to pay off with minimums only)
• Using retirement funds to pay debt (penalties + taxes often cost more than the debt interest)
• Taking on new debt while paying off old debt
• Ignoring the debt and hoping it goes away
• Not celebrating milestones - acknowledge progress to stay motivated

Frequently Asked Questions

DEBT AVALANCHE = Pay highest interest rate first (mathematically optimal)
DEBT SNOWBALL = Pay smallest balance first (psychologically motivating)

EXAMPLE - $50,000 total debt:

Debt list:
• Credit Card A: $8,000 @ 22% APR
• Credit Card B: $2,000 @ 19% APR
• Personal Loan: $15,000 @ 12% APR
• Student Loan: $20,000 @ 5% APR
• Car Loan: $5,000 @ 7% APR

AVALANCHE ORDER (highest rate first):
1. Credit Card A (22%)
2. Credit Card B (19%)
3. Personal Loan (12%)
4. Car Loan (7%)
5. Student Loan (5%)

SNOWBALL ORDER (smallest balance first):
1. Credit Card B ($2,000)
2. Car Loan ($5,000)
3. Credit Card A ($8,000)
4. Personal Loan ($15,000)
5. Student Loan ($20,000)

THE RESULTS ($2,000/month payment):

Avalanche Method:
• Time to debt-free: 28 months
• Total interest paid: $5,847
• Savings: $847

Snowball Method:
• Time to debt-free: 29 months
• Total interest paid: $6,694
• Quick wins: 2 debts gone in 4 months

OUR RECOMMENDATION: Modified Avalanche
• Pay off one small debt first (quick win)
• Then switch to avalanche (highest interest)