How to Payoff debt quickly using Debt avalanche calculator

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If your new year goal is to be debt-free, chances are great where you are in a state where you want to get rid of your debt sooner.

But paying off debt could be a herculean task, also paying it off quickly could be quite daunting.

If you are looking for a solution, the Debt avalanche calculator is one of the fastest ways to pay off your debt. By paying off your debt quickly, you can save a significant sum of money from paying as interest to the bank.

Related read: How to save interest payment? snowball vs avalanche calculator

How does debt avalanche calculator work?

When you follow the debt avalanche method, you focus on eliminating the debt with a higher interest rate before any other debt.

So, if you have credit card debt with an annual percentage rate of 19.75 %, also hold a personal loan with an annual interest rate of 10.99%. Then your primary target should be paying off the credit card debt since it carries a higher interest rate than a personal loan.

In this scenario, any extra cash would be going to make extra payments on a credit card debt while paying the minimum amount on a personal loan.

Once the credit card debt is paid off, you move to the next debt with a higher interest rate. Let’s say you have a personal loan with a 10.99% interest rate.

At this stage, you apply the money you were paying on the credit card debt to the personal loan, by adding the extra amount to the personal loan’s minimum monthly payment. Again, you need to keep making the minimum payments on all the other debts.

If you stick to this strategy, you will pay off your debt in a way that reduces the total interest charges you will pay.

To be short, a debt avalanche is taking down the hardest one first and then moving to the easier ones.

Related read: Why should you use Dave Ramsey’s method to save money


Types of debts to include in the debt avalanche method

Types of debt to include in debt avalanche are

  • Credit card
  • Personal loan
  • student loan
  • car loan

How to use debt avalanche calculator

  • Make a list of all your debts
  • Rank the debts with the higher interest rate to the lower interest rate.
  • Come up with extra money by identifying your income & spending rate as you make minimum debt payments. (extra money can be allocated to higher interest rate debt on your list)
  • Once you eliminated the highest-interest debt, shift to the debt with the next highest interest rate.

Keep up this strategy, until all your debts are paid off.

Debt avalanche calculator example

Let’s assume you have four debts that you want to attack as part of the debt avalanche strategy. Based on the interest rate, here’s the order from highest to lowest.

debt avalanche calculator

In this scenario, you would first pay the credit card with an interest rate of 19%. If you extra $100 a month to put toward debt repayment, you will combine the minimum monthly payment of $120 with an extra money of $100 for a total monthly payment of $220. You would make that $220 payment each month until the credit card balance goes zero.

Now move on to the personal loan debt with an interest rate of 11%. You would combine the $220 a month you had paid toward your credit card debt with the $200 minimum payment of the personal loan, putting a monthly payment of $420 toward the personal loan.

After paying the personal loan, now you repeat the avalanche method process and move to the student loan with a 5% interest rate, paying $420 on top of the student loan’s $400 minimum monthly payment. Finally, you work on the auto loan at an interest rate of 3%.

Is the debt avalanche for you?

If you are interested in paying off your high-interest debt first and also self-motivated with self-discipline, the debt avalanche calculator method may be right for you.


Because this strategy knocks off the high-interest debt first and can save money in interest charges as you pay.

But it requires patience to carry out – because it could take some time to pay off your high-interest rate debt first, depending on the size of the balance.


Whether you choose the debt avalanche method or any other debt reduction method, choose the one which keeps you at ease until you eliminate all the debts.

Before choosing, please compare the debt avalanche calculator with other debt reduction methods and pick the one which is right for you!


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