What this calculator does
Takes multiple debts (balance, APR, and minimum payment for each) and a total monthly budget. Simulates both the Snowball strategy (pay smallest balance first) and the Avalanche strategy (pay highest APR first). Returns total interest paid and payoff date for each strategy.
The formula
Each month for each strategy:
1. Pay minimum on all debts
2. Apply any surplus budget to the target debt
Snowball: target = debt with lowest balance
Avalanche: target = debt with highest APR
3. When target debt is paid off, add its minimum to the surplus
(the "snowball" or "avalanche" effect)
4. Move to next target debt
Interest each month per debt:
interest = balance × (APR / 12)
principal = payment − interest
balance = balance − principal (floored at 0)
Repeat monthly until all balances = 0
Track total interest paid across all debts for each strategy
Assumptions
- Monthly budget is fixed throughout the repayment period.
- Minimum payments cover at least the monthly interest (no negative amortisation).
- Debts are independent — no cross-default clauses are modelled.
- No new debt is added during the repayment period.
Data sources
No regulatory data is used. The Debt Snowball method was popularised by Dave Ramsey (Financial Peace University, 1992). The Avalanche method is the mathematically optimal strategy for minimising total interest, as demonstrated by standard amortisation theory.
Limitations
- Does not model minimum payment recalculation — many credit card minimums fall as the balance falls, but the calculator uses fixed minimums for fair comparison between strategies.
- Does not model balance transfer options that could change the optimal strategy.
- The psychological benefit of the Snowball method (quick wins from eliminating small debts) is real but cannot be quantified.
Worked example
Three debts, £300/month total budget.
Debt A: £800 at 15% APR, £25 minimum Debt B: £2,500 at 22% APR, £60 minimum Debt C: £1,200 at 10% APR, £35 minimum Total minimums: £120; surplus: £180 Snowball (target = smallest balance = Debt A): Month 1 onwards: £180 surplus applied to Debt A Debt A paid off approximately month 5 £25 minimum added to surplus → surplus becomes £205 Next target: Debt C (£1,200) Avalanche (target = highest APR = Debt B at 22%): Month 1 onwards: £180 surplus applied to Debt B Debt B paid off approximately month 14 Avalanche typically saves £100–£300 in total interest over Snowball in this scenario
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |