How This Calculator Works
This calculator uses the **Debt Avalanche Method**, which prioritizes paying off debts with the highest interest rates first. This approach saves the most money in interest over time.
The Strategy
- Pay the minimum (or monthly) payment on all debts.
- Apply all extra money to the debt with the **highest interest rate**.
- When a debt is paid off, roll that payment into the next highest interest debt.
- Continue until all debts are cleared.
Extra Payment Options
- Extra per month: Additional amount added to your monthly budget every month.
- Extra per year: Bonus payment made once per year.
- One-time payment: A lump sum payment made in a specific month.
Fixed vs Decreasing Monthly Payment
- Yes (Fixed): After paying off a debt, the freed-up money is redistributed to remaining debts. Your total monthly payment stays constant.
- No: Your total monthly payment decreases as debts are paid off.