Question 1

Which debt payoff method is better?

Accepted Answer

The avalanche method saves more money on interest, while the snowball method provides psychological wins that can help maintain motivation. Choose avalanche if you're disciplined and want to minimize costs. Choose snowball if you need motivation from quick wins.

Question 2

Should I pay more than the minimum?

Accepted Answer

Yes, if possible. Paying only minimums can result in paying for years and spending thousands on interest. Even an extra $50-100/month can dramatically reduce your payoff time and total interest paid.

Question 3

Should I save or pay off debt first?

Accepted Answer

It's generally recommended to have a small emergency fund ($500-1000) first, then focus on high-interest debt. Low-interest debt (mortgage, some student loans) can be paid alongside retirement saving.

Question 4

What about balance transfers?

Accepted Answer

Balance transfers to lower-interest cards can save money, but watch for transfer fees (usually 3-5%) and promotional period end dates. Make sure you can pay off the transferred amount before the promotional rate expires.

Question 5

How does this calculator handle freed-up payments?

Accepted Answer

When a debt is paid off, its minimum payment is added to your extra payment and applied to the next debt in line. This "snowball" effect accelerates payoff of remaining debts.

Debt Payoff Calculator

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