Tool 08 · Debt payoff
Clear your debts, in the right order.
List what you owe, add whatever you can pay above the minimums, and see your debt-free date. Then compare the two famous strategies — snowball and avalanche — and pick the one that fits you.
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Pro features. Throw a lump sum at it, read insights, see the year-by-year plan, compare both strategies and export.
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A windfall thrown at your top-priority debt today.
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Snowball vs Avalanche
| Strategy | Debt-free in | Total interest |
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Snowball vs avalanche: how debt payoff works
When you have several debts, you pay the minimum on each and put every spare euro toward one of them until it's gone — then roll that freed-up payment onto the next. The only question is which debt to attack first, and that's where the two strategies differ:
Avalanche targets the highest interest rate first. It's mathematically optimal — it always clears your debts for the least total interest and usually the soonest. Snowball targets the smallest balance first. It costs a little more interest, but you clear whole debts quickly, and the early wins keep many people motivated. This tool simulates both, month by month, so you can see the real difference for your numbers.
The reason both methods work is the roll-over effect. You always pay the same total each month; as each debt clears, the money that used to cover its minimum gets added to the payment on the next target. So your firepower against each remaining debt grows over time, like a snowball rolling downhill — which is where the name comes from. The maths behind getting out of debt is genuinely optimistic once you start.
A worked example
€5,000 card at 19.9% · €12,000 car loan at 6.5% · €3,000 loan at 12% · €200 extra/month
Both strategies clear these debts in around the same time, but avalanche saves roughly €250 in interest by hitting the 19.9% card first. Snowball would instead clear the €3,000 loan first for an early psychological win. Same budget, slightly different order — and the tool shows exactly what each choice costs.
Things to keep in mind
- Always keep paying minimums on everything. Missing a minimum triggers fees and hurts your credit — the strategy is only about where the extra goes.
- The bigger the rate spread, the more avalanche wins. With a 22% card and a 4% loan in the mix, attacking the card first saves real money. When rates are similar, pick whichever keeps you motivated.
- Find extra where you can. Even a small increase to the monthly extra dramatically shortens the payoff, because it attacks principal directly. Windfalls thrown at the top-priority debt (the Pro lump-sum feature) accelerate it further.
- Consider a 0% balance transfer. Moving high-interest card debt to a 0% introductory offer can pause interest entirely while you attack the balance — just watch the transfer fee and the end date.
Frequently asked questions
Should I save or clear debt first?
Usually clear high-interest debt first — paying off a 20% credit card is a guaranteed 20% "return" that almost no investment can match. The common exceptions: keep a small emergency buffer so you don’t fall back on the card, and capture any employer pension match (free money) before overpaying debt.
Will paying off debt help my credit score?
Generally yes — lowering your balances (especially your credit-utilisation on cards) tends to help over time, and clearing accounts removes monthly obligations. Keep older accounts open where sensible, since length of credit history also counts.
Which is better, snowball or avalanche?
Avalanche saves the most money and time, so if you're driven by the numbers, choose it. Snowball gives faster psychological wins by clearing small debts first — if motivation is your challenge, the small extra cost can be worth it. Compare both above for your exact debts.
What is the "extra per month"?
It's whatever you can pay above the total of all your minimum payments. All of it goes to your target debt. Even a small extra amount dramatically shortens the payoff, because it attacks the principal directly.
Does the order really matter that much?
The difference is usually modest in time but can be meaningful in interest when your rates vary a lot (e.g., a 22% credit card vs a 4% loan). Attacking the 22% card first with avalanche saves the most.