Debt Avalanche Calculator
Debts Setup
Avalanche vs Minimum Payments:
- Minimums Only: Timeline is 4 Years 0 Months, with total interest of ₹97,610.
- With Avalanche: Payoff timeline drops to 2 Years 1 Months.
- You save ₹49,483 and become debt free 23 months sooner!
What to do next
Based on your Debt Avalanche Calculator, here are the tools you should try next:
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Avalanche Method Interest Saved Formula
Compares interest accumulation by sorting debts descending by interest rate and putting all extra cash towards the highest-rate debt.
Worked Example: Three debts (₹50k card at 40%, ₹2L loan at 12%, ₹1L car at 9%)
The Debt Avalanche: Sorting liabilities to maximize interest savings
Karan was overwhelmed with multiple debts: ₹50,000 on a credit card at 40%, a ₹2 Lakh personal loan at 12%, and a ₹1 Lakh car loan at 9%. He had ₹15,000 total monthly cash to allocate toward debt reduction.
Instead of splitting his extra funds equally, he used the Debt Avalanche method. He paid the minimums on the personal and car loans, and funneled all remaining cash into the 40% credit card. Once the card was cleared, he targeted the 12% loan. This strategy saved him ₹34,500 in interest and made him debt-free 9 months earlier.
The Debt Avalanche mathematically guarantees the highest interest savings because it targets high-interest liabilities first, stopping expensive compounding early.
List all your debts with their interest rates. Focus all surplus income on the highest-rate debt while maintaining minimum payments on the rest for optimal speed.
Frequently Asked Questions
What is the Debt Avalanche method?
It is a debt reduction strategy where you list all your debts in descending order of interest rate. You pay the minimum on all debts, and throw all extra cash at the debt with the highest interest rate first.
Does Avalanche save more money than Snowball?
Yes. The Debt Avalanche is mathematically optimal. By prioritizing high-interest debts first, you save the maximum amount of interest compared to the Snowball method (which prioritizes small balances).
When should I choose the Debt Avalanche method?
Choose it if you are motivated by mathematical savings and want to pay the least amount of total interest over your debt-free journey.
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