Debt Snowball vs Avalanche Calculator
Compare two debt payoff strategies side-by-side: snowball (smallest balance first) vs avalanche (highest rate first). Track months to debt-free and total interest.
Disclaimer
This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available ATO data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.
Frequently Asked Questions
What's the debt snowball method?
What's the debt avalanche method?
Which method is better for me?
Should I keep some emergency fund while paying off debt?
What is Debt Snowball vs Avalanche?
A side-by-side comparison of two popular debt payoff strategies: SNOWBALL (smallest balance first, ignores interest rate — popularised by Dave Ramsey) versus AVALANCHE (highest interest rate first — mathematically optimal). Shows months to debt-free and total interest paid under each approach.
How this calculator works
Enter each of your debts: name, balance, interest rate, and minimum monthly payment. Then enter the extra budget you have available beyond the minimums each month. The simulator runs both strategies month-by-month: pays minimums on all debts, accrues interest, and applies the extra budget to either the smallest balance (snowball) or highest rate (avalanche). Output shows time to debt-free and total interest under each strategy.
The Snowball Method
List debts smallest balance to largest. Pay minimums on all, throw every extra dollar at the smallest. When it's paid off, the freed-up minimum payment 'snowballs' onto the next-smallest. Quick wins (paying off Credit Card 2 in 3 months) provide huge psychological boost. Behavioural economics research suggests this approach has higher completion rates than avalanche — people stick with it.
The Avalanche Method
List debts highest interest rate to lowest. Pay minimums on all, throw every extra dollar at the highest-rate debt. Mathematically optimal: minimises total interest paid and clears all debts fastest. Best for highly disciplined people who are motivated by spreadsheets and savings figures rather than visible 'wins'. Often saves $500-$3,000 vs snowball depending on debt mix.
Which Method to Choose
Look at the difference: if avalanche saves <$500 vs snowball, the psychological benefit of snowball usually wins. If avalanche saves >$2,000, that's significant — go with the math. If you've TRIED to pay off debt before and lost momentum, snowball's quick wins matter more than the extra interest. If you're consistent and analytical, avalanche wins on every metric except 'fun'.
Australian-Specific Considerations
Australia has some unique debt prioritisation factors: (1) HECS-HELP is indexed to CPI, NOT charged compound interest — it's almost always the LAST debt to attack regardless of method. (2) BNPL (Afterpay, Zip) typically has no interest if paid on time but heavy late fees. (3) Credit cards in AU often have 19-24% rates — virtually always the highest priority under avalanche. (4) Home loan offset accounts are mathematically equivalent to extra repayments on the lowest-rate debt.
What to Do First
Before attacking debt, build a $1,000-$2,500 starter emergency fund. Without it, any unexpected expense (car breakdown, dental emergency) will go on a credit card and undo your progress. After consumer debt is cleared (everything except mortgage), grow emergency fund to 3-6 months expenses, then start investing. Mortgage extra repayments / offset come last in the priority order for most households.
Updated for the 2025-26 financial year (1 July 2025 to 30 June 2026).
Official Sources
All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.
Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.