How to pay off debt: two orders that work
With several debts — a credit card, a personal loan, car finance — the fastest way out is to pay every minimum each month and send all your extra money to one debt at a time. When that debt is paid off, its minimum stays in your budget and rolls over to the next debt in line. The monthly amount stays the same, but each debt in turn gets a bigger share. The two methods differ only in which debt goes first.
- The debt snowball method starts with the smallest balance. The first debt is cleared quickly and its payment starts working on the next one straight away — like a snowball that grows as it rolls.
- The debt avalanche method starts with the highest interest rate. The most expensive money is repaid first, so you usually pay the least interest overall.
This debt payoff calculator runs both orders with your own numbers and shows the month you will be debt-free, the total interest and the month each debt is paid off.
How the calculator works
It works month by month, in the same order as real life:
- Each debt is charged a month of interest: balance × annual rate / 12.
- The monthly budget is the sum of all minimum payments plus your extra amount. It is fixed at the start and stays the same until the end — that is the rollover.
- Every debt except the first in line receives its minimum.
- Everything left in the budget goes to the first debt in line. If it is paid off mid-month, the rest moves on to the next debt in the same month.
The order is set once, from today's balances and rates, and then stays fixed. This is exactly how the Debts screen in Groworth calculates, so the same numbers give the same result here and in the app.
Worked example: three debts and €100 extra a month
The calculator above already holds three debts:
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Personal loan | €1,500 | 12% | €60 |
| Credit card | €3,000 | 22% | €90 |
| Car finance | €7,000 | 6.5% | €160 |
The minimums add up to €310; with €100 extra the monthly budget is €410.
- The snowball starts with the personal loan, the smallest balance. It is paid off in 10 months, every debt in 33 months, with €1,715.67 in interest in total.
- The avalanche starts with the credit card, the highest rate at 22%. The first debt is paid off in 19 months, every debt in 32 months, with €1,579.46 in interest.
- Paying only the minimums, each debt on its own and without the rollover, would take 51 months and €2,920.19 in interest. The extra €100 and the rolled-over payments make you debt-free 18 months sooner and keep €1,204.52 in your pocket.
In this example the avalanche saves €136.21 in interest, and the snowball clears its first debt 9 months sooner. Change any number above and both results update instantly.
How to read the result
- Debt-free — the month the last debt is paid off in the order you chose.
- Total interest — the interest on all debts until they are paid off. Repaying principal turns debt back into your own money, so the price of the plan is the interest.
- Monthly total — all minimums plus your extra amount: the figure to plan for each month until the end.
- The chart stacks each debt's balance; the dashed line is the total balance when paying only the minimums. The payoff order lists the month each debt closes.
Snowball or avalanche: which one to choose
| Snowball | Avalanche | |
|---|---|---|
| First in line | Smallest balance | Highest rate |
| Total interest (example) | €1,715.67 | €1,579.46 |
| First debt paid off | in 10 months | in 19 months |
| Strength | A quick first win | Less interest |
The avalanche usually costs less interest. The snowball gives you a paid-off debt sooner, and for many people that first win is what carries them to the end. The difference in euros is often small — the calculator shows it exactly for your debts, and the choice is yours.
How to pay off debt faster
- Put every debt on one list. The balance, rate and minimum payment are in each agreement or in your banking app. Once they are in one place, the date can be calculated.
- Add an extra amount each month. Even €25 a month moves the date — try a few amounts in the calculator and see how many months each one saves.
- Roll over every freed-up payment. When a debt is paid off, send its payment to the next one. In the example, that together with the extra amount shortens the plan from 51 to 33 months.
- Use one-off sums. A bonus, a tax refund or something you sell, paid into the first debt in line, shortens the whole plan.
- Look for a lower rate. For an expensive debt, refinancing at a lower APR reduces the interest. Enter the new rate in the calculator and compare.
For a single loan, the loan calculator shows the monthly payment, the total interest and how much sooner an overpayment ends it.
Frequently asked questions
What is the debt snowball method?
The debt snowball is a payoff order in which all extra money goes to the smallest balance first while every other debt gets its minimum. When the smallest debt is paid off, its payment rolls over to the next smallest, so the payment grows like a snowball.
What is the debt avalanche method?
The debt avalanche sends all extra money to the debt with the highest interest rate first while every other debt gets its minimum. The most expensive debt shrinks fastest, so you usually pay the least interest overall.
Which is better, snowball or avalanche?
Both pay off every debt; they differ only in the order. The avalanche usually costs less interest, the snowball gives you a paid-off debt sooner. The calculator shows both results with your numbers, and the choice is yours.
What does rolling over a payment mean?
When a debt is paid off, its minimum payment stays in your monthly budget and goes to the next debt in line. The total you pay each month stays the same, but a growing share reaches the remaining debts — that is what makes both methods faster than paying the minimums alone.
How accurate is the calculation?
Interest is added every month at the nominal rate (annual rate / 12) and rounded to the cent, the same way the Groworth app calculates. Lenders may charge interest by the day or add fees, so a statement can differ by a few euros. If a month's payments are smaller than the interest, the calculator shows how much more per month starts bringing the balance down.
What happens to the numbers I enter?
The whole calculation runs in your browser, and the amounts you enter stay on your device.