Debt Reduction and Payoff Calculator
Finding the right debt reduction strategy that not only fits your current budget, but also works well with your overall, long-term plan is the key to a successful financial future. The debt reduction calculator lets you explore various methods of debt payoff including the "Snowball Method" and the "Avalanche Method". It also allows you to customize a payment plan based on paying off either the highest or lowest loan, or credit card balance first.
Debt Reduction Information [Enter Number]
How does the Snowball Method of Debt Reduction help?
This method of debt reduction works as people first choose to payoff the debt with the smallest loan or credit card balance. Once this is done, they then move to the debt with the next highest balance. The advantage to this method is that the debtor sees progress immediately and finds success early in the debt reduction process. It is regarded as the "snowball method" because as debt is paid off the payments snowball into larger and larger amounts to be applied, and pick up momentum. Eventually all debt gets reduced and eliminated, leaving you debt free and able to invest in your future once again-rather than make minimum monthly payments trying to keep your head above water.
The Snowball Method Might Be Right For You If:
- You want to see fast results
- You’ve been unsuccessful with other debt plans or have had a hard time sticking with them
- You only require a simple, easy to follow debt reduction plan without complex theories or details
- Many of your debts carry a wide range of balances
What is the Avalanche Method of Debt Reduction-How does it work?
The "debt avalanche method" is another debt reduction plan that begins with the credit card or loan that carries the highest interest rate. By focusing on this debt, the theory is that the most damaging bills will be eliminated first and more money can be saved in the long run. Because you start from the top and work your way down, the method of debt reduction was coined, the "avalanche method".
The Avalanche Method Might Be Right For You If:
- You like to crunch numbers
- You’re a disciplined person who can patiently stay with a debt reduction plan even if you don’t see results immediately and money is tight
- You wish to use your resources to maximize your opportunities to pay down your debt
Regardless of the debt reduction method you choose, it's critical to stay the course and stick with your plan of action. Any payment program will take time to implement and must be carefully configured to meet the financial needs of your budget.
While we make every effort to ensure the accuracy of the debt reduction calculator tool, we are not liable for damages, whether monetary, incidental, consequential or otherwise in connection with its use. The calculator tool is not intended as a replacement for professional independent financial advice.