Calculate the optimal strategy to pay off multiple debts including mortgages, loans, and credit cards. Uses the debt avalanche method for maximum savings.
Managing multiple debts can feel overwhelming, but with the right strategy, you can create a clear path to financial freedom. This calculator helps you determine the most efficient way to pay off all your debts, from high-interest credit cards to low-interest mortgages, using proven debt elimination methods.
The key to successful debt payoff is having a systematic approach that minimizes total interest costs while maintaining motivation through visible progress.
Mathematically optimal - saves the most money in interest
Psychologically motivating - builds momentum through quick wins
Combines motivation with mathematical efficiency
| Debt Type | Typical Rate | Tax Deductible | Priority Level |
|---|---|---|---|
| Credit Cards | 15-29% | No | Very High |
| Personal Loans | 6-36% | No | High |
| Auto Loans | 3-15% | No | Medium |
| Student Loans | 3-7% | Partially | Medium |
| Home Equity Loans | 4-9% | Yes | Low |
| Mortgages | 3-8% | Yes | Low |
| Factor | Debt Avalanche | Debt Snowball |
|---|---|---|
| Total Interest Cost | Lowest | Higher |
| Time to Debt-Free | Shortest | Longer |
| Psychological Impact | Slower initial progress | Quick early wins |
| Complexity | Simple math-based | Simple balance-based |
| Best For | Disciplined individuals | Need motivation boost |
| Strategy | Potential Monthly Savings | Difficulty Level |
|---|---|---|
| Reduce dining out | $200-500 | Easy |
| Cancel unused subscriptions | $50-200 | Easy |
| Refinance auto insurance | $50-150 | Easy |
| Side income/gig work | $300-1000+ | Medium |
| Rent out space/room | $400-800 | Medium |
| Sell unnecessary items | $100-500 | Medium |
Prevents new debt from emergencies
Build after paying off high-interest debt (15%+)
| Scenario | Total Debt | Extra Payment | Time Saved | Interest Saved |
|---|---|---|---|---|
| Minimum Only | $50,000 | $0 | - | - |
| Extra $200/month | $50,000 | $200 | 5-8 years | $15,000-25,000 |
| Extra $500/month | $50,000 | $500 | 8-12 years | $25,000-40,000 |
| Aggressive Plan | $50,000 | $1,000 | 10-15 years | $35,000-55,000 |
Only Paying Minimums: Results in paying for decades and massive interest costs.
Ignoring Interest Rates: Treating all debt equally instead of prioritizing high-rate debt.
No Emergency Fund: Using credit cards for emergencies while paying off debt.
Lifestyle Inflation: Increasing spending instead of applying raises to debt payoff.
Not Tracking Progress: Losing motivation without visible progress monitoring.
| Situation | Consider Consolidation | Reason |
|---|---|---|
| Multiple high-rate debts | Yes | Lower single rate possible |
| Struggling with payments | Yes | Lower monthly payment |
| Good credit improvement | Yes | Qualify for better rates |
| Mostly low-rate debt | No | May increase overall cost |
| Lack of discipline | No | May lead to more debt |
Mortgage Interest: Deductible up to $750,000 in mortgage debt for primary residence.
Student Loan Interest: Up to $2,500 deductible annually with income limits.
Business Debt: Generally deductible as business expense.
Personal Debt: Credit cards and personal loans are not tax-deductible.
Emergency Fund: Build full 3-6 months of expenses after debt elimination.
Investment Transition: Redirect debt payments to retirement accounts and investments.
Lifestyle Inflation Control: Maintain debt-payoff spending habits to maximize wealth building.
Credit Score Improvement: Debt elimination typically improves credit scores significantly.