Debt Snowball Calculator
This debt snowball calculator accelerates your debt payoff by using the "rollover" method. As soon as the first debt is paid off use the freed-up payment amount to pay down the next debt even faster. Continue the process (building like a snowball) until all debts are paid off. As you are about to discover, the debt snowball method is the most cost effective, fastest, and emotionally satisfying way to get out of debt.
Instructions: Order your debts from highest interest rate to lowest interest rate to save the most money. The calculator pays them off in the order entered. Alternatively, you can create a debt snowball by ordering your debts from smallest balance to highest balance for the greatest emotional satisfaction - although it will cost you a little more interest. Enter the name, current balance, interest rate and minimum payment amount for all of your debts (up to a maximum of 10 debts). Next, enter a monthly dollar amount you could add to your accelerated debt payoff plan at the bottom right of the calculator. Then, click the "Calculate Debt Snowball" button.
Note: If you include your mortgage in your accelerated debt payoff plan then be sure to enter only the principal & interest portion of your monthly mortgage payment (don't include monthly tax and insurance portion as that expense never gets paid off).
Debt Elimination Strategy Using Snowball Method
You made a resolution to get out of debt, or to reduce your debt, because times and jobs are uncertain. But where do you start? How do you do it? Sometimes when you are in debt, it feels like there’s no way to get out. It seems daunting but you can pull yourself up using the debt snowball strategy.
Why Is This Called A Debt Snowball?
Snowballing uses the strategy of paying debts in the correct order. It is the process of ranking your debts with the highest interest rate to the lowest and paying off debt with the highest interest rate first. Once you’ve paid off the most expensive debt, there’s a new debt at the top of the list. You move on to the next highest debt, and then the next, and your payments start to “snowball” or get bigger and bigger over time, like making a snowball rolling down the hill. One of the benefits of the snowball method is that you see results faster by quickly knocking off the most expensive debts and building momentum to tackle your debts one by one. The above snowball calculator will help you in the process. It allows you to enter up to 10 different debts with their associated interest rates, and the total amount you want to spend per month paying your debts, and it will generate a payment schedule and pay off summary. The result will also tell you the number of payments you need to pay for each debt and the calculated interest.
Debt Snowball Approach To Eliminating Debts
Know The Annual Percentage Rates
Calculate How Much You Can Afford
Stick To Your Plan
The Downside of the Snowball Method
Like any other debt elimination strategies, the snowball method has also some disadvantages. One of the downsides is large loans require more money in interest, so paying for them last would mean spending more on interest or extending the payment periods for all bigger loans. Using this method requires that you have enough cash flow to be able to make all your payments. As a consequence, people with low incomes may be at a disadvantage with this strategy, as their monthly wages may not accommodate huge loan payments. This means that this is not necessarily the most efficient method of debt repayment. If, however, you’re in a position where you don’t have enough cash flow to even pay your minimums, you may need to look at other debt reduction options.
The snowball method is not right for everyone, but it could be right for you. The debt snowball method relies heavily on a person’s self discipline and financial situation. If you do not use as intended the money that you have freed up by paying off the smaller debts, you might end up getting into a bigger debt problem.
Debt Snowball Terms and Definitions
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