1. What is the Debt Snowball Method?

The Debt Snowball Method is a debt reduction strategy where you pay off debts in order of smallest to largest balance. As each debt is paid off, its payment is added to the next debt, creating a "snowball" effect that accelerates debt payoff.

2. How Does the Calculator Work?

The calculator uses amortization calculations to determine:

Where:

• Debts are sorted from smallest to largest balance
• Each debt is paid using minimum payment plus any extra payment
• When a debt is paid off, its minimum payment is added to the snowball amount
• Amortization calculations account for interest accrual

3. Importance of Debt Snowball Strategy

Details: The snowball method provides psychological wins by eliminating smaller debts first, which can increase motivation to continue debt reduction. It simplifies debt management by focusing on one debt at a time.

4. Using the Calculator

Tips: Enter each debt on a separate line in the format: Balance,Interest Rate,Minimum Payment. Include any extra monthly payment you can afford. The calculator will show total payoff time and interest paid.

5. Frequently Asked Questions (FAQ)

Q1: Why pay smallest debts first instead of highest interest?
A: While mathematically not optimal, the psychological benefit of quick wins often leads to better long-term adherence to debt reduction plans.

Q2: What's the difference between snowball and avalanche methods?
A: Snowball pays smallest balances first; avalanche pays highest interest rates first. Avalanche saves more on interest, but snowball provides faster motivational wins.

Q3: Should I stop saving while doing debt snowball?
A: Maintain a small emergency fund (1-2 months expenses) while aggressively paying down debt to avoid new debt from unexpected expenses.

Q4: What if I have irregular income?
A: Use average monthly income for calculations, and apply windfalls (tax refunds, bonuses) directly to your current snowball debt.

Q5: How accurate are these calculations?
A: Calculations use standard amortization formulas and provide good estimates, but actual results may vary slightly due to rounding and payment timing.