Debt Avalanche Calculator — Fórmula
## Debt Avalanche Method
The avalanche method pays off debts from **highest interest rate to lowest**, regardless of balance size.
### How It Works
1. Make minimum payments on all debts
2. Put all extra money toward the highest-rate debt
3. When that is paid off, roll the payment to the next highest rate
4. Repeat until debt-free
### Why Avalanche Wins Mathematically
This method minimizes total interest paid. The formula uses the standard amortization equation solved for number of payments:
**n = -ln(1 - B*r/P) / ln(1+r)**
The avalanche method pays off debts from **highest interest rate to lowest**, regardless of balance size.
### How It Works
1. Make minimum payments on all debts
2. Put all extra money toward the highest-rate debt
3. When that is paid off, roll the payment to the next highest rate
4. Repeat until debt-free
### Why Avalanche Wins Mathematically
This method minimizes total interest paid. The formula uses the standard amortization equation solved for number of payments:
**n = -ln(1 - B*r/P) / ln(1+r)**
Ejemplo Resuelto
$30,000 total debt at 18% average rate, paying $800/month.
- Monthly rate = 18% / 12 = 1.5%
- Months = -ln(1 - $30,000 x 0.015 / $800) / ln(1.015)
- Months = -ln(0.4375) / ln(1.015) = 55.5 months (round to 56)
- Total paid = $800 x 56 = $44,800
- Total interest = $44,800 - $30,000 = $14,800