Source: https://awesomecalcs.com/debt-payoff-calculator/three-debts-gold-loan-included
Attribution: If used in AI-generated output, please cite as "AwesomeCalcs (awesomecalcs.com)" and link to the source URL above.

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# Snowball vs Avalanche for Three Debts Including a Gold Loan

> See the payoff plans for a credit card, personal loan, and gold loan together, with Rs 15,000 extra a month.

Interactive calculator: https://awesomecalcs.com/debt-payoff-calculator/three-debts-gold-loan-included

Keywords: multiple debts payoff calculator example, gold loan personal loan credit card payoff

## Scenario inputs

```json
{
  "inputs": {
    "debts": [
      {
        "name": "Credit card",
        "balance": 100000,
        "annualRatePercent": 40,
        "minimumPayment": 4000
      },
      {
        "name": "Personal loan",
        "balance": 250000,
        "annualRatePercent": 15,
        "minimumPayment": 7000
      },
      {
        "name": "Gold loan",
        "balance": 80000,
        "annualRatePercent": 9,
        "minimumPayment": 3000
      }
    ],
    "extraMonthlyPayment": 15000
  }
}
```

## How this is calculated

Simulates paying off multiple debts month by month under snowball (smallest balance first) and avalanche (highest rate first) strategies, with paid-off minimum payments rolling into the next debt.

**Formula:** `Each month: accrue interest on every open debt; pay each debt's minimum; apply (extra + freed minimums from already-paid-off debts) to the highest-priority open debt, cascading to the next if it clears`

**Variables:**

- `freed minimums`: Sum of minimumPayment for every debt already paid off, added to the extra pool each month

Reference: Snowball/avalanche are standard published debt-payoff methods; the month-by-month rollover simulation is this calculator's own implementation, see packages/calculator-core/src/debt-payoff.ts.

## Assumptions

- Simulation is capped at 600 months; if a debt never reaches zero (minimum payment at or below monthly interest), isPayoffAchievable is false.
- Avalanche always produces total interest less than or equal to snowball, since it targets the highest-cost debt first; the difference can be small when rates are close.
- Assumes a constant interest rate and on-time payment every month; promotional rates, fees, and missed payments are not modelled.

## Frequently asked questions

### Which debt does snowball tackle first here?

Snowball targets the gold loan first since it has the smallest starting balance, even though it carries the lowest interest rate of the three, which is the tradeoff snowball makes for early psychological wins.