| Debt | Interest Rate | Current Balance | Minimum Payment |
|---|---|---|---|
| MasterCard | 19.9% | $600 | $22 |
| Visa | 23.95% | $2,545 | $60 |
| Car | 4.8% | $16,800 | $465 |
| Student Loan | 6.8% | $18,400 | $220 |
| Electronics Store | 22.65% | $1,015 | $29 |
| Loan from Dad | 0% | $3,000 | $20 |
| Knee Surgery | 6.2% | $5,000 | $100 |
The above are debts you owe, the annual interest rate for those
debts and the monthly payment. If you only make a debt payment of
$1,200 each month, how much total interest will you pay over the
life of your loans if you use a debt avalanche method.
Answer
The debt avalanche method involves making minimum payments on all debt, then using any remaining money to pay off the debt with the highest interest rate
Debt avalanche is a strategy of paying off what you owe by prioritizing loans and credit card balances with the highest interest rates. The goal is to minimize the amount of interest you pay, and this approach might help you pay off debt faster than other strategies like the debt snowball.
Note :
Note :
| Month 1 | ||||||||
| Minimum Monthly payment | ||||||||
| Debt | Interest Rate | Current Balance | Minimum Payment | payment Interest on O/S bal | Monthly payment towards principal | Balance after payment | Payment as per debt avalanche method | Balance after payment |
| MasterCard | 19.90% | $600.00 | $22.00 | 9.95 | 12.05 | 587.95 | 587.95 | |
| Visa | 23.95% | $2,545.00 | $60.00 | 50.79 | 9.21 | 2,535.79 | 284 | 2,251.79 |
| Car | 4.80% | $16,800.00 | $465.00 | 67.20 | 397.80 | 16,402.20 | 16,402.20 | |
| Student Loan | 6.80% | $18,400.00 | $220.00 | 104.27 | 115.73 | 18,284.27 | 18,284.27 | |
| Electronics Store | 22.65% | $1,015.00 | $29.00 | 19.16 | 9.84 | 1,005.16 | 1,005.16 | |
| Loan from Dad | 0% | $3,000.00 | $20.00 | - | 20.00 | 2,980.00 | 2,980.00 | |
| Knee Surgery | 6.20% | $5,000.00 | $100.00 | 25.83 | 74.17 | 4,925.83 | 4,925.83 | |
| $916.00 | 277.20 | |||||||
| Month 2 | ||||||||
| Minimum Monthly payment | ||||||||
| Debt | Interest Rate | Current Balance | Minimum Payment | payment Interest on O/S bal | Monthly payment towards principal | Balance after payment | Payment as per debt avalanche method | Balance after payment |
| MasterCard | 19.90% | 587.95 | $22.00 | 9.75 | 12.25 | 575.70 | 575.70 | |
| Visa | 23.95% | 2,251.79 | $60.00 | 44.94 | 15.06 | 2,236.74 | 284.00 | 1,952.74 |
| Car | 4.80% | 16,402.20 | $465.00 | 65.61 | 399.39 | 16,002.81 | 16,002.81 | |
| Student Loan | 6.80% | 18,284.27 | $220.00 | 103.61 | 116.39 | 18,167.88 | 18,167.88 | |
| Electronics Store | 22.65% | 1,005.16 | $29.00 | 18.97 | 10.03 | 995.13 | 995.13 | |
| Loan from Dad | 0% | 2,980.00 | $20.00 | - | 20.00 | 2,960.00 | 2,960.00 | |
| Knee Surgery | 6.20% | 4,925.83 | $100.00 | 25.45 | 74.55 | 4,851.28 | 4,851.28 | |
| 268.33 | ||||||||
| Month 3 | Minimum Monthly payment | |||||||
| Debt | Interest Rate | Current Balance | Minimum Payment | payment Interest on O/S bal | Monthly payment towards principal | Balance after payment | Payment as per debt avalanche method | Balance after payment |
| MasterCard | 19.90% | $ 575.70 | $22.00 | 9.55 | $ 12.45 | $ 563.25 | $ 563.25 | |
| Visa | 23.95% | $ 1,952.74 | $60.00 | 38.97 | $ 21.03 | $ 1,931.71 | $ 284.00 | $ 1,647.71 |
| Car | 4.80% | $ 16,002.81 | $465.00 | 64.01 | $ 400.99 | $ 15,601.82 | $ 15,601.82 | |
| Student Loan | 6.80% | $ 18,167.88 | $220.00 | 102.95 | $ 117.05 | $ 18,050.83 | $ 18,050.83 | |
| Electronics Store | 22.65% | $ 995.13 | $29.00 | 18.78 | $ 10.22 | $ 984.91 | $ 984.91 | |
| Loan from Dad | 0% | $ 2,960.00 | $20.00 | - | $ 20.00 | $ 2,940.00 | $ 2,940.00 | |
| Knee Surgery | 6.20% | $ 4,851.28 | $100.00 | 25.06 | $ 74.94 | $ 4,776.35 | $ 4,776.35 | |
| $ 916.00 | $ 259.33 | $ 656.67 | ||||||
| Month 4 | Minimum Monthly payment | |||||||
| Debt | Interest Rate | Current Balance | Minimum Payment | payment Interest on O/S bal | Monthly payment towards principal | Balance after payment | Payment as per debt avalanche method | Balance after payment |
| MasterCard | 19.90% | $ 563.25 | $22.00 | 9.34 | $ 12.66 | $ 550.59 | $ 550.59 | |
| Visa | 23.95% | $ 1,647.71 | $60.00 | 32.89 | $ 27.11 | $ 1,620.59 | $ 284.00 | $ 1,336.59 |
| Car | 4.80% | $ 15,601.82 | $465.00 | 62.41 | $ 402.59 | $ 15,199.23 | $ 15,199.23 | |
| Student Loan | 6.80% | $ 18,050.83 | $220.00 | 102.29 | $ 117.71 | $ 17,933.12 | $ 17,933.12 | |
| Electronics Store | 22.65% | $ 984.91 | $29.00 | 18.59 | $ 10.41 | $ 974.50 | $ 974.50 | |
| Loan from Dad | 0% | $ 2,940.00 | $20.00 | - | $ 20.00 | $ 2,920.00 | $ 2,920.00 | |
| Knee Surgery | 6.20% | $ 4,776.35 | $100.00 | 24.68 | $ 75.32 | $ 4,701.03 | $ 4,701.03 | |
| $ 916.00 | $ 250.19 | $ 665.81 | ||||||
Debt Interest Rate Current Balance Minimum Payment MasterCard 19.9% $600 $22 Visa 23.95% $2,545 $60 Car...
Debt Interest Rate Current Balance Minimum Payment MasterCard 19.9% $600 $22 Visa 23.95% $2,545 $60 Car 4.8% $16,800 $465 Student Loan 6.8% $18,400 $220 Electronics Store 22.65% $1,015 $29 Loan from Dad 0% $3,000 $20 Knee Surgery 6.2% $5,000 $100 The above are debts you owe, the annual interest rate for those debts and the monthly payment. If you pay a total of $1,200 each month on all your debt, how many months will it take you to get out...
Debt Interest Rate Current Balance Minimum Payment MasterCard 19.9% $600 $22 Visa 23.95% $2,545 $60 Car 4.8% $16,800 $465 Student Loan 6.8% $18,400 $220 Electronics Store 22.65% $1,015 $29 Loan from Dad 0% $3,000 $20 Knee Surgery 6.2% $5,000 $100 The above are debts you owe, the annual interest rate for those debts and the monthly payment. If you make $1,200 monthly payments on all your debt, how much is the interest cost on the final $1,200 of debt you...