Juggling several debts without a plan means paying more interest for longer. This skill turns a list of debts plus a monthly amount available into an ordered payoff plan — comparing the avalanche (highest rate first, least interest) and snowball (smallest balance first, fastest wins) methods so the person can pick with eyes open. Educational planning, not personalized financial advice.
Required Inputs
Ask for these only if they aren't already provided:
- Each debt — name, balance, interest rate (APR), and minimum payment.
- Total monthly amount available for debt (must cover all minimums + extra).
- Preference (optional) — save the most money, or get motivating quick wins.
Output Format
Debt payoff plan — [name]
Debts
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| $ | % | $ |
Method comparison (paying $X/month total):
| Method | Order | Debt-free in | Total interest paid |
|---|---|---|---|
| Avalanche (highest APR first) | … | ~N months | $ |
| Snowball (smallest balance first) | … | ~N months | $ |
Recommended order — the chosen method's payoff sequence, with the "attack" target each phase and roughly when each debt clears (roll each freed-up minimum into the next debt — the snowball/avalanche effect).
The trade-off — avalanche saves $X in interest; snowball gives the first win ~N months sooner. State which fits their stated preference and why.
Watch-outs — keep paying every minimum (missed minimums = fees + credit damage), and avoid adding new debt mid-plan.
Quality Checks
- Both avalanche and snowball are quantified (months + total interest), not just described
- The recommended order rolls freed-up payments into the next debt
- The recommendation matches the person's stated preference (savings vs. momentum)
- The math is internally consistent and the assumptions (fixed APR, no new debt) are stated
- Minimums-must-always-be-paid is flagged
Anti-Patterns
- Do not recommend a method without showing the interest/time trade-off in numbers
- Do not forget the minimums on non-target debts — the plan must cover all of them
- Do not ignore the person's psychology — the mathematically optimal plan they quit isn't optimal
- Do not assume variable-rate debt stays fixed without flagging it
- Do not present this as personalized financial advice — it's an educational model to adapt
Based On
Debt-reduction methods — the debt avalanche (highest-interest-first) and debt snowball (smallest-balance-first).