Debt Payoff Tracker — Methodology

This is the public methodology for the CalculatorAI Debt Payoff Tracker: what it models, how the projections are calculated, and where the numbers come from. Everything here is reproducible by hand — no black box.

What the tracker is for

You enter what you owe. It works out the order to pay things off in, the month each debt is cleared, the date you are debt-free, and what the whole plan costs in interest. Then it does the same for two other strategies so you can see what your choice is worth in money and months.

The three strategies

Avalanche — highest interest rate first. Mathematically optimal: it always produces the least total interest, and never a later debt-free date than the alternatives. If you only care about the money, this is the answer.

Snowball — smallest balance first. Usually costs a little more in interest, but clears individual debts sooner. The argument for it is behavioural: an account that disappears entirely is a visible win, and people who see early wins are more likely to keep going. The tracker shows you exactly how much that motivation costs, so it is an informed trade rather than an article of faith.

Custom — your own order. Some debts are worth clearing for reasons a spreadsheet cannot see: money borrowed from family, a car you want to own outright, a card you want closed. Set the order yourself.

How the projection is calculated

The simulator walks forward one month at a time. In each month:

Interest accrues on the opening balance of every debt, at the monthly rate — the APR divided by twelve. This mirrors how a card statement works.
Every debt receives its minimum payment, so nothing goes delinquent.
Everything left in the budget goes to a single target debt, chosen by the strategy. If that payment clears the debt mid-month, the remainder cascades to the next target instead of sitting idle.
A cleared debt's minimum joins the pool. This is the rolling snowball, and it is the entire reason the method works: the money you were paying to a dead account keeps working on the next one.

The monthly budget is the sum of all minimum payments plus whatever extra you set. The projection assumes you make that payment every month, that the rates stay fixed, and that you add no new debt.

What the tracker does not model

Stated plainly, because a projection you cannot trust is worse than none:

Variable rates. Card APRs move. The projection uses the rate you entered for the whole term.
Promotional and 0% periods. Enter the rate that will apply; a 0% teaser that expires mid-plan will make the projection optimistic.
Fees, penalties and minimum-payment recalculation. Real card minimums usually fall as the balance falls. The tracker holds your minimum constant, which makes it slightly conservative on time and slightly optimistic on interest versus a shrinking minimum.
Daily interest compounding. Interest is applied monthly. On most consumer debt the difference over a full plan is small relative to the other assumptions above.
Taxes. Deductible interest (some mortgages and student loans, depending on your country) is not netted off.

Progress and payments

Each debt records a starting balance separately from its current balance, which is what the progress bar measures against. It defaults to whatever the balance was when you added the debt, so progress starts at zero — but you can raise it to take credit for what you paid down before you started tracking.

Logging a payment reduces the balance in the same action. Anything above that debt's minimum is flagged as extra, because that is the part that actually shortens the plan. Deleting a payment adds the amount back, so a mistyped entry is a genuine undo rather than something you then have to fix by hand.

A debt whose balance reaches zero is stamped with a payoff date and stays in your history as a win rather than disappearing.

Plan versus what you actually paid

A projection only means something if you can check it. For any month you can see what the plan asked of you, what you actually paid, and the gap between the two — first as three totals, then debt by debt, so the answer is "the student loan fell short by 60" rather than "you paid less than planned".

Two things worth knowing about how this is scoped:

The simulation runs forward from your current balances, so it can only produce an expectation from the plan's start month onward. Pick an earlier month and the comparison says so instead of showing a zero that would read as "you paid nothing". Your logged payments for that month are still listed.
Expected and actual are rounded independently, and both may pass through a currency conversion, so the comparison uses a small tolerance. A gap of a few cents is treated as on-plan, not as falling behind.

The plan's start month

By default the schedule begins this month. You can move it earlier to line the plan up with when you actually started, which is what makes past months reviewable in the comparison above. Everything else on the Plan tab — the payoff date, the order, the month-by-month schedule — is measured from this month.

An extra payment that changes month to month

Real budgets are not flat. On top of the usual extra payment you can set a different amount for a specific month: more in a bonus month, less — or nothing — in an expensive one. Months you have not touched keep using the usual amount.

Deliberately skipping a month makes the balance grow for that month, and that is allowed: only a month running on your normal budget can prove a plan impossible (see above). The schedule and the debt-free date update to reflect what you set.

More than one currency

Each debt is stored in its own currency, so a card in one currency and a loan in another can live side by side. Lists show each debt in the currency you entered it in; every total, the payoff simulation and the plan comparison are converted into the currency you are viewing in, at current rates, and say so when they do.

This matters more here than in a simple ledger: the simulation pays balances down against one shared monthly budget, so adding raw amounts across currencies would not just mislabel a total — it would produce a debt-free date that is not real.

Where the money went

Each debt also records a creditor — who actually holds it, kept separate from whatever you call the debt. And because a debt payment is money leaving your account like any other, any logged payment can be sent to the Expenses Tracker, where it opens a prefilled entry for you to confirm. Nothing is written to another tracker without you approving it.

When a plan is impossible

If the monthly budget does not cover the interest being charged, the balance grows no matter how long you keep paying. The tracker detects this instead of projecting forever, and tells you the monthly shortfall. The fix is more money toward the debt or a lower rate — a balance transfer, a consolidation loan, or a hardship rate from the lender.

What if — testing a move before you make it

Three scenarios run against your real plan without changing it:

A one-off payment — a bonus or a tax refund, applied to whichever debt your strategy is attacking, with any remainder cascading onward.
A balance transfer — moving a balance to a lower rate. The transfer fee is added to what you owe, because that is how it actually works and it is usually the thing that decides whether the move is worth making.
Consolidation — rolling everything into one loan. The payment is amortised from the new term, so a longer term correctly shows a lower payment and a higher total cost.

Each one is re-run through the same simulator as your live plan and reported as a difference: how many months earlier or later, and how much more or less interest. Nothing is saved.

Reading a statement from a photo

Photograph a card or loan statement and the balance, purchase APR, minimum payment and due day are read from it. Nothing is written automatically — the add form opens with what was read so you can correct it first. Statements put the credit limit next to the balance and often list several APRs; the reader is told to take the balance owed and the purchase rate, but check them.

The AI coach

A Pro feature that can see your real balances, rates and the projection. It has the plan under all three strategies, the minimums-only baseline and what another $100 a month would do — because the questions people actually ask are comparisons. It quotes the same numbers the page shows rather than working them out again.

It gives general financial education, not regulated advice, and doesn't recommend specific lenders. For bankruptcy, debt settlement or anything with legal consequences it will tell you to speak to a qualified professional and point toward non-profit credit counselling.

Free and Pro

Free accounts track up to three debts, with the full simulator, all three strategies, the what-if scenarios and unlimited payment logging. Pro removes the debt limit and adds the AI coach and statement scanning. Data you have already entered always stays visible and exportable — a limit only ever gates creating something new.

The tracker uses the same maths as the individual calculators on the site — the credit card payoff, personal loan, debt snowball and debt avalanche calculators — applied to all of your debts at once rather than one at a time.