What is the Avalanche Debt Payoff Method?

The avalanche method is a strategy for paying off debt that prioritises tackling debts with the highest interest rates first. By focusing on high-interest debts, you minimise the total amount of interest you pay over time, which helps you become debt-free faster.

You can read in more depth about the method in our special report How to Use the Avalanche Method

Steps for the Avalanche Method:

1. List all your debts, including the balance, interest rate, and minimum payment for each.
2. Continue making the minimum payments on all debts.
3. Allocate any extra money to the debt with the highest interest rate.
4. Once the highest-interest debt is paid off, move to the next highest-interest debt.
5. Repeat until all debts are cleared

How to Use the Avalanche Payoff Template

Seeing what you would pay without using the Avalanche

Find out what the minimum payback amount is for each debt. Add these up to find a total and then consider how much extra you can allocate to help pay them down.

Minumum payments will be set by your lender, but for this example we are assuming some ball park figures. Note that with the credit card debt in section 1 the minimum payment of £125 would mean the payment is eaten up entirely by the interest accrued and so will never be paid off – hence we have set it to be £150 and then done the same for the other debts as an illustration.

So we will be allocating £150 to each debt for a total of £450 a month.

Create a duplicate of the template by right clicking on the tab at the bottom and selecting duplicate:

Name your sheet – it will be the one without using Avalanche.

Now enter the details of each debt to the spreadsheet. Order them by the highest interest rate to the lowest eg:

Next fill in the date column by first replacing the date in the top cell with your start time eg 01/01/26

Then fill in the rest of the column by clicking on the handle (small dot on right bottom of the cell), then pulling down on the data fill handle – by moving your mouse down while keeping the left button down, until you reach row 100:

Later you may need to extend the date rows – just drag it down like you just did.

Now for each debt select the 3 cells in row 4 – click cell B4 and then hold shift and click cell D4

and pull down by moving the mouse with the left button down, until the debt goes red (ie it is paid off) – if you overshoot, don’t worry, the formula for the totals ignores negatives:

Do the same for the other loans. Then you will see the totals for each loan and the grand total on the right.

Seeing what you would pay using the Avalanche Method

Create a duplicate sheet like we did earlier.

Setup your date column as before. Now fill in the initial data as before (this time be sure to order them by interest rate). However this time we will be loading as much payment on loan one as we can, so it will receive £350 a month, whilst the other two only get £50 each:

Select the 3 cells for loan 1 as before and pull down until the debt is paid off:

Now fill in the data for loan 2 up until the date loan 1 was paid off (Nov 2026 in our example):

The money that was going to loan 1 (our smallest debt) can now go toward loan 2. So change the value in the payment cell from £50 to £400. Then drag the data down again until loan 2 is fully paid.

Now it’s loan 3’s turn – drag its data down until it reaches loan 2’s payoff date and add all £400 to its payment:

Finally drage loan 3’s data down to its payoff.

Looking at the grand total on the right we can see in this example that the total paid is £21,600 – which is a saving of £4,500 over the £26,100 total earlier without using the avalanche.