Two ways to pay down debt
Compare payoff strategies while holding the payment budget constant.
Materials: calculator page, paper or this response sheet, and a basic calculator. “Keep for comparison” preserves up to three scenarios while that calculator tab stays open.
Prepare the fictional setup
Click “Load example” in the calculator before starting. The first scenario is fictional and may intentionally show a difficult financial outcome.
Complete setup reference
| Extra monthly payment above all minimums ($) | 100 |
|---|
Credit card: $6,000 at 22%, $180 minimum. Car loan: $12,000 at 7%, $300 minimum. Store card: $1,200 at 27%, $40 minimum. Extra monthly payment: $100.
Typed responses stay in this tab. Save a PDF to keep your work. Do not enter real household or student financial information.
Warm-up · 5 minutes
What makes a debt expensive: its balance, its rate, or both?
Investigate · 25–40 minutes
Step 1
Load the debt example and add the minimum payments. Include the $100 extra monthly payment.
Step 2
Compare avalanche and snowball. Explain why the first debt may be the same in both strategies here.
Step 3
Keep the scenario. Change the store-card APR from 27% to 3%. Compare payoff order and total interest again.
Step 4
Increase the extra payment to $200. Describe the effect without assuming everyone can afford that extra payment.
Discuss & reflect · 10 minutes
Why is it important to compare strategies using the same budget?
Extension
Create two fictional debts where snowball and avalanche give different payoff orders. Explain the behavioral trade-off.
Teacher guide and assessment
Expected reasoning
Minimum payments total $520; the example budget is $620. The store card initially has both the smallest balance and highest APR. Lowering its rate separates those priorities. Avalanche generally prioritizes interest savings; snowball prioritizes smaller balances.
Use the calculator’s breakdown to check rounding. The teacher explanation is tied to the fictional setup above, not to any learner’s edited scenario.
Quick assessment · 6 points
- 2 points: accurate calculations with units and labeled scenarios.
- 2 points: explains how changing one assumption changes the result.
- 2 points: supports a conclusion with evidence and names a limitation.
Support: work through one scenario together and use a simple table. Challenge: ask the learner to find a counterexample or solve a target by hand. These are flexible suggested grade bands, not a standards-alignment claim.
Methods & sources
Formula explanations, assumptions and source links are on the calculator page. This is an educational activity, not a recommendation to borrow, invest or make a purchase.