**Excel** is the most widely used tool for dealing with massive datasets. We can perform myriads of tasks of multiple dimensions in **Excel**. In the case of repaying multiple loans, one can take the help of **Excel**. Two standard methods to calculate repayments of multiple loans are the debt snowball method and the debt avalanche method. We can perform both in **Excel**. In this article, I will give an overview of debt snowball vs avalanche in **Excel** spreadsheet. After going through this article you will learn the methods and understand the concepts of debt snowball vs avalanche in **Excel** spreadsheet.

## Download Practice Workbook

Download this workbook and practice while going through the article.

## Debt Snowball Method in Excel Spreadsheet

This is the dataset for today’s article. We have two debts and will prepare the schedule for repaying these loans using both the debt snowball and debt avalanche methods. The minimum amount of payment for each loan is **$200** per month and we have allotted **$1000** per month for loan repayment. That means, after repaying a minimum amount for each loan, we will use the remaining fund to repay one of these loans.

First of all, we will look at the debt snowball method. In this method, we will repay a minimum amount to each loan every month. __Then we will use the remaining fund to repay the loan that is of the lowest amount__. In our case, it will be **Debt-2**. Let’s make the schedule step by step.

**Steps:**

- First of all, repay the minimum amount for
**debt-1**. - Then calculate the balance for this debt.

- Then calculate the interest amount for this loan. To do so, write down the following formula in
**D7**.

`=E7*$K$4/12`

- You have to divide the yearly interest rate by
**12**to get the monthly interest rate. - Then, press
**ENTER**.**Excel**will calculate the interest amount.

- Now, you have to repay
**debt-2**. You allotted**$1000**per month for repaying loans. Now,**$200**was for**debt-1**. So you have**$800**remaining for**debt-2**. - Pay
**$800**to**debt-2**and calculate the balance and interest just like**debt-1**.

- After that, again pay
**$200**for**Feb-21**.

- Now, you have to calculate the remaining balance for
**debt-1**. For this, go to**E8**and write down the following formula-

`=E7+D7-C8`

- The interest for
**Jan-21**was the month-end interest.__You must pay this additional interest too__. So**this will add****to**the remaining balance. - Now, press
**ENTER**.**Excel**will return the balance.

- Then, again calculate the month-end interest for
**Feb-21**.

- After that, repay
**$800**to**debt-2**and calculate the balance and month-end interest in a similar fashion.

- Then, do the same operation for
**Jun-21**. You can use the AutoFill feature to do the operation easily.

- Now, you see that the remaining balance for
**debt-2**is**$402.78**which is below**$800**. So this time, you will cancel out this debt.__The payment should equal the sum of__. So, write down the following formula in**the balance**and the**month-end interest**of**Jun-21****F13**.

`=H12+G12`

- Then, press
**ENTER**.**Excel**will calculate the payment for**Jul-21**.

- Thus,
**debt-2**is paid off.

- Now, for
**Jul-21**, you have already paid**$408.82.**So you have another**$591.18**available for this month. This amount will go as the payment for**debt-1**.

- Calculate the balance and interest for
**Jul-21**.

- Now, you have only
**debt-1**. So you can use all**$1000**to repay the debt. Make a payment of**$1000**up to**Nov-21**and calculate the interest and balance.

- On
**Dec-21**, you have a balance of**$779.23**and interest of**$9.74**for payment. So the payment for**Dec-21**will be the sum of these two amounts. - To calculate it, go to
**C18**and write down the following formula

`=D17+E17`

- Now, press
**ENTER**.**Excel**will return the payment.

- Thus,
**debt-1**will also be paid off.

**Read More: ****How to Calculate Annual Debt Service in Excel (3 Ideal Examples)**

**Similar Readings**

**How to Create Debtors Ageing Report in Excel Format****How to Calculate Before Tax Cost of Debt in Excel (3 Easy Ways)****Debt Service Coverage Ratio Formula in Excel**

## Debt Avalanche Method in Excel Spreadsheet

Now, we will look at the debt snowball method. In this method, we will repay a minimum amount to each loan every month. __Then we will use the remaining fund to repay the loan that has the highest interest rate__. In our case, it will be Debt-2 again. Let’s make the schedule step by step.

**Steps:**

- First of all, repay the minimum amount for
**debt-1**. - Then calculate the balance for this debt.

- Then calculate the interest amount for this loan. To do so, write down the following formula in
**D7**.

`=E7*$K$4/12`

- You have to divide the yearly interest rate by
**12**to get the monthly interest rate. - Then, press
**ENTER**.**Excel**will calculate the interest amount.

- Now, you have to repay
**debt-2**. You allotted**$1000**per month for repaying loans. Now,**$200**was for**debt-1**. So you have**$800**remaining for**debt-2**. - Pay
**$800**to**debt-2**and calculate the balance and interest just like**debt-1**.

- After that, again pay
**$200**for**Feb-21**.

- Now, you have to calculate the remaining balance for
**debt-1**. For this, go to E8 and write down the following formula

`=E7+D7-C8`

- The interest for
**Jan-21**was the month-end interest.__You must pay this additional interest too__. So this will add to the remaining balance. - Now, press
**ENTER**.**Excel**will return the balance.

- Then, again calculate the month-end interest for
**Feb-21**.

- After that, repay
**$800**to**debt-2**and calculate the balance and month-end interest in a similar fashion.

- Then, do the same operation for
**Jun-21**. You can use the**AutoFill**feature to do the operation easily.

- Now, you see that the remaining balance for
**debt-2**is**$402.78**which is below**$800**. So this time, you will cancel out this debt.__The payment should equal the sum of__. So, write down the following formula in**the balance**and the**month-end interest**of**Jun-21****F13**.

`=G12+H12`

- Then, press
**ENTER**.**Excel**will calculate the payment for**Jul-21**.

- Thus,
**debt-2**is paid off.

- Now, for
**Jul-21**, you have already paid**$408.82.**So you have another**$591.18**available for this month. This amount will go as the payment for**debt-1**.

- Calculate the balance and interest for
**Jul-21**.

- Now, you have only
**debt-1**. So you can use all**$1000**to repay the debt. Make a payment of**$1000**up to**Nov-21**and calculate the interest and balance.

- On
**Dec-21**, you have a balance of**$779.23**and an interest of**$9.74**for payment. So the payment for**Dec-21**will be the sum of these two amounts. - To calculate it, go to
**C18**and write down the following formula

`=D17+E17`

- Now, press
**ENTER**.**Excel**will return the payment.

- Thus,
**debt-1**will also be paid off.

**Read More: ****How to Create Pay off Credit Card Debt Calculator in Excel**

## Key Differences Between Debt Snowball and Debt Avalanche Method

- In the debt snowball method, you pay a minimum amount to all the loans and use the remaining fund to repay the loan that has the lowest amount.
- On the other hand, after paying a minimum amount for all the loans, you use the remaining fund to repay the highest interest loan.
- The loan amount is important in the debt snowball method, irrespective of the interest rate whereas, the opposite scenario is true for the debt avalanche method.

## Things to Remember

- Do not forget to repay a minimum amount in all loans.
- Decide the suitable method after analyzing the results from these methods.
- Use
**the absolute reference**to lock a cell.

## Conclusion

In this article, I have given an overview of debt snowball vs avalanche in **Excel** spreadsheet. I hope it helps everyone. If you have any suggestions, ideas, or feedback, please feel free to comment below. Please visit **Exceldemy** for more useful articles like this.

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