# Debt Payoff and Savings Plans

AI cannot manage your money, but it can model scenarios that help you make better decisions. This lesson covers the two most impactful financial planning exercises: debt payoff strategy and emergency fund planning.

Snowball vs. Avalanche: Let AI Model Both

The two dominant debt payoff strategies are: - Avalanche: Pay minimums on everything, throw extra money at the highest-interest debt first. Mathematically optimal. - Snowball: Pay minimums on everything, throw extra money at the smallest balance first. Psychologically powerful (quick wins build momentum).

Let AI model both for your specific debts:

I have the following debts. Model both snowball and avalanche payoff
strategies. I can put $500/month toward debt above minimum payments.

1. Credit Card A: $4,200 balance, 22.9% APR, $105 minimum
2. Credit Card B: $1,800 balance, 18.9% APR, $55 minimum
3. Student Loan: $18,500 balance, 5.5% APR, $280 minimum
4. Car Loan: $8,400 balance, 4.9% APR, $320 minimum

For each strategy, show:
1. The order I would pay off each debt
2. Monthly payment allocation table
3. Total months to become debt-free
4. Total interest paid
5. Month-by-month progress for the first debt in the payoff order