Debt vs Invest Calculator
Compare guaranteed interest savings from paying off debt against expected investment returns to make the optimal choice.
Debt vs Invest Calculator
Should you pay off debt or invest? Compare guaranteed interest savings vs expected investment returns to make the optimal decision.
Recommendation
Pay off the debt first
Your debt costs 8% guaranteed. Your after-tax investment return is only ~0.1%. Paying off debt is the better risk-free return.
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Debt-free in
2.8 yrs
34 months
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Total interest paid
$3,584
If you pay only debt
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Guaranteed return (debt)
8.0%
Risk-free by paying it off
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After-tax invest return
~0.1%
9% return × (1 − 22% tax)
The hybrid approach
In practice, most financial planners recommend: pay off high-interest debt first (anything above ~6–7%), then invest. Always capture employer 401(k) match before paying extra debt — that match is a 50–100% instant return.
- Emergency fund first (3–6 months expenses)
- Max employer 401(k) match
- Pay off debt >7% aggressively
- Invest the rest