10/02/2026
Friday Tips! New series with quick hitters on something I come across throughout the week!
To Payoff debt or Invest?
There are two parts to this. Financial (pure numbers) and Emotional (what feels good). Neither are more important than the other, but as a CFP(R) I generally give folks the numbers and then let them take it from there.
From the numbers side it all comes down to interest rate on the debt. If the interest rate is low enough, it can make more sense to continue your monthly payments because your invested dollars SHOULD earn more than the interest you are paying on the debt. As the interest rate goes higher, the data leans more and more towards paying the debt first. And remember there are few investments that offer a guarantee that the investment will outperform even if historical trends suggest so. So it's a projected return against the interest paid each month which is a known quantity.
From the emotional side it feels really good to payoff a debt and not have that monthly payment! No argument here and I won't ever say someone is flat out wrong should they choose to payoff a debt. However, when the interest rate on your debt is low, it is the old "one marshmallow now or two marshmallows later" debate. Future you would certainly feel good with more money, right?
If we go through an analysis and still at the end a client asks me "What Would Ken Do?", I'm a numbers guy and always choose based on what the probabilities say will benefit me most over the long term.
