Invest vs. Pay Off Debt Calculator
You have extra cash. Should you put it in the market or kill the debt? The honest answer comes down to two numbers: your debt's interest rate and what you can earn investing. How much being debt-free matters to you is the tiebreaker. Enter your debts and we'll show you both sides.
List the debts you'd consider paying down with your extra cash.
Money you could put toward either investing or paying down debt.
0 = pure math. 10 = debt-free is worth a lot to me.
If you invest the extra
$150,585
$261,983 in investments, $111,397 debt left.
If you pay off debt first
$136,461
Debt-free in 14 years and 9 months, saves $103,801 in interest.
Net worth over time
Simplifications: ignores taxes (investment gains in retirement accounts are pre-tax; brokerage gains are taxed; mortgage interest may be deductible), employer 401(k) match, changes in interest rates over time, and the option to refinance. Assumes constant returns. Not financial advice.
See the long-term impact on your actual money, not a generic scenario.
Planned projects how this decision plays out across your real accounts, with your real interest rates and contributions, updating as those numbers change.
Frequently asked questions
Common questions about investing vs. paying off debt, answered plainly.
How do I know if my debt rate is high?
Credit cards (15 to 25%) are always high. Personal loans (8 to 15%) usually are. Student loans (5 to 8%) and mortgages (3 to 7%) usually aren't. The honest test is to compare the rate to what you can realistically earn investing. The long-run stock market average is around 7% a year, so any debt above that range tilts the math toward paying it off first.
Avalanche or snowball, which is better?
Mathematically, paying the highest interest rate first (avalanche) always wins because you kill the most expensive debt first. Smallest balance first (snowball) loses a bit of money in interest but feels great because you cross debts off the list quickly. Use the toggle above to compare them with your own numbers. Pick the one you'll actually stick with.
What about my employer's 401(k) match?
Always capture the full employer match before paying extra debt or investing elsewhere. A typical 50% to 100% match is essentially a guaranteed return on the money you contribute, which beats almost any debt rate. This calculator assumes you've already done that and you're deciding what to do with the extra cash beyond the match.
Does this account for taxes?
No. Investment returns in a 401(k) or IRA grow without being taxed each year. Brokerage gains are taxed when you sell. Mortgage interest may be deductible if you itemize. These are real factors but small adjustments to the big picture. Comparing your debt rate to your expected investment return is what drives the answer.
Why doesn't the peace of mind slider change the dollar amounts?
Because the dollar amounts are what they are. The slider only changes the recommendation paragraph. Some people reasonably trade a few thousand dollars of expected return for the certainty of being debt-free. That's a valid choice and we want to make it visible without quietly distorting the underlying math.
What if my interest rate is variable?
Enter your current rate. If your rate rises significantly, like with a HELOC or a variable-rate student loan, paying it down becomes more attractive. Come back to the calculator when your rate changes to see how the answer shifts.