Torn between paying off your debt and investing? You’re not the only one. Here’s how to think through the decision — without guilt.
Q: I have some credit card debt and student loans. But I also want to start investing. What should I do first?
A: You’re asking the right question.
Honestly? Most people avoid it altogether — and that’s the real problem.
But the short answer is: it depends on the type of debt.
Q: Okay… what kinds of debt are we talking about?
A: Think of it in three buckets:
- Bad debt – credit cards, payday loans, anything over 10–15% interest
- Neutral debt – federal student loans, 4–6% range
- Good-ish debt – mortgage, maybe even low-interest car loans (if used smart)
If you’re in bucket #1, pay it off. Fast. That interest is killing your future self.
If you’re in #2 or #3, you can start investing while paying it down — especially if your employer offers a 401(k) match, RRSP match, or similar.
Q: But won’t investing grow my money faster?
A: Sometimes, yes.
But here’s the thing: paying off debt is a guaranteed return.
If your loan charges 6%, and the market returns 7%, you’re playing a risky 1% game.
Plus, the emotional return of being debt-free? Huge.
Q: So is it bad to do both at the same time?
A: Not at all.
In fact, a balanced approach is often the most sustainable.
Something like:
- 60% of extra cash to debt
- 40% to investing
Or vice versa, depending on rates and your tolerance.
Q: What if I just feel stuck and overwhelmed?
A: That’s normal.
Debt feels heavy. Investing feels scary. And advice online? Confusing.
Start small.
Pick one card to pay off. Open one investing account.
Momentum > perfection.
Final Thought
You’re not behind.
You’re not bad with money.
You’re just early in the story — and the fact that you’re asking this means you’re on the right page.