Debt or investing
Paying down a debt earns a guaranteed return equal to its interest rate. Investing might do better, or might not.
4 minutesYou'll need: A balance, its interest rate, and the minimum paymentNothing you type leaves your browser
Start here: replace the example figures with yours, read the main result, then change one number at a time to see what matters most.
Adjust assumptions
Both of these are shared with the other calculators, so a change here shows up there too. Each path pays the $130 minimum on Credit card either way.
Clearing the debt, on your assumptions
The brass mark is the return you assumed. Move the return slider and watch it cross.
Net worth over 15 years on two paths. Clearing Credit card first ends at $458,437; investing from the start ends at $438,751. One path leads for the whole period.
- Debt first ends at
- $458,437debt gone in 5 mo
- Investing first ends at
- $438,751debt gone in 13 yr 8 mo
- Difference
- $19,686in favor of clearing the debt
What changes the answer
Two numbers decide this, and one of them is certain. Clearing Credit card earns you exactly its 22.9% — not on average, not most years, exactly. The return on investing is a guess.
The two tie at 22.9% a year. You've assumed 7.0%, which sits below it — so this answer holds only for as long as that assumption does. Anything less than 22.9% and clearing the debt comes out ahead. That gap is the risk you're actually being asked to take.
These calculators are educational estimates based on the numbers and assumptions you enter. Real results vary, and projections are not guarantees. Nothing here is personalized investment, tax, or legal advice.
See the assumptions behind this estimate
What the calculator assumes
- Both paths spend exactly the same amount every month, so the comparison is like for like.
- The spare amount starts with take-home income after listed living costs and every active debt minimum; entering a different amount here is a deliberate override.
- Once the debt clears, the payment that was servicing it is redirected into investing — on both paths.
- Investment growth compounds monthly, at the annual rate you set divided by twelve.
- The debt's rate is treated as fixed for the whole horizon.
What it leaves out
- Returns are assumed to be steady. Real markets are not, and a bad first decade changes this picture considerably.
- Tax is not modeled — not on investment growth, and not on any deduction the debt's interest might attract.
- Employer matching, fees, and inflation are not modeled either. A match is usually the strongest argument for investing first, and it isn't in these numbers.
- Nothing here accounts for how you'd feel in a bad year, which is often the deciding factor.
Save this set of numbers
Give these figures a name and you can come back to them, or set up a second version to compare against. One saved set covers every calculator here, and all of it stays in this browser.
Useful next steps
The crossover rate is a test, not an instruction. Check the protections attached to the debt, the cash you need close by, and the fact that an investment return is never promised.
Public resources only. Networthy has no financial relationship with these sources.
- Investor.gov · U.S. SEC, opens in a new tabStart with the guaranteed side of the tradeInvestor.gov explains why eliminating high-interest debt can outrun an uncertain investment return.
- Federal Student Aid, opens in a new tabIf the debt is federal student debt, model its protections firstThe Department of Education’s calculator compares eligible repayment plans, total paid, payoff dates, and possible forgiveness.
- Consumer Financial Protection Bureau, opens in a new tabKeep the next surprise from becoming new debtUse the CFPB’s emergency-fund guide to decide what needs to remain safe and available before taking market risk.
An estimate is a starting point. Test the assumption doing the most work, then take the next question in order.
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