The Question Everyone Asks Wrong
Should I pay off debt or invest? It's the most common personal finance question, and the standard answer ("compare your interest rate to expected market returns") is technically correct but practically incomplete.
The math: if your debt rate is 7% and the market historically returns 10%, investing seems like the better play. But that ignores risk, taxes, and the behavioral reality of carrying debt while trying to build wealth.
When Debt Payoff Wins
Any debt above 7–8% should be paid first. Credit cards at 20–29% APR aren't even close, no investment consistently returns 20%+ per year. Open the Debt Payoff Calculator on DebtCalc and calculate your total interest cost. That number is the guaranteed return you earn by paying it off.
Debt payoff also wins when it reduces stress, frees up monthly cash flow, or eliminates a variable rate that could climb. The psychological return of being debt-free has real value that doesn't show up in spreadsheets.
When Investing Wins
Employer-matched 401(k) contributions return 50–100% instantly on the match portion. Even with high-rate debt, skipping the match means leaving free money. Student loans at 4–5% are low enough that investing alongside repayment makes mathematical sense, especially over 20+ year horizons.
If your debt is below 5% and you have 15+ years until retirement, splitting between payoff and investing is reasonable. The market's long-term average rewards patience.
The Honest Answer
Pay off everything above 7%. Capture your full employer match regardless. Then decide based on your timeline and temperament. If carrying debt keeps you up at night, pay it off, the peace of mind is worth the theoretical investment gain you'd forgo.